TaxConnections

 
 

Access Leading Tax Experts And Technology
In Our Global Digital Marketplace

Please enter your input in search

Email Contact Us

Archive for FBAR Filing

Mr. FBAR’s Civil Penalty – Does 31 USC 5321(a)(5) Authorize The Imposition Of ANY Civil Penalty For Failure To File An FBAR?

Mr. FBAR's Civil Penalty - Does 31 USC 5321(a)(5) Authorize The Imposition Of ANY Civil Penalty For Failure To File An FBAR?

This is Post 6 in a series of posts describing the historical, statutory and regulatory evolution of Mr. FBAR*

These posts are organized on the page “The Little Red FBAR Book“.

Mr. FBAR Visits The Supreme Court Of The United States!

But, maybe the issue is whether a civil FBAR penalty can be imposed at all instead of how much of a penalty can be imposed?

Read more

Dangers Of FBAR, Accuracy-Related Penalties, And Foreign Assets

Dangers of FBAR, Accuracy-Related Penalties, and Foreign Assets

Tax Court in Brief | Estate of Clemons v. Comm’r | Dangers of FBAR, Accuracy-Related Penalties, and Foreign Assets

Estate of Clemons v. Comm’r, T.C. Memo. 2022-95| September 16, 2022 | Buch, J. | Dkt. No. 25029-16

Opinion

Short Summary:  Brett Clemons (Clemons) was a successful computer programmer and owned various computer programming businesses.  In 2001, he opened a Swiss bank “numbered” account.  However, he hid the transfer and existence of the foreign account from his then-wife because he intended to divorce her.  When opening his foreign account, he acknowledged his U.S. tax liability in opening documents and requested that the Swiss bank account hold his mail.  After the bank account was opened, he used it to deposit significant funds and to make investments overseas.

Clemons prepared and filed his own income tax returns.  For 2003 through 2007, he did not report all of his earnings from his computer programming business, and he did not report investment gains from his investments overseas.  He also did not disclose foreign accounts on Schedule B of his returns, nor did he file FBARs each year.

Read more

FBAR (FinCEN Form 114, Formerly TD F 90-22.1), Report of Foreign Bank And Financial Accounts

FBAR (FinCEN Form 114, Formerly TD F 90-22.1), Report of Foreign Bank And Financial Accounts

The law requires each “United States person” who has a financial interest in or signature authority over any foreign financial account to file an FBAR if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year. The form required is FinCEN Form 114.

This is one that should be pretty well known by now. The obligation to file a Report of Foreign Bank and Financial Accounts (FBAR) with the US Treasury was initially imposed by the Bank Secrecy Act in 1970. Here are the Instructions to FinCEN Form 114 (FBAR). You can electronically file Form 114 for free here.

What Is a Financial Interest for the FBAR?

Read more

The Evolving Standard Of “Willfulness” In FBAR Cases: Where Are We Now?

The Evolving Standard Of “Willfulness” In FBAR Cases: Where Are We Now?

The concept of “willfulness” is an important one in the FBAR civil penalty context.  Indeed, a taxpayer’s willful failure to file a timely and accurate FBAR may result in significant penalties:  the higher of 50-percent of the unreported account balance at the time of the violation or $100,000 (adjusted for inflation).  Take this simple example:

Mark is a dual citizen of the United States and Australia.  Mark routinely travels to Australia to visit his family. In one year, Mark chooses to live and work in Australia, making $300,000 as an independent contractor.  Mark deposits the funds from his work in an Australian bank account.

When tax time comes, Mark files an income tax return reporting the $300,000 of income.  However, he fails to file an FBAR reporting the maximum account balance in the foreign account, which was $200,000.  If the IRS determines that Mark’s failure to file an FBAR was willful, the IRS may assess a $100,000 willful FBAR penalty against him.

Read more

Beware Of Your FBAR Obligations – United States V. Solomon

Beware Of Your FBAR Obligations - United States v. Solomon

Free Attendee Ticket – Freeman Law International Tax Symposium

FBARs are no laughing matter. In recent years, the Internal Revenue Service, as well as other tax agencies around the world, have stepped up their efforts with respect to international civil tax enforcement. In particular, the Internal Revenue Service oversees investigations concerning FBAR compliance and assesses and collects civil penalties for those U.S. persons who fail to report foreign accounts. The penalties are steep—now a $12,921 maximum annual penalty. However, one relevant question is whether those penalties apply per FBAR filing or per account. In a recent decision by the Southern District of Florida, the Court determined that such FBAR penalties should be applied per account.

