FBAR Reporting: The reporting rules for FBAR continue to evolve, and are becoming more complex than ever. The IRS requirs the FBAR to be filed by U.S. persons who have ownership or signature authority over foreign accounts — and who meet the threshold for reporting. FBAR reporting includes more than just bank accounts. It also includes offshore stock accounts, investment accounts, and assets — as well as foreign life insurance policies. When a person does not properly report the FBAR, they may be subject to FBAR Penalties. The Internal Revenue Service has taken an aggressive position with enforcing foreign accounts compliance. The civil penalties are either willful vs. non-willful, but the IRS can also pursue criminal FBAR penalties. While this is not common, FBAR convictions can happen. If you are out of FBAR compliance, the Internal Revenue Service has developed various FBAR Amnesty programs, collectively referred to as Offshore Voluntary Disclosure.
What is Reported on the FBAR?
The FBAR form is technically referred to as FinCEN Form 114.
The IRS is reported by U.S. persons with offshore accounts, assets and investments (aka Foreign Bank and Financial Accounts) report the accounts each year electronically on the FinCEN website, which is the BSA e-filing system. Not all foreign bank and financial accounts are reportable. Some common reported “accounts,” include:
- Checking and savings accounts
- Investment accounts
- Stock accounts
- Mutual Funds and ETFs
- Life Insurance Policies
- Pension and retirement accounts
Is Preparing the FBAR, Hard?
Proper FBAR preparation and execution can be deceivingly complex.
And, while preparing the FBAR is not always complex, FBAR rules, deadlines and penalties can be rough — especially since foreign and offshore reporting is a key IRS enforcement priority.
Golding & Golding has also prepared a 10-Step FBAR Filing Guide, to help you in your quest.
How is the FBAR Reported?
The FBAR was introduced in 1970.
The IRS took over enforcement in 2003.
Since 2013, the FBAR is filed electronically.
So, while the FBAR is filed with FinCEN, it is enforced by the IRS.
Individual account holders can file the FBAR directly on Financial Crimes Enforcement Network’s (FinCEN) BSA E-Filing System.
Even though the form is due at the same time your tax return is filed, the form is no longer filed with your tax return.
*You can apply for an exemption if you want to still file by “paper.”
When is the FBAR Due Date
The FBAR Due Date is April 15th but coincides with filing your tax returns.
It (currently) is on automatic extension to October.
Filing Late FBARs
The real way the IRS can get you for FBAR filing, is filing a late FBAR outside the accepted amnesty procedures.
Filing a late FBAR outside of the offshore disclosure programs is typically considered a Quiet Disclosure and can land you in some real trouble with the U.S. Government.
If you happen to have zero unreported income (that means zero unreported income from abroad and not zero tax liability) you may be able to qualify for the delinquency procedures, which results in a penalty waiver and a relatively simple submission procedure.
If you have any unreported income, you can still make a reasonable cause submission but it is different. Most individuals prefer to enter one of the approved programs such as streamlined filing compliance procedures or traditional OVDP — you may have multiple options available to you.
Depending on which program you qualify for, and/or which program you prefer to enter, you may qualify for reduced penalty for even a penalty waiver.
We do not recommend making any submission to the Internal Revenue Service regarding any foreign or offshore accounts without at least speaking with an experienced offshore disclosure lawyer first to evaluate and assess your facts.
FBAR Reporting & Non-Compliance with U.S. Tax Law
Whether it is because you did not you had to report foreign accounts, thought you were below the threshold for filing, did not realize non-bank accounts were required to be reported, and/or have other unreported income, accounts, investments or assets – we can help.
Golding & Golding: About Our International Tax Law Firm
Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure and FBAR reporting.
Contact our firm today for assistance with getting compliant.