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FBAR FAQs: Common Questions and Answers about FBAR Reporting

For years, the FBAR reporting has been a major concern for many US tax payers with offshore financial accounts. When faced with the complexities of the US tax code, lots of them wonder “Should I hire a tax attorney serving the area near me to help me with my FBAR filing?”

Rest assured that a highly respected and experienced FBAR lawyer in or near NJ could help you get into IRS compliance and avoid civil examination, criminal investigation or penalties you are exposed to if you neglect your FBAR obligations.

In case you were uninformed about your reporting responsibilities, here are the facts you should know about disclosing your foreign accounts and assets.

What is an FBAR statement?

An FBAR statement is The Report of Foreign Bank and Financial Accounts, called FBAR or Foreign Bank Account Report. It should be filed every year with the Department of Treasury online. The FBAR requirement was created to help the government fight money laundering, financial fraud and concealment of overseas transactions.

Who must file an FBAR?

All US citizens and resident aliens need to report and pay tax on their global income, regardless of whether it comes from a US or international source. This includes reporting foreign pension funds and life insurance policies issued abroad. The rule applies to both individuals and businesses.

Anyone who has a financial interest in or a signature authority over an overseas financial account is taxed on the account(s) in case the total value of these accounts is at least $10,000 (or its foreign equivalent). You are subject to taxation not only if you have this amount of money in your account(s); you also need to report any non-monetary assets of the stated value.

What about the exceptions to the FBAR Reporting Requirements?

There are filing exceptions for the following individuals or offshore financial accounts: overseas accounts jointly owned by spouses, international financial accounts owned by a governmental entity, beneficiaries of tax-qualified retirement plans or participants in such plans, US persons included in a consolidated FBAR, particular individuals who have signature authority over a foreign account yet don’t have financial interest in it, etc.

To gain deeper insight into these exceptions, get in touch with a knowledgeable tax attorney serving NJ or area near you to help determine whether you have an FBAR filing requirement.

How exactly can I submit my FBAR?

The FBAR 114 Form is filed electronically directly with The Department of Treasury through the BSA E-Filing System. To report offshore financial accounts and assets, you have to either complete and submit the form online or download the form (PDF) and upload it when you enter the required data.

Filers who are to file the FBAR as individuals can submit their report without signing up, while lawyers, CPAs and enlisted agents need to register first to be able to submit the FBAR as an institution. You can find all the details about the process on The Internal Revenue Service website.

When is the deadline for the FBAR reporting?

Just like the tax return filing, since 2017, the Foreign Bank Account Report has to be filed by April 15. The due date for US expats is the same as for the expat tax filing – June 15. Although the dates coincide, the FBAR is not filed with a federal tax return.

The IRS has authorized an automatic six-month extension of time to file. Therefore, regardless of whether you live abroad or in the US, if you fail to report your offshore income and assets on time, you can still file the FBAR by October 15. The extension only refers to the FBAR reporting and not on the federal tax return filing.

What happens if I forget to submit and report my past FBARs?

If you decide to just submit all your late FBARs at once, you will be breaking the law. This action is illegal and it’s known as a quiet or silent disclosure. The IRS can start a criminal investigation and prosecution, as well as impose a 100 percent fine.

One option you may consider if you are not under examination or investigation and the IRS still hasn’t contacted you is to provide an explanation for the delay while filling out the online form. Another way to voluntarily disclose offshore assets or income you didn’t know you had to report is to go through the OVDP (which remains open only by September 28, 2018) or the Streamlined Filing Compliance Procedures (continue to be open for the time being). A knowledgeable attorney in/near NJ will help you reach a decision and find the optimal solution to report your overseas financial account(s).

Are the FBAR fines extreme?

Criminal penalties are extremely severe. They can include a fine of up to $250,000 and/or jail time of up to 5 years. In case the IRS determines the violation was non-willful, you can face a penalty of up to $100,000 or 50 percent of the balance in your offshore account at the time of the violation. If the IRS defines your violation as willful, the penalty will be milder: it can go up to $10,000. The penalty for both willful and non-willful violation can be imposed for every unreported account and every year the account was undisclosed.

Can an FBAR lawyer near the area I live assist me?

If you have neglected your responsibilities, with charges this extreme, it is strongly recommended that you talk with an attorney. If you are a NJ resident, you can meet with our skilled international tax attorney to discuss your case. If you are outside of NJ, we provide 1-hour consultation via phone or skype that is free of charge. It’s essential that you have a well versed attorney who can assist you in minimizing your tax penalty and liability and, if possible, prevent criminal prosecution.