FBAR: File to Financial Crimes Enforcement Network

Foreign accounts FBAR filing is a matter of law.

An internet search for FBAR could land you on the site of the Financial Crimes Enforcement Network. The site’s upper left corner badge conjures fear, especially if you’ve never filed an FBAR, also known by the IRS as Form 114.

Who must file an FBAR?

A United States person having a financial interest in or signature authority over foreign financial accounts must file an FBAR if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year. The FBAR filing requirement isn’t part of filing a tax return, but rather, is filed separately and directly with FinCEN.

One of the biggest fears of filing a first FBAR is that it opens the door for the IRS, the Financial Crimes unit to the Treasury Department, and the Justice Department to look at you closer. This is a valid consideration.

The reporting and filing requirements of a person who meets the definition of ‘who must file’ can’t be watered down to ‘who should file.” The statute of limitations for civil or criminal violations is generally six years, and the penalties of failure to file the FBAR can include willful and non-willful civil penalties and criminal violations.

In March 2013, the US Government Accountability Office published a Report to Congressional Requesters “OFFSHORE TAX EVASION, IRS Has Collected Billions of Dollars, but May be Missing Continued Evasion.” Interest has heightened, and if a taxpayer becomes involved in an investigation it could, among other things limit a taxpayer’s options relative to available remedies.

Bottom line

If you set up foreign accounts for the first time in 2015 and haven’t filed your FBAR (Form 114) yet, we can help you. Contact us for an appointment.

There are various ways to approach late filings, and without a solid plan of action, you not only severely limit your options, but could find yourself with a very expensive legal issue. If you think you fit the definition of ‘who must file’ but aren’t sure, we can help you. Contact us for an appointment.

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