Who Should File an FBAR (An Introduction)

WHO SHOULD FILE FBAR (FinCEN Form 114)

Technically, “US persons” are required to file an annual FBAR in a year that the annual aggregate total of their foreign accounts exceeds the threshold for filing. It is important to note, that it is not a per-account threshold, but rather a threshold based on the aggregate total of all accounts. Therefore, if a taxpayer has 12 small accounts that when combined exceed the threshold value for filing, then they are required to file the form to report all the accounts. In addition, it is not limited to individuals but includes various entities as well. As provided in the recently updated publication by the IRS (Publication 5569):

“A “U.S. person” means:

• A

citizen or resident of the United States;

• An entity created, organized, or formed in the United States or under the laws of the United States, any State, the District of Columbia, the Territories and Insular Possessions of the United States, or the Indian Tribes. An “entity” includes but is not limited to, a corporation, partnership, trust, and limited liability company; or

• An estate formed under the laws of the United States.”

WHAT IF YOU DO NOT REPORT THE FBAR TIMELY?

If the Taxpayer does not timely file the FBAR to report their foreign bank and financial accounts (or does not substantially comply), then they may become subject to fines and penalties. Out of all the different international information reporting noncompliance penalties, those involving the FBAR are some of the worst. Even in a non-willful situation, the US government can try to get penalties upwards of $10,000 per account, per year—up to a total value of 50%. If the taxpayer is willful, then the IRS can go after annual penalties based on 50% maximum value of the unreported accounts, per year – up to a CAP.


WORRIED ABOUT INTERNATIONAL TAX COMPLIANCE?

If you missed overseas account, asset, and income reporting in prior years, take a deep breath -- it is not as bad as some online scare-mongers want you to believe.

One important recommendation is to not take the quiet disclosure route (submitting to the IRS outside of the amnesty procedures). That is because if you get caught in a silent or quiet disclosure, it may lead to extensive fines and penalties. Instead, if you are inclined to get into compliance, consider one of the offshore voluntary tax amnesty programs listed below:

• Streamlined Domestic Offshore Procedures
• Streamlined Foreign Offshore Procedures
• Voluntary Disclosure Program
• Reasonable Cause
• DIIRSP (Modified on 11/2020)
• DFSP

SPEAK WITH EXPERIENCED COUNSEL

If you are out of compliance, you should speak with an experienced Attorney before making any affirmative representations or statements to the IRS.

IRS Voluntary Disclosure law is a specialty. In IRS offshore disclosure, experienced tax attorneys will have 20+ years of attorney experience, practice exclusively in International Tax Law, have earned a Board-Certification -- and advanced credentials such as an LL.M. and dual licenses in tax and law.

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ABOUT THE AUTHOR: Golding & Golding
Our Managing Partner, Sean M. Golding, is a 20+year Attorney and Board-Certified Tax Law Specialist (a distinction earned by less than 1% of attorneys nationwide). His team specializes exclusively in IRS Offshore & Voluntary Disclosure matters. They have assisted thousands of clients nationwide and across the globe.

Copyright Golding & Golding, Attorneys at Law



Disclaimer: Every effort has been made to ensure the accuracy of this publication at the time it was written. It is not intended to provide legal advice or suggest a guaranteed outcome as individual situations will differ and the law may have changed since publication. Readers considering legal action should consult with an experienced lawyer to understand current laws and.how they may affect a case. For specific technical or legal advice on the information provided and related topics, please contact the author.