FBARs, Generally

Read more

What Documents Do You Need For Filing An FBAR?

What Documents Do You Need For Filing An FBAR?

Most US expats need to file an FBAR (Foreign Bank Account Report) annually. The FBAR filing obligation is triggered when you have a financial interest in or signature authority over financial foreign assets with a value of $10,000 or more at any point during the year. Learn what documents you need for filing an FBAR and the filing deadlines.

Can I file FBAR myself and what documents do I need to file an FBAR?

Yes, you can prepare and file your own FBAR. In order to do so, you will need the following information:

  • Name on the account, ITIN (your SSN), and address
  • Account number of each account
  • Name and address of the foreign financial institution where the account is held
  • Type of account (Bank, Securities, Other)
  • For jointly-owned accounts, you must provide the name, address and ITIN if applicable for all joint owners of the account
  • Maximum value of the account (you can find it on your bank statement)
    Read more

IRS Gets Green Light To Seek Information From Third Parties Regarding Panama Offshore Legal Services

IRS Gets Green Light To Seek Information From Third Parties Regarding Panama Offshore Legal Services

On July 29, 2021, the United States Attorney for the Southern District of New York, the Assistant Attorney General for the Department of Justice Tax Division, and the IRS Commissioner all announced that a federal court in New York had entered an order “authorizing the IRS to issue summonses requiring multiple couriers and financial institutions to produce information about U.S. taxpayers who may have used the services of Panama Offshore Legal Services (‘POLS’) and its associates (together, the ‘POLS Group’) to evade federal income taxes.”  A copy of the news release can be found here.  Although the government’s efforts to identify additional foreign assets and accounts is not surprising, the news release does provide another cautionary tale of the government’s power and reach to identify taxpayers who hold foreign accounts and assets overseas without proper reporting and payment of federal taxes.

Background 

Read more

Federal Court Imposes Willful FBAR Penalties On Long-Time CPA

Federal Court Imposes Willful FBAR Penalties On Long-Time CPA

In a recent decision, a federal district court found that a long-time CPA/tax-return preparer recklessly failed to file FBARs to disclose several foreign financial accounts.  As avid readers of our Insights are aware, many federal courts have found that reckless reporting failures are sufficient to impose “willful” FBAR penalties—and those penalties can be quite signficant.

The case was United States v. Kronowitz.  And it is yet another reminder that courts addressing FBAR reporting failures tend to look critically at the account holder’s background, including educational and professional.  Account holders with tax-related backgrounds or professionals with substantial business experience are often held to a higher standard.

The Foreign Accounts

Read more

The FBAR For United States Citizens And Residents Is Due Today, Oct 15th – What About Business Visitors?

The FBAR For United States Citizens And Residents Is Due Today, Oct 15th - What About Business Visitors?

Update 2020 …

Prologue: Circa 1948 – George Orwell anticipates the arrival of Mr. FBAR

Read more

Report Of Foreign Bank And Financial Accounts (FBAR)

Report Of Foreign Bank And Financial Accounts (FBAR)

Every year, under the law known as the Bank Secrecy Act, you must report certain foreign financial accounts, such as bank accounts, brokerage accounts and mutual funds, to the Treasury Department and keep certain records of those accounts. You report the accounts by filing a Report of Foreign Bank and Financial Accounts (FBAR) on FinCEN Form 114.

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:

  1. a financial interest in or signature or other authority over at least one financial account located outside the United States if
  2. the aggregate value of those foreign financial accounts exceeded $10,000 at any time during the calendar year reported.

Read more

When Do You Need To File An FBAR?

When Do You Need To File An FBAR?

According to the IRS, a U.S. citizen, resident, corporation, partnership, limited liability company, trust, and estate, must file an FBAR if they meet certain criteria.  These requirements can include: if you have a financial interest in or authority over at least one foreign financial account and if the combined value of the foreign accounts exceeds $10,000 at any time during the calendar year.

When you have foreign bank accounts, there are certain situations in which seeking help from a tax attorney can be beneficial.  In addition to getting information on how to file an FBAR, a tax attorney can help you with the following:

Read more