Do Non-Residents File an FBAR to Report Foreign Accounts?

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Do Foreigners Have to File the U.S. FBAR Each Year?

Do Foreigners Have to File the U.S. FBAR Each Year?

Do Foreigners File the U.S. FBAR Each Year?

The FBAR refers to FinCEN Form 114, which is an electronic form that is used to report foreign bank and financial accounts to the U.S. Government. When a U.S Person has ownership or interest in (or signature authority over) foreign bank and financial accounts — which in annual aggregate total exceeds more than $10,000 on any day of the year — they may have to file an FBAR to report the accounts — in addition to having to file their U.S. tax return. In general, the FBAR form is not overly complicated, and for taxpayers who are already in compliance the form is manageable — unlike other international reporting forms such as Form 5471 or 8621 that can become much more complicated to prepare. One of the most critical preliminary questions we receive about filing the FBAR is whether non-U.S.-born persons are required to even file the FBAR.

Non-U.S. Person with Foreign Accounts (6013(g))

The first thing to remember is that the FBAR filing is required by U.S. persons. Therefore, if a foreign national (who is not a U.S. person) has foreign accounts, then they are not required to report this on the FBAR unless they become a U.S. person. It is also important to note that if a taxpayer makes a 6013(g) election to be treated as a U.S. person for tax purposes — this does not necessarily mean that they are a U.S. person for FBAR reporting purposes.

Foreign Born U.S. Person

An individual does not need be born in the United States to have to file an  FBAR. Rather, the person must be a U.S. person for tax purposes. This typically means that the taxpayer is a U.S. citizen, lawful permanent resident, or foreign national who meets the substantial presence test. Especially for taxpayers who are U.S. persons because they meet this substantial presence test, they only file the FBAR when their tax status deems them a U.S. person. Conversely, since U.S. citizens are always U.S. persons unless they expatriate, U.S. citizens are generally considered U.S. persons for FBAR filing purposes.

Accidental Americans

Taxpayers who are ‘Accidental Americans’ but are U.S. citizens are still required to file the FBAR even if they were born overseas and even if they have lived overseas their entire lives. In other words, the FBAR filing requirement is not (generally) based on where the U.S. citizen taxpayer resides but rather if the taxpayer is considered a U.S. person for tax purposes. It is important to note, that there was a recent case in which a Green Card Holder taxpayer was successful in showing that since they qualified for a treaty election to be treated as a non-resident alien under the U.S./Mexican tax treaty that they should not have been issued non willful FBAR penalties because they were not required to file FBAR in the first place. Presumably, the IRS will still challenge taxpayers who take this position, but it is important for taxpayers who make this type of treaty election to be aware of it.

Late Filing Penalties May be Reduced or Avoided

For Taxpayers who did not timely file their FBAR and/or other international information-related reporting forms, the IRS has developed many different offshore amnesty programs to assist Taxpayers with safely getting into compliance. These programs may reduce or even eliminate international reporting penalties.

Current Year vs. Prior Year Non-Compliance

Once a Taxpayer missed the tax and reporting (such as FBAR and FATCA) requirements for prior years, they will want to be careful before submitting their information to the IRS in the current year. That is because they may risk making a quiet disclosure if they just begin filing forward in the current year and/or mass filing previous year forms without doing so under one of the approved IRS offshore submission procedures. Before filing prior untimely foreign reporting forms, Taxpayers should consider speaking with a Board-Certified Tax Law Specialist who specializes exclusively in these types of offshore disclosure matters.

Avoid False Offshore Disclosure Submissions (Willful vs Non-Willful)

In recent years, the IRS has increased the level of scrutiny for certain streamlined procedure submissions. When a person is non-willful, they have an excellent chance of making a successful submission to Streamlined Procedures. If they are willful, they would submit to the IRS Voluntary Disclosure Program instead. But, if a willful Taxpayer submits an intentionally false narrative under the Streamlined Procedures (and gets caught), they may become subject to significant fines and penalties. 

Need Help Finding an Experienced Offshore Tax Attorney?

When it comes to hiring an experienced international tax attorney to represent you for unreported foreign and offshore account reporting, it can become overwhelming for Taxpayers trying to trek through all the false information and nonsense they will find in their online research. There are only a handful of attorneys worldwide who are Board-Certified Tax Specialists and who specialize exclusively in offshore disclosure and international tax amnesty reporting. 

*This resource may help Taxpayers seeking to hire offshore tax counsel: How to Hire an Offshore Disclosure Lawyer.

Golding & Golding: About Our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, specifically IRS offshore disclosure. 

Contact our firm today for assistance.

osure Submissions (Willful vs Non-Willful)

In recent years, the IRS has increased the level of scrutiny for certain streamlined procedure submissions. When a person is non-willful, they have an excellent chance of making a successful submission to Streamlined Procedures. If they are willful, they would submit to the IRS Voluntary Disclosure Program instead. But, if a willful Taxpayer submits an intentionally false narrative under the Streamlined Procedures (and gets caught), they may become subject to significant fines and penalties. 

Need Help Finding an Experienced Offshore Tax Attorney?

When it comes to hiring an experienced international tax attorney to represent you for unreported foreign and offshore account reporting, it can become overwhelming for Taxpayers trying to trek through all the false information and nonsense they will find in their online research. There are only a handful of attorneys worldwide who are Board-Certified Tax Specialists and who specialize exclusively in offshore disclosure and international tax amnesty reporting. 

 
*This resource may help Taxpayers seeking to hire offshore tax counsel: How to Hire an Offshore Disclosure Lawyer.

Golding & Golding: About Our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, specifically IRS offshore disclosure. 

 
Contact our firm today for assistance.