- You currently have an FBAR filing requirement.
- You failed to file FBARs during prior years and want to disclose your non-filing.
Non-willful FBAR penalties can be up to $10,000 per violation, while willful FBAR penalties can be up to $100,000 or 50 percent of the aggregate account balance, whichever is greater.
FBAR Filing Requirements
The general FBAR filing requirement exists when you have a financial interest in or signature authority over foreign accounts exceeding $10,000 in value at any time during the year. This requirement applies to U.S. citizens, U.S residents, and other entities formed under the laws of the United States.
You can avoid penalties by filing your FBAR by April 15th. You also need to report any income earned from these foreign accounts, and you may have other reporting obligations.
If you have unfiled FBARs from a previous tax year, you have a few disclosure options. The best option will depend on several factors that you should discuss with a tax attorney.
If you properly reported your foreign-source income on your tax return, but didn’t file an FBAR, then you may be able to submit the delinquent FBARs. This is the simplest offshore disclosure method, but it isn’t appropriate in every case.
If you didn’t file FBARs or report foreign income, you can use either the Streamlined Filing Compliance Procedures or the new Offshore Disclosure Rules to correct your non-compliance. The Streamlined Procedures offer a much lower penalty structure, but should only be used when the taxpayer can certify that his or her failure to file FBARs was non-willful.
The issue of willfulness is complex and should be thoroughly discussed with your tax attorney. The Streamlined Procedures don’t require payment of FBAR penalties, but they don’t provide protection from criminal prosecution if your conduct is determined to have been willful.
The Offshore Disclosure Rules do offer immunity from criminal prosecution, but involve much higher penalties. Willful FBAR penalties can be assessed, but you may not have to pay for multiple violations if you have several years of unfiled FBARs.
Schedule a consultation with a tax attorney to discuss the best strategy for you to avoid FBAR penalties and disclose your unfiled FBARs.
Get help with FBAR and offshore disclosure matters by calling The Gartzman Law Firm at (770) 939-7710. We can listen to your concerns and help you find the best tax resolution strategy for your case.