FBAR Reporting, Compliance and Guidance from the experienced tax attorneys at Freeman Tax Law. Let us help you navigate the complex FBAR reporting requirements of the United States treasury.
FBAR stands for Foreign Bank Account Report. The United States Department of Treasury has the authority to collect information from United States persons who have financial interests in or signature authority over financial accounts maintained with financial institutions located outside of the United States. The treasury requires that a FinCEN Form 114, Report of Foreign Bank and Financial Accounts be filed if the aggregate maximum values of the foreign financial accounts exceed $10,000 at any time during the calendar year.
The FBAR is a way for the US government to identify people who are trying to avoid or evade US income tax by hiding income in offshore banks, brokerage accounts or through the use of nominee entities. It is entirely legal for US citizens and residents to own and have interest in foreign accounts. However, the failure to properly disclose those holdings, as well as the failure to include any income from those assets on an individual’s tax return can result in serious negative consequences.
The penalties for failing to file FBARs are severe. There is a minimum $10,000 penalty if your failure to file was inadvertent. However, if you are found guilty of willfully not filing a FBAR, the minimum fine is $100,000 or half the value of the account, whichever is greater. For willful failure to file FBAR or retain records of account, there are also criminal penalties (jail time) that might be imposed. Below is a summary of potential penalties:
FBAR FILING REQUIREMENTS
WHO MUST FILE FBAR
Citizens and residents of the United States must file an FBAR if that person has a financial interest in or signature authority over any financial account(s) outside of the United States and the aggregate maximum value of the account(s) exceeds $10,000 at any time during the calendar year. Entities created or organized in the USA, such as corporations, partnerships, LLC’s, Trusts and Estates are also subject to FBAR.
Financial account(s) from above, include the following:
- Bank accounts, savings accounts, and time deposits
- Mutual funds
- Insurance policies
- Commodities or Options accounts
- Brokerage and Securities Accounts
WHEN TO FILE FBAR
FBAR must be submitted by June 30th of each year. There are no extensions allowed for filing the FBAR. Obtaining an extension to file your federal income tax returns does not extend the due date for filing a FBAR. If you don’t have all the information you need to file the FBAR by June 30, you should file as complete a return as you can and later amend the FBAR when the additional or new information becomes available.
HOW TO FILE FBAR
The FBAR is not filed with your tax return. Instead, it must be separately filed with the Department of the Treasury.
Effective July 1, 2013, FBARs must be filed electronically using the E-Filing System maintained by the US Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”). This mandatory electronic filing requirement applies to all FBARs, and to amendments of previously filed FBARs that are submitted by individuals or by entities on or after the effective date. The electronic FBAR is now known as Form FinCEN 114.
To file the FBAR as an individual filer, you must personally and/or jointly own a reportable foreign financial account that requires the filing of an FBAR (FinCEN Report 114) for the reportable year. Filing is done via the internet either by use of a fillable pdf form or directly on the FinCen webpage.
EXPERIENCED FBAR ATTORNEYS
FREEMAN FBAR LAWYERS ARE HERE TO HELP.
Not sure if you are required to file FBAR returns? Worried that you may not be in compliance with all United States Treasury rules and regulations? We specialize in providing people the peace of mind that comes with knowing that all required information is being reported completely and accurately. We would be happy to confidentially review your foreign tax situation, and quickly answer any questions you may have. Please contact us today for a free consultation regarding FBAR.