Foreign Accounts? Know Your Taxpayer Obligations

by | May 15, 2018 | Cracking the Tax Code with Christy | 0 comments

Foreign Bank Account Report, or more commonly known as FBAR, originally started as part of the Bank of Secrecy Act in 1970. It was designed to strongly discourage and help prevent tax evasion. But what is FBAR, exactly, and what does it mean for you? FBAR is a federally required tax return that is filed electronica through the Financial Crimes Enforcement Network, also known as FinCEN. The FBAR is a tool that is used by investigators from the Department of Treasury, as well as the IRS, to determine who might be engaged in illicit money laundering and to help pinpoint foreign-sourced income that has gone unreported.

What does this all mean? It’s actually very simple. If you have any form of interest financially in, or even the simple signatory authority of any foreign financial account overseas-bank accounts, mutual funds, brokerage accounts, and trusts- you are REQUIRED by law to report each of those accounts by April 17 of each year to the Department of Treasury. You will also be required to file a Financial Crimes Report (FinCEN), Form 114, as well.  If you live abroad, if you are a US citizen, or a green card holder, and you have one financial account or multiple in other countries, with total assets equaling $10,000 or more at any given point throughout a calendar year, you must file an FBAR report.

If you fail to file an FBAR, severe penalties can follow. This could mean that a civil penalty of $10,000 could be issued to you as a fine of non-willful violation. However, if you are found guilty of willful violation, you can be fined up to $100,000 or 50% of the amount in each account, for each violation. While the filing date for FBAR was April 17 for 2018, if you did not file, you are granted an automatic extension until October 18, 2018.

If you find yourself in a bind due to FBAR laws, whether  it be needing help navigating the proper forms to file and claim your accounts, or to represent you in dealings with the IRS, contact the Law Offices of Christy Lee, P.C. today!