- 1 Which Accounts in Panama are Reported for FBAR
- 2 US Person Definition
- 3 FBAR Reporting Basics
- 4 Largest Banks in Panama
- 5 Term Deposits, Fixed Deposits, and CDs
- 6 Stock Investment Accounts in Panama
- 7 Panama & Mutual Funds, ETF, SICAVs
- 8 Foreign Business and FBAR
- 9 Panama FBAR Amnesty Program Summary
- 10 Can I Just Start Filing FBAR This Year Instead?
- 11 Our FBAR Lawyers Represent Clients Worldwide
Which Accounts in Panama are Reported for FBAR
What Accounts in Panama are Reported for FBAR: With Panama seeking to continue to develop their burgeoning economy — many US Persons have made investments into Panama’s infrastructure. As a result, it is important that US Taxpayers consider that if they are a US person and have accounts overseas — they may be subject to Foreign Bank and Financial Account (FBAR) Reporting to FinCEN, which is enforced by the IRS. The failure to be in compliance for FBAR reporting may result in fines and penalties although those penalties can oftentimes be minimized or abated with offshore voluntary disclosure/FBAR Amnesty. Let’s go to some of the basics of FBAR and Foreign Accounts in Panama.
US Person Definition
US Persons includes more than just individuals — it also includes entities — but the focus of this article is for individuals.
US persons with accounts in Panama who may have to file FBAR, include:
- U.S. Citizen
- Lawful Permanent Resident
- Foreign Nationals who meet the Substantial Presence Test
FBAR Reporting Basics
When a US Person has accounts in Panama, they have to report the accounts, when the annual aggregate total of all accounts combined exceeds more than $10,000. The due date is April 15 but is on automatic extension until October (this rule is subject to change).
Largest Banks in Panama
There are many different banks and other Foreign Financial Institutions located in Panama. Here are some of the more common institutions.
- Caja De Ahorros
- Banco Nacional De Panama
- Banesco SA
- Citibank Panama
- Scotiabank of Panama
Term Deposits, Fixed Deposits, and CDs
Most all types of bank accounts are reportable on the FBAR. This includes ancillary types of accounts at Banks such as term deposit accounts, fixed deposit accounts and CDs. In addition, the interest generated on these accounts are generally taxable in the US.
Stock Investment Accounts in Panama
There are various different types of stock investment accounts in Panama. And, even though certain Taxpayers with residence or citizenship in Panama may receive tax related benefits under foreign tax laws — whether or not there taxable — they are still reportable on the FBAR.
In addition, unless the PFIC rules apply — accrued but non-distributed income in a Stock Investment Accounts is taxable.
Panama & Mutual Funds, ETF, SICAVs
When a US Person Taxpayer has foreign investment accounts in Panama such as Mutual Funds, ETFs and SICAVs — they may have an FBAR reporting requirement when the threshold is met. The value of the investment accounts are aggregated with the value of the other accounts to determine the annual threshold value for reporting is met.
With investment funds, there is the additional issue of potential PFIC reporting on Form 8621.
Foreign Business and FBAR
When a US Person owns a Business and/or has signature authority over an account (as an employee for example) — those accounts are generally reportable as well, although if there is no financial interest in the account(s) then the account is usually not subject to penalties.
Panama 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 for non-reporting.
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
Can I Just Start Filing FBAR This Year Instead?
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.
Our FBAR Lawyers Represent Clients Worldwide
Our FBAR Lawyer team specializes exclusively in international tax, and specifically IRS offshore disclosure for Taxpayers with Accounts in Panama.
Contact our firm today for assistance.