Delinquent FBAR (2018) – Foreign Accounts & Offshore Disclosure
Filing the FBAR when you have Foreign Accounts is a very important aspect of IRS International Tax Compliance. Why? Because the penalties that the IRS can issue for non-filing, or improper delinquent filing and reporting of foreign bank accounts far exceed anything you could have ever imagined.
Even if the IRS believes you were non-willful in your non-reporting of your foreign bank accounts, the IRS can still issue penalties upwards of $10,000, per account, per year.
That is not to say that each person who is out of compliance for not timely filing FBARs is going to get hit with these monstrous penalties – they won’t. But, what it does mean is that the IRS has the power, right, and authority to levy these excessive fines against you.
Moreover, whether you reside in the United States or overseas, and whether you have assets or accounts in the US or abroad – the IRS can still go after you.
But I Live Abroad?
Unfortunately, unless you also properly expatriated and no longer have a US tax responsibility, the mere fact that you live overseas does not limit the IRS’ power against you. Stated another way, even if you live overseas (U.S. Citizens and U.S. Persons), you are still required to file a timely FBAR. And, if you do not file a timely FBAR, you have to make sure you properly get back into compliance, before the IRS finds you.
When do I File an FBAR?
The basic threshold for having to file the annual FBAR (FinCen 114) report is when a person has more than $10,000, in annual aggregate total in foreign accounts – on any single day of the year.
It doesn’t matter if you have $50,000 in one account or 15 accounts with $800 in each of them. Once the total value of accounts that qualify for having to be identified on the FBAR exceed $10,000, on any given day of the year, you suddenly have the reporting requirement.
What is Proper FBAR Filing Compliance?
Since 2017 (in order to report 2016 values), it means that you file your FBAR timely at the time you file your tax return. Presumably, even if you filed your tax return early you would still have until April to file your FBAR. Moreover, if you received an extension of time to file your tax return, the extension of time continues to your FBAR filing requirement. So, if you were on IRS extension and had until October to file your tax return, your FBAR could be filed timely in October as well.
My Assets are Outside of the U.S.
Unfortunately, this will not protect you. The U.S. Government has entered into (IGA) Intergovernmental Agreements for the reciprocal enforcement of FATCA (Foreign Account Tax Compliance Act) with more than 110 different countries worldwide. Moreover, more than 300,000 foreign financial institutions (FFI) around the world have agreed to provide US account holder information to the IRS.
These agreements facilitate the cooperation between countries to detect offshore tax fraud and evasion (as well as mere non-reporting) and to enforce the agreements accordingly.
Therefore, just because you live in Canada, Japan, China, Taiwan or the UK, does not mean the IRS does not have the right and power to levy, lien, seize or otherwise freeze your assets overseas.
Golding & Golding, A PLC
We have successfully represented clients in more than 1000 streamlined and voluntary disclosure submissions nationwide, and in over 70-different countries.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe.