An FBAR is not a Test.
You do not need a perfect score in order to complete the form correctly. Rather, it is important that you complete the form, to the best of your knowledge, timely and properly.
What is an FBAR?
An FBAR statement is a Report of Foreign Bank and Financial Accounts form. It is electronically filed annually with the Department of the Treasury online. Before this year (2016) the form had to be filed no later than June 30th of the current tax year in order to report the accounts for the prior tax year (File in 2015 to report the 2014 Maximum Account Balances). The law is changing in 2016 which will be applicable in 2017, and will have an April 15th, 2017 due date.
What is Included in an FBAR?
An FBAR is required to be filed when a person or business (explained below) has an annual aggregate total of foreign accounts that exceeds $10,000 on any day throughout the year. It does not matter if all that money is in one account or if a person had 11 accounts with $1000.00 in each account. Once your overseas foreign accounts exceed $10,000, it is now time to report all of the foreign accounts.
You are required to report the maximum balance throughout the year. If you do not have the maximum balance available, you can mark the box that notes the Max balance is unavailable — or alternatively you can use the best value have and then note that on the FBAR.
What if I Cannot Obtain all the FBAR Information?
This is perfectly normal.
For example, if you only have signature authority over a foreign account, the owner of the account may not even want to provide you any information you would need to complete the FBAR entry in its entirety – that does not mean the IRS is going to penalize you on your failure to know information regarding accounts in which the money is not yours. Why? Because the IRS does not penalize you on money that does not belong to you.
Another typical example is when a person may have a joint account with a family member in a country in which they do not provide monthly bank statements. For example, in many countries the owner of the account will receive a passbook which is used to update the account – but only when the owner of the account requests that the book be updated.
With that said, if the account owners has not updated the account for many years, it does not mean that the individual with mere signature authority is going to be penalized.
Golding & Golding: About Our International Tax Law Firm
Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.
Each case is led by a Board-Certified Tax Law Specialist with 20 years of experience, and the entire matter (tax and legal) is handled by our team, in-house.
*Please beware of copycat tax and law firms misleading the public about their credentials and experience.