Foreign Bank Account Reports (FBARs) are due April 15 each year, at the same time as your annual tax return. A non-willful failure to file an FBAR may result in a $10,000 penalty, with much higher penalties for willful violations.
FBAR Filing Extensions
If you miss the deadline to file your FBAR, you will receive an automatic six-month extension. You don’t need to request this filing extension.
You may need to file an FBAR even if your foreign financial account did not produce any income. FBAR filing requirements are based on the aggregate value of your foreign accounts.
FBAR Filing Obligations
If you had a financial interest in or signature authority over foreign accounts that exceeded $10,000 in value at any time during the year, you need to file an FBAR. There are some exceptions to this rule, but discuss them with a tax attorney to make sure you don’t have a filing requirement.
FBARs must be filed electronically through FinCEN’s e-filing system. You don’t file this form with your tax return.
However, you should also properly report all income from foreign accounts on your tax returns. If you fail to do so, you may need to amend your returns.
You have a few options if you have unfiled FBARs:
- Submit your delinquent FBARs using quiet disclosure.
- Use the Streamlined Filing Compliance Procedures to submit delinquent FBARs and amend your tax returns to include foreign income.
- Use the new Offshore Disclosure Rules to submit delinquent FBARs and amend up to six years of tax returns.
Your best option will depend on your circumstances. Each approach has its costs and benefits.
The Offshore Disclosure Rules are the only option that offers immunity from criminal prosecution for willful violators. If your non-compliance was willful and you use another disclosure method, you could be vulnerable to criminal prosecution.
However, the Offshore Disclosure Rules also come with the highest penalty assessments. You could save a significant amount by using one of the other strategies, if you qualify.
Contact a tax attorney before you attempt to correct your failure to file FBARs with any IRS offshore disclosure method.
The Gartzman Law Firm can evaluate your case to determine your best offshore disclosure option. Use our contact form to request a consultation with an Atlanta tax resolution attorney.