If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, exceeding certain thresholds, the Bank Secrecy Act may require you to report the account yearly to the Department of Treasury by electronically filing a Financial Crimes Enforcement Network (FinCEN) 114, Report of Foreign Bank and Financial Accounts (FBAR). See the ‘Who Must File an FBAR’ section below for additional criteria.
Current FBAR Guidance
New Due Date for FBARs
The new annual due date for filing Reports of Foreign Bank and Financial Accounts (FBAR) for foreign financial accounts is April 15. This date change was mandated by the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, Public Law 114-41 (the “Act”). Specifically, section 2006(b)(11) of the Act changes the FBAR due date to April 15 to coincide with the federal income tax filing season.
The Act also mandates a maximum six-month extension of the filing deadline. To implement the statute with minimal burden to the public and FinCEN, FinCEN will grant filers failing to meet the FBAR annual due date of April 15 an automatic extension to October 15 each year. Accordingly, specific requests for this extension are not required.
Please see the section entitled “Reporting and Filing Information” below for more information.
Filing deferral for certain individuals with signature authority only, effective through April 15, 2018
FinCEN Notice 2016-1 extended the due date for filing FBARs by certain individuals with signature authority over, but no financial interest in, foreign financial accounts of their employer or a closely related entity, to April 15, 2018.
Chronology Pertaining to This Filing Deferral
May 31, 2011 (rev. June 6, 2011)FinCEN Notice 2011-1 provides filing extension to June 30, 2012 extension for:
An employee or officer of an entity under 31 CFR § 1010.350(f)(2)(i)-(v) who has signature or other authority over and no financial interest in a foreign financial account of a controlled person of the entity; or
An employee or officer of a controlled person of an entity under 31 CFR § 1010.350(f)(2)(i)-(v) who has signature or other authority over and no financial interest in a foreign financial account of the entity, the controlled person, or another controlled person of the entity.
For purposes of FinCEN Notice 2011-1, a controlled person is a United States or foreign entity more than 50 percent owned (directly or indirectly) by an entity under 31 CFR § 1010.350(f)(2)(i)-(v).
June 17, 2011FinCEN Notice 2011-2 extended due date for filing to June 30, 2012, for certain officers of employees of investment advisors registered with the Securities and Exchange Commission who have signature authority over, but no financial interest in, foreign financial accounts of their employer.February 14, 2012FinCEN Notice 2012-1 extended the deadline to file to June 30, 2013, for those persons identified in Notice 2011-1 and Notice 2011-2.December 26, 2012FinCEN Notice 2012-2 further extended the due date for filing to June 30, 2014.December 17, 2013FinCEN Notice 2013-1 further extended the due date for filing to June 30, 2015.November 24, 2014FinCEN Notice 2014-1 further extended the due date for filing to June 30, 2016.December 8, 2015FinCEN Notice 2015-1 further extended the due date for filing to April 15, 2017December 16, 2016FinCEN Notice 2016-1 further extended the due date for filing to April 15, 2018
Who Must File an FBAR
United States persons are required to file an FBAR if:
the United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; and
the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year reported.
United States person includes U.S. citizens; U.S. residents; entities, including but not limited to, corporations, partnerships, or limited liability companies, created or organized in the United States or under the laws of the United States; and trusts or estates formed under the laws of the United States.
Exceptions to the Reporting Requirement
Exceptions to the FBAR reporting requirements can be found in the FBAR instructions. There are filing exceptions for the following United States persons or foreign financial accounts:
Certain foreign financial accounts jointly owned by spouses
United States persons included in a consolidated FBAR
Foreign financial accounts owned by a governmental entity
Foreign financial accounts owned by an international financial institution
Owners and beneficiaries of U.S. IRAs
Participants in and beneficiaries of tax-qualified retirement plans
Certain individuals with signature authority over, but no financial interest in, a foreign financial account
Trust beneficiaries (but only if a U.S. person reports the account on an FBAR filed on behalf of the trust)
Foreign financial accounts maintained on a United States military banking facility.
Review the FBAR instructions for more information on the reporting requirement and on the exceptions to the reporting requirement.
Reporting and Filing Information
A person who holds a foreign financial account may have a reporting obligation even when the account produces no taxable income. The reporting obligation is met by answering questions on a tax return about foreign accounts (for example, the questions about foreign accounts on Form 1040 Schedule B) and by filing an FBAR.
The FBAR is a calendar year report and must be filed on or before April 15 of the year following the calendar year being reported. Effective July 1, 2013, the FBAR must be filed electronically through FinCEN’s BSA E-Filing System.
The FBAR is not filed with a federal tax return. When the IRS grants a filing extension for a taxpayer’s income tax return, it does not extend the time to file an FBAR. Prior to the passing of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, there was no provision for requesting an extension of time to file an FBAR. The Act mandates a maximum six-month extension of the filing deadline. To implement the statute with minimal burden to the public, FinCEN will grant filers failing to meet the FBAR annual due date of April 15 an automatic extension to October 15 each year. Accordingly, specific requests for this extension are not required.
Filers who submit FBARs jointly with spouses or who wish to have a third party preparer file their FBARs on their behalf can use FinCEN Report 114a, Record of Authorization to Electronically File FBARs. FinCEN Report 114a is not submitted when filing an FBAR but, instead, is kept in FBAR records maintained by the filer and the account owner, and must be made available to FinCEN or IRS upon request.
Those required to file an FBAR who fail to properly file a complete and correct FBAR may be subject to civil monetary penalties. For penalties that are assessed after August 1, 2016, whose associated violations occurred after November 2,2015, the IRS may assess an inflation-adjusted civil penalty not to exceed $12,459 per violation for non-willful violations that are not due to reasonable cause. For willful violations, the inflation-adjusted penalty may be the greater of $124,588 or 50 percent of the balance in the account at the time of the violation, for each violation. For guidance on circumstances, including natural disasters, that prevent timely filing of an FBAR, see FIN-2013-G002 (June 24, 2013).
Note regarding civil penalty assessment prior to August 1, 2016: For those violations occurring on or before November 2, 2015, the IRS may assess a civil penalty not to exceed $10,000 per violation for non-willful violations that are not due to reasonable cause. For willful violations, the penalty may be the greater of $100,000 or 50 percent of the balance in the account at the time of the violation, for each violation.
U.S. Taxpayers Holding Foreign Financial Assets May Also Need to File Form 8938
Taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS on Form 8938, Statement of Specified Foreign Financial Assets, which is filed with an income tax return. Those foreign financial assets could include foreign accounts reported on an FBAR. The Form 8938 filing requirement is in addition to the FBAR filing requirement. A chart providing a comparison of Form 8938 and FBAR requirements may be accessed on the IRS Foreign Account Tax Compliance Act Web page.
Offshore Voluntary Disclosure Program
On January 9, 2012, the IRS reopened its Offshore Voluntary Disclosure Programfollowing continued interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programs. This program offers people with unreported taxable income from offshore financial accounts or other foreign assets an opportunity to fulfill their tax and information reporting obligations, including the FBAR. Although the program does not have a closing date, the IRS may end the program at any time.
Streamlined Filing Compliance Procedures
On September 1, 2012, the IRS