Get an FBAR to FinCEN, ASAP, to stay clear of the IRS
Unless you are a tax attorney, that might just be so much alphabet soup. But in an increasingly globalized society, where money moves more fluidly across borders and even everyday investors can place cash around the world, it might be necessary to understand those acronyms and take appropriate action.
FBAR represents a Report of Foreign Bank and Financial Accounts. It’s a report U.S. citizens file annually to the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) under the following circumstances:
- A person has “financial interest in or signature authority over” at least one foreign financial account, and
- The total value of all such accounts exceeded $10,000 at any point during the year.
The requirement was established in the Bank Secrecy Act, passed in 1970 to help combat money laundering and tax evasion. Multiple FBAR violations are included in February 2018 indictments filed by Special Prosecutor Robert Mueller against Paul Manafort and Rick Gates as part of his federal investigation. Manafort faces four counts of failing to file an FBAR and Gates three. (Mueller later moved to dismiss the charges against Gates).
Penalties for Failing to File FBAR
Penalties for failing to complete this form can be steep. The Internal Revenue Service (IRS) can levy fines up to $12,459 for non-willful violations. Purposeful refusal to file the form can multiply the penalty 10 times, to “the greater of $124,588 or 50 percent of the balance in the account at the time of the violation, for each violation.”
Clearly, one doesn’t want to miss the filing deadline — a deadline that changed beginning in 2017. Previously the due date was June 30. But the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 moved the date up until April 15, to coincide with the deadline for filing federal taxes.
Even that date is a bit misleading, however. There is an automatic six-month extension built in, no request required, moving the effective due date to Oct. 15. FBAR reporting — the primary document is called FinCEN 114 — is not submitted with the federal tax return, despite the concurrent deadline.
In addition to the FinCEN 114, taxpayers could be required to file IRS Form 8938 with their federal return. This does not replace FinCEN 114, though taxpayers may file one or the other, or both. The IRS provides a prodigious chart comparing the requirements.
Contact an Experienced Atlanta Tax Law Firm
With such complexity around these reporting requirements, and the significant consequences of getting them wrong, it makes sense to rely on the experienced Atlanta tax attorneys at The Gartzman Law Firm. Gartzman Law Firm attorneys can help determine which form you must file, establish whether you meet any of a series of exceptions from filing, and then file the appropriate forms on your behalf. Contact us today.