Undisclosed Overseas Bank Accounts
For the past several years, the US government has significantly increased enforcement of foreign bank and financial account enforcement and compliance. US persons who have foreign accounts and assets that meet the threshold requirements for reporting must file an FBAR form each year (technically, FinCEN Form 114). US persons who are required to file the FBAR, but fail to do so can become subject to significant fines and penalties. Penalties can reach upwards of 50% value of the unreported accounts each year — depending on whether or not the IRS determines that the filer was willful or non-willful. Golding & Golding are international tax law specialists that focus exclusively on matters involving foreign back in financial accounts and other assets for offshore disclosure. Let’s take a brief look at FBAR filing and compliance, and when you may need a Foreign Bank Account Attorney.
What is an Overseas Bank Account Lawyer?
FBAR Lawyers: An FBAR Attorney is a Lawyer who represents Taxpayers with filing FBARs when the foreign account holder needs to file late or delinquent FBARs — or has already been issued penalties. Not all filers require the services of a Lawyer. Rather, when a U.S. person has unreported foreign accounts and wants to get into compliance — they may need an FBAR Attorney to represent them before the IRS and/or in Federal Court. While any lawyer can claim to be an attorney who specializes in FBAR — there are only a handful of international tax lawyers across the globe who are Board-Certified Tax Law Specialists with advanced degrees and +20-years legal experience in tax/law that specialize exclusively in offshore account and asset compliance. In the past 10 years, the IRS has significantly increased the enforcement of offshore and foreign asset and account tax matters. When a U.S. person (including more than just individuals) has more than $10,000 in an annual aggregate total of foreign accounts on any given day of the year, they may have an FBAR filing requirement. Let’s review the basics of vetting and hiring an FBAR Lawyer.
When do you Need Legal Representation?
If the account holder has not filed the FBAR timely, they may be subject to civil penalties and possibly criminal penalties — although the latter is rare. The only time a US Person may need an FBAR Attorney is when they have not filed FBARs in one or more previous years and want to submit to one of the Voluntary Disclosure or FBAR Amnesty Programs — or they have been issued a penalty notice. When penalties are at issue, hiring an experienced FBAR Lawyer Specialist is a good investment.
We have an entire website dedicated to FBAR filing and compliance.
FBAR – What is it?
The FBAR is FinCEN Form 114. It was developed by FinCEN in 1970 but compliance is enforced by the IRS.
Who is Required to File the FBAR?
US Persons who meet the annual aggregate total threshold for filing may have an FBAR reporting requirement.
FinCEN defines a U.S. Person as:
- “United States Person. United States person means United States citizens (including minor children); United States residents; entities, including but not limited to, corporations, partnerships, or limited liability companies created or organized in the United States or under the laws of the United States; and trusts or estates formed under the laws of the United States. Note. The federal tax treatment of an entity does not determine whether the entity has an FBAR filing requirement.
FBAR Filing Threshold & Due Day
The threshold kicks in when a US Person has ownership, co-ownership, or signature authority over foreign financial accounts that total more than $10,000 in annual aggregate total on any given day of the year (not +$10,000 per account, but in total between all accounts). The FBAR is due to be filed in April, to coincide with the due date for filing a tax return. FBAR filing is on automatic extension through October — so there is no additional requirement to file a separate extension form.
What Types of Accounts are Reported on the FBAR?
All types of bank and financial accounts are included. It includes an account a US person has ownership (aka Financial Interest) or Signature Authority such as:
- Bank Accounts
- Investment Accounts
- Foreign Pension Accounts
- Life Insurance Policies
- Mutual Funds and other funds
Our FBAR Lawyers have published hundreds of articles on matters involving which foreign accounts are reportable.
What Happens if You Don’t File the FBAR Timely?
If you do not file, you may be subject to fines and penalties.
Civil penalties can be broken down further into willful penalties and non-willful penalties. Criminal penalties are also possible — but again, not very common. This is when Taxpayers should consider hiring an FBAR Lawyer.
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 (aka “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 an FBAR Quiet Disclosure situation, it may lead to willful penalties and even a criminal investigation by the IRS Special Agents. This is when the Taxpayer should consider whether hiring an FBAR Attorney may benefit them in safely getting into compliance.
FBAR Lawyers Represent Clients in Amnesty Programs
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:
Our FBAR Lawyers have represented thousands of clients in over 80 countries with Foreign Accounts Compliance matters.
FBAR Lawyer Fees
Experienced FBAR Lawyers always charge flat fees and not hourly fees for all matters before the IRS.
It avoids inexperienced counsel from puffing up your bill and charging you for nonsense services that should be bundled into a flat-fee service (tax and legal). Fees should only be determined after the Attorney has spoken in detail with the client — and not some prefabricated fee.
And, to protect the attorney-client privilege (and avoid a court rejecting Kovel), the full case (Tax and Legal) should be handled in-house. This is how experienced FBAR Lawyers charge — and it will also help you avoid the “low up-front hourly retainer bait-and-switch.“
FBAR Lawyer Specialist Team: Golding & Golding
Our FBAR attorneys have been featured in Forbes, Washington Post, and more.
Contact our firm today for assistance.