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Tag Archive for 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?

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?

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Collins Reminds That Corrective Actions Alone Do Not Always Negate Willful FBAR Penalties

Collins Reminds That Corrective Actions Alone Do Not Always Negate Willful FBAR Penalties

As a general matter, the FBAR is not a difficult tax form to prepare, at least for most taxpayers and their tax professionals.  At its very basics, it merely asks for identifying information regarding the taxpayer and certain basic information regarding foreign accounts held outside the United States.  Thus, one would suspect that the failure to timely file this seemingly innocuous information return should not result in significant penalties.

However, tax professionals know better.  Under Title 31, a taxpayer’s willful failure to file a timely and accurate FBAR can result in penalties of up to 50% of the foreign account balances, a penalty that can be applied over multiple years. And because federal courts and the IRS view certain reckless behavior as constituting “willfulness,” the bar for willful FBAR penalties can be a seemingly low one.

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

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?

According to the FBAR instructions:

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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

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A Landscape PAINting Of The Effects Of U.S. Citizenship-Taxation On U.S. Citizens Living Outside The U.S.

A Landscape PAINting Of The Effects Of U.S. Citizenship-Taxation On U.S. Citizens Living Outside The U.S.

Introduction:

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What Happens When Taxpayers Fail To Report Foreign Sources Of Income: FBARS and Form 3520

What Happens When Taxpayers Fail To Report Foreign Sources Of Income: FBARS and Form 3520

Harrington v. Comm’r, T.C. Memo. 2021-95 | July 26, 2021 | Lauber, J. | Dkt. No. 13531-18

Short Summary:  Mr. Harrington is a U.S. citizen; his wife is a dual citizen of the United States and Germany.  Mr. Harrington sold his house after meeting Mr. John Glube, a Canadian attorney for Eastern Wood Harvesters (EHW).  He then provided these proceeds—$350,000—to Mr. Glube, who deposited that amount in a Union Bank of Switzerland (UBS) account under the name of Reed International, Ltd. (the “Reed Account”).  At trial, Mr. Harrington testified that he lent this $350,000 as part of his effort to stabilize EHW, a company in which he became an employee.  Later, EHW went under due to the European Union banning the import of North American softwood products, products that EHW sold.

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Mr. FBAR: Rule Of Law vs. Rule By Law

FBAR LAWS

Introduction: Looking For Mr. FBAR – Outside Looking In Rather Than Inside Looking Out

FBAR cases are newsworthy. For the last decade blogs and legal journals have been populated by some of the most important FBAR questions of the day.

These questions (most of which are unresolved) include:

– What does willfulness mean in the context of the failure to file an FBAR? What if an individual incorrectly answers the FBAR question on Schedule B?

– What accounts are required to be reported? Gambling accounts? Crypto currency accounts? Gift card balances?

– What does “reasonable cause” mean and when can reasonable cause apply?

– and most recently: Can the Government impose a separate penalty on each unreported account or can only one penalty be reported based on the requirement of one FBAR form?

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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

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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:

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Exercising Broad Regulatory Authority, US Treasury Has Clarified The Meaning Of “Resident” For FBAR Purposes

John Richardson On FBAR

Introduction – Looking For Mr. FBAR

What’s new?

I haven’t written a post about Mr. FBAR for quite some time. But, a post about the recent Boyd Case at Tax Connections, by Darlene Hart got me thinking about FBAR again. For those interested – where the IRS successfully argued that it was appropriate to impose penalties on each individual account – here is the case:

Those who know little about Mr. FBAR might find this introduction to FBAR – although written in 2012 – helpful. Incidentally, it’s pretty obvious that Russia’s Foreign Bank account reporting laws were based on an admiration of Treasury’s success with the FBAR rules.

The purpose of this post
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13 Reasons Why I Committed Citizide AKA Renounced My US Citizenship

JOHN RICHARDSON

Introduction

On December 5, 2019 TaxConnections published our “Open Letter To Democrats Abroad” in which we argued that “revenue neutrality” should be irrelevant in moving from “citizenship-based taxation” to “residence-based taxation”. That post attracted a large number of comments from Americans abroad expressing the difficulties living under the citzenship-based taxation regime. The bottom line is that the United States is forcing expats to renounce their U.S. citizenship. Yes, its’ true. The comments reminded me of a post that appeared on my site in 2017. Settle in for the ride as you read the “13 Reasons Why …”

Guest post by a perfectly ordinary person who renounced U.S. citizenship for perfectly ordinary reasons

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