WHAT HAPPENS IF YOU DON'T FILE FBAR?
The Foreign Bank Account Report (FBAR) is an acronym for FBAR. For citizens and residents of the United States who have financial accounts outside the United States, this is a mandatory reporting requirement.
When it comes to the Bank Secrecy Act, also known as the FBAR, you are required to report and maintain records of certain foreign financial accounts such as bank, brokerage, and mutual funds to the Treasury Department every year. A FinCEN Form 114 (Report of Foreign Bank and Financial Accounts) must be filed to report the accounts.
Who Must File ?
A United States person, including a citizen, resident, corporation, partnership, limited liability company, trust and estate, must file an FBAR to report:
- Any American with one or more foreign financial (such as bank, brokerage or pension) accounts that have an total balance of over $10,000 in them at any time during the tax year, or
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Anyone with control over such an account or accounts (for example as a signatory), is required to file an FBAR. FinCEN Form 114 should be filed each year that a person qualifies.
that the $10,000 minimum is per person, not per account, so someone with ten offshore financial accounts each containing $1,001 dollars at the same time at any time in a year would exceed the threshold and so have to report all of their foreign accounts on an FBAR.
Generally, an account at a financial institution located outside the United States is a foreign financial account. Whether the account produced taxable income has no effect on whether the account is a “foreign financial account” for FBAR purposes.
But, you don’t need to report foreign financial accounts that are:
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Correspondent/Nostro accounts,
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Owned by a governmental entity,
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Owned by an international financial institution,
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Maintained on a United States military banking facility,
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Held in an individual retirement account (IRA) you own or are beneficiary of,
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Held in a retirement plan of which you’re a participant or beneficiary, or
- Part of a trust of which you’re a beneficiary, if a U.S. person (trust, trustee of the trust or agent of the trust) files an FBAR reporting these accounts.
You don’t need to file an FBAR for the calendar year if:
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All your foreign financial accounts are reported on a consolidated FBAR.
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All your foreign financial accounts are jointly-owned with your spouse and:
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You completed and signed FinCEN Form 114a authorizing your spouse to file on your behalf, and your spouse reports the jointly-owned accounts on a timely-filed, signed FBAR.
How to File
The FBAR is an annual report that is due on April 15 following the calendar year reported.
You’re allowed an automatic extension to October 15 if you fail to meet the FBAR annual due date of April 15. You don’t need to request an extension to file the FBAR.
If you are affected by a natural disaster, the government may further extend your FBAR due date.
How to File
You must file the FBAR electronically through the Financial Crimes Enforcement Network’s BSA E-Filing System. You don’t file the FBAR with your federal tax return.
As FBAR operated by the Financial Crimes Enforcement Network (FinCEN), which is part of the US Department of Treasury, you need to file FBAR and your tax separately.
Filing the FBAR is different from filing your Federal Tax Return. The FBAR is filed separately to the Department of the Treasury–not the IRS.
To file the FBAR, you’ll use FinCEN 114 and submit it electronically through the BSA e-filing site.
We Expedo Tax a certified tax prepare will help you in understanding and filing your FBAR. Please click the link to register and file with us.
For filing we need below information
You must keep records for each account you must report on an FBAR that establish:
- Name on the account,
- Account number,
- Name and address of the foreign bank,
- Type of account, and
- Maximum value during the year.
As FBARs are filed to FinCEN rather than to the IRS, penalties for not filing FBARs are more stringent than those for not filing tax returns. There are several levels of penalties, depending on whether the IRS (which has the delegated authority to enforce FBAR violations) considers that failure to file was wilful or non-wilful.
The lowest level penalty for non-wilful failure to file is $10,000 for each year that an FBAR wasn’t filed. If the IRS deems that failure to file was wilful on the other hand, the penalty is $100,000 or 50% of the balance of the account at the time of the violation. A possible prison sentence may also apply. The penalties are the same for knowingly and wilfully filing a false FBAR
For those whose lack of filing was non-wilful (meaning you didn’t know about your reporting obligation), the fine can be $12,921 per violation.
If it is determined that you purposely avoided filing, the fine can be $129,210 or 50% of the balance of the account at the time of the violation – whichever is greater
As you can see, penalties can add up quickly if you are years behind in your FBAR filing!
A Solution to Missing Filing the FBAR
First, don’t panic! Millions of Americans have FBAR forms that are past-due, and the IRS has created two amnesty programs to help you get caught up. The program most helpful to expats is the Streamlined Filing Procedures. This program is available to US citizens living both in the US and abroad, and all who have failed to file due to a lack of knowledge of their obligations are eligible.
If you found out that you were supposed to file the FBAR but didn’t – there is a solution for you. You can take advantage of the Streamlined Filing Procedure process, which can help you get back on track and become tax compliant with the IRS. This particular tax amnesty program helps Americans abroad make up for missed years of back taxes and prevent nasty penalties to accumulate, as long as you were innocently unaware of your filing requirements, of course.
We at Expedo Tax– with our expert tax adviser – help many expats every day with the FBAR and Streamlined Procedure. There is a voluntary disclosure program for Americans living abroad called the Streamlined Procedure that allows people who weren’t aware of their filing obligations to catch up with their filing (for both tax returns and FBARs) and pay any back taxes owed without facing penalties. You simply need to file your last three returns and your last six FBARs, and self-certify that your prior non-compliance was non-wilful.
The Streamlined Procedure provides a great opportunity for the millions of expats who aren’t up to date with their filing to get compliant before the IRS come to them.
There is another amnesty program for expat who have been filing their US taxes for abroad, but not FBARs, called the Delinquent FBAR Submissions Procedures.
If you have any doubts about your situation, or you would like to find out more about the Streamlined Procedure or the Delinquent FBAR program, get in touch and we’ll be happy to provide you advice based on your unique circumstances.
To file under this program, you will file the last three years of Federal Tax Returns if you haven’t already done so, as well as the last six years of FBARs. FBAR reporting will be done electronically, just as it would if you filed on time, with special notation confirming your participation in the program.
Getting caught up is extremely important if you are behind in your FBAR filings. While there are no penalties when filing under the Streamlined Procedures, if the IRS finds out before you come forward, you will be ineligible for this program and subject to the maximum penalties.
Need Help Filing Your FBAR?
Our expert tax team and IRS Enrolled Agents have helped hundreds of expats successfully file their FBAR. Our reliable Foreign Bank Account Reporting service gives you peace of mind that your FBAR filing will be 100% complete and accurate. Let us help you take care of your FBAR filing obligations hassle-free! Get started today.
or more information refer :
https://www.irs.gov/individuals/individual-taxpayer-identification-number
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