As FBAR Deadline Looms, IRS and Treasury Threaten Penalties
American taxpayers with overseas accounts are required to report these accounts through the use of the Report of Foreign Bank and Financial Accounts form (FBAR). Failures to file this report with the Treasury’s Financial Crimes Enforcement Network (FinCEN) are not uncommon. Failures can stem from a lack of awareness of the requirement or simple confusion. The tax law responsible for this requirement is complex and some level of confusion is understandable.
A basic understanding of these requirements can help to ease some of the confusion that comes with required compliance.
Who needs to file an FBAR? The Internal Revenue Service (IRS) explains that American taxpayers who meet these two factors are generally required to file an FBAR:
- Signature or actual authority over an account outside of the United States
- Value of said account exceeds $10,000
This includes those who are citizens and residents as well as entities like businesses and corporations. The FBAR is due on April 15. In some cases, an extension is granted until October 15.
What if I do not file? Those who are required to file and fail to do so can face serious penalties. Monetary fines are steep and can include a $100,000 penalty or 50 percent of the funds within the account at issue.
Depending on the details of the allegations, a failure to file can also lead to criminal charges.
What if I need to come into compliance with tax reporting requirements for foreign assets? Those who wish to come into compliance with current tax law are wise to do so carefully. Various compliance options are available, including the voluntary disclosure program.
Determining the best option depends on the details of your unique situation. Contact an attorney to review these details and provide legal guidance.
