Foreign Bank Account Reports (FBAR) – Filing & Representation
The U.S. Congress passed the Foreign Account Tax Compliance Act in 2010 and the Internal Revenue Service (IRS) increased the disclosures required for offshore assets, increasing tax revenues and curtailing offshore tax evasion. With the increased attention and reporting obligations, it is important to ensure that you are in compliance. At Allied Tax Advisory Group, our CPA’s, Enrolled Agent’s and Former IRS Agent has the skills to assist you with international tax reporting.
FBAR – Report of Foreign Bank and Financial Accounts
The FBAR is a tool used by the United States government to identify the persons who may be using foreign financial accounts to bypass United States Law. This tool is required because foreign financial institutions may not be subject to the same reporting requirements as US financial institutions. This tool, therefore, helps investigators to identify or trace funds for illicit purposes or to identify any unreported income maintained or generated overseas.
Since introducing the FBAR program, the Federal government has collected over $4.4 billion. Taxpayers should be aware that this is not to be taken lightly and the IRS is dedicating even more tax dollars because of the large stream of revenue this has generated.
Who Has to File an FBAR?
Unfortunately, there is a bit of a gray area when it comes to who and what needs to be reported on an FBAR. If you have any financial interest or signature authority over a foreign financial account, the Bank Secrecy Act may require you to report the account yearly to the Internal Revenue Service by filing Form TD F 90-22.1. This Report of Foreign Bank and Financial Accounts (FBAR) includes any bank account, brokerage account, mutual fund, trust, or any other type of foreign financial account.
To file this foreign report you must file a FinCEN Form 114 ( Financial Crimes Enforcement Network). Anyone with $10,000 in one or more foreign financial accounts must file Form TD F 90-22.1 (FBAR Form). There are no extensions available for the FBAR, therefore all forms must be received before June 30th.
Reporting and Filing – Important Information
Individuals who hold a foreign financial account may have a reporting obligation even though the account produces no income.
Please keep in mind, the FBAR is not filed with the filer’s Federal Income Tax Return. The granting of an extension by the IRS for a Federal Income Tax Return does not extend the due date for filing an FBAR. You may not request an extension for filing the FBAR and must file before June 30th of the tax year.
FBAR Penalties & Procedures
There are civil penalties delegated by the IRS for negligence, non-willful and willful violations. IRS penalties differ from case to case and are asserted only to promote the compliance with FBAR reporting and record keeping.
Since the FBAR penalties do not have a set amount, IRS has developed penalty mitigation guidelines to assist examiners. These guidelines are intended as an aid for determining the appropriate penalty amount.
For each person required to file the FBAR penalties are determined per account, not per unfiled FBAR. Therefore it is quite important who you choose to represent you in FBAR compliance.
FBAR Tax Representation and Relief
The tax experts at Allied Tax Advisory Group give our clients options when understanding their obligation to the government concerning foreign properties. We have dealt with a multitude of circumstances from clients and as many of our satisfied clients can confirm, we believe to have perfected the complexities of government compliance.
If you haven’t filed or reported your foreign activity, contact us immediately for tax assistance and relief.