The consequences of failing to file FBAR reports on time can be significant.
Do You Need Help With FBAR Filing?
DO YOU HAVE OWNERSHIP OR CONTROL OVER A FOREIGN BANK ACCOUNT OR OTHER FOREIGN ASSET?
If so, you may be required to file FBAR reports. FBAR rules help the U.S. government identify unreported income and trace illicit use of funds.
IS THE AGGREGATE VALUE OF YOUR FOREIGN ACCOUNTS GREATER THAN $10,000?
FBAR filing requirements come into play if the qualifying foreign accounts reached a combined value greater than $10,000 at any point during the tax year.
DO YOU OWN FOREIGN-ISSUED ANNUITIES OR LIFE INSURANCE WITH CASH VALUE?
Qualifying accounts include bank accounts and investments, but also extend to assets that many people may not think about, such as foreign annuities and cash-value life insurance.
If the answer to one or more of these questions is YES, contact Gordon Law Group today to schedule a confidential consultation. Call us at (312) 471-0126 or contact us online.
Experienced and Knowledgeable Help to Meet FBAR Obligations
The Bank Secrecy Act requires United States persons to file the Report of Foreign Bank and Financial Accounts (FBAR), otherwise known as FinCen Form 114, if the value of their foreign accounts and assets total more than $10,000 at any point during the calendar year. This filing requirement is often misunderstood, leading some people to assume they do not need to file reports.
The FBAR attorneys at Gordon Law Group—based in Chicago, IL—can help taxpayers understand and meet their obligations. We can make corrective filings if previous FBARs included errors, help those who missed their filing deadlines, handle FBAR audits or investigations, and more.
Understanding IRS FBAR Filing Rules
The FBAR rules may seem straightforward, but there are nuances that can create unintentional filing violations.
FBAR applies to U.S persons, including U.S. citizens, residents, trusts, estates, corporations, partnerships, and limited liability companies (LLCs). These persons must file an FBAR report if they have a financial interest in (including signature authority over) one or more financial accounts located outside the U.S. and the total value of all accounts is greater than $10,000 at any point during the tax year.
There are certain types of assets which are exempt from the FBAR calculation and reporting requirements. However, generally you must include:
- Foreign bank accounts
- Foreign investments including mutual funds, hedge funds, and brokerage accounts
- Offshore cash-value life insurance
- Offshore annuities
- Pre-paid offshore credit/debit accounts
FBAR reports must be filed by April 15 each tax year, although that due date is automatically extended to Oct. 15 if a taxpayer isn’t able to obtain the information needed to file their report by the April 15 due date.
Consequences of Failing to Follow FBAR Rules
FBAR violations—whether willful or non-willful—can come with steep penalties. In fact, when someone is found to have willfully violated the FBAR rules, consequences may include monetary penalties and up to 5 years in prison.
Civil penalties are adjusted annually for inflation. As of July 2021, non-willful transaction violations can result in up to $12,921 in civil fines for each year that you failed to meet your filing requirement, filed inaccurate reports, or omitted one or more foreign accounts.
FBAR and FACTA
Filing IRS Form 8938, which is required under FACTA reporting rules, does not negate the need to make FBAR filings. While there are some similarities between FBAR and FACTA reporting rules, there are also some key differences, including the type of information that must be reported as well as filing deadlines.
Working with an experienced FBAR and tax attorney can help ensure you stay on top of all your filing and reporting obligations.
Help Is Available for FBAR and FBAR Streamlined Filings
Gordon Law Group’s FBAR attorneys are committed to helping U.S. persons meet their reporting and filing requirements. Whether you are currently living in the United States or abroad, we can help. We will work closely with you to help you get in compliance with the rules and to mitigate or avoid worst-case scenarios, including criminal investigations and civil penalties.
Working with a tax attorney rather than simply hiring a CPA also means you can benefit from attorney-client privilege. If you need help with an FBAR compliance issue or investigation, want assistance meeting your filing obligations, or simply want guidance to better understand the rules, Gordon Law Group’s experienced tax professionals can help. Contact us today.