- 1 Top 6 FBAR Reporting Mistakes Filers Should Avoid
- 2 Due Date and Automatic Extension
- 3 Do I File an FBAR if I Do No have to File a Tax Return?
- 4 Is FBAR Reporting Limited to Bank Accounts?
- 5 Minor Children FBAR Reporting Requirement
- 6 Late-Filing Means Criminal Indictment and Millions in Penalties?
- 7 Can I Just Start Filing FBAR This Year Instead?
- 8 IRS FBAR Amnesty Program Summary
- 9 Our FBAR Lawyers Represent Clients Worldwide
Top 6 FBAR Reporting Mistakes Filers Should Avoid
Common FBAR Reporting Mistakes to Avoid when Filing: The FBAR is used to report foreign bank and financial accounts to FinCEN on FinCEN Form 114. The form is required by US person — whether they reside in the US or abroad — in any year they meet the threshold requirements for reporting. While the form is technically a FinCEN form, Foreign Account Penalties (which can tough) for noncompliance with FBAR and FATCA are assessed and enforced by the IRS. When it comes to US Persons filing the annual FBAR, the form could be deceptively complicated. While the reporting is limited to the maximum value of the accounts for the year being reported — there are various complexities when it comes to determining which accounts have to be reported, who has to report, when the form is due — and what happens if you file late. Let’s take a brief look at the top 6 FBAR reporting mistakes filers should (and can) avoid.
Due Date and Automatic Extension
The most common FBAR reporting mistake, is usually a (relatively) easy one — which is filing the FBAR timely. The FBAR was previously due on June 30th without any filing extension available. About five years ago the rules were changed so that the FBAR is due on April 15th — the same time your tax return is due. Currently, the FBAR is an automatic extension until October — and no extension form needs to be filed to take advantage of the extension; in other words, it is automatic and everyone is entitled to it without having to file any separate form.
Do I File an FBAR if I Do No have to File a Tax Return?
Yes. if you meet the annual reporting requirements for having to file an FBAR, then you have to still file the form even if you do not have a tax filing requirement in the same year that you have an FBAR filing requirement.
Is FBAR Reporting Limited to Bank Accounts?
No, and this is another very common FBAR reporting mistake. The FBAR is very encompassing — and includes much more than just bank accounts. the phraseology “Foreign Financial Accounts” is much more encompassing, and includes items such as foreign pension accounts, foreign investment accounts, and certain foreign life insurance policies with a surrender or cash value.
Minor Children FBAR Reporting Requirement
There is no exception for minors when it comes to reporting foreign bank and financial accounts on the annual FBAR.
Therefore, if you have a minor child and the annual aggregate total of foreign account values exceeds $10,000 on any given day of the year — then your three year-old may have an FBAR filing requirement.
Late-Filing Means Criminal Indictment and Millions in Penalties?
Of course not.
For most individuals and others who have missed accurately filing and/or reporting their annual FBAR, the IRS has developed several different FBAR amnesty programs to safely get you back into compliance with little to no issue. Some programs carry a penalty , while other programs carry a much more reduced penalty or even a penalty waiver if you qualify.
Can I Just Start Filing FBAR This Year Instead?
This is a very important FBAR reporting mistake to avoid. The answer is no, unless the current year is the first-year you had an FBAR Reporting requirement.
If you had a prior year reporting requirement, but only begin to start filing in the current year (Filing Forward) it is illegal. In the world of offshore disclosure, this is referred to as an FBAR Quiet Disclosure.
The IRS has warned taxpayers that if they get caught in a FBAR Quiet Disclosure situation, it may lead to willful penalties and even a criminal investigation by the IRS Special Agents.
IRS FBAR Amnesty Program Summary
The FBAR Amnesty Programs are programs developed by the Internal Revenue Service to assist Taxpayers who are already out of compliance with the IRS and to safely resolve FBAR reporting mistakes.
Some of the more common programs, include:
- Voluntary Disclosure Program (VDP or “New” OVDP)
- Streamlined Domestic Offshore Procedures
- Streamlined Foreign Offshore Procedures
- Delinquency Procedures
- Reasonable Cause
Our FBAR Lawyers Represent Clients Worldwide
Our FBAR Lawyer team specializes exclusively in international tax, and specifically IRS offshore disclosure and helping clients resolves FBAR reporting mistakes.
Contact our firm today for assistance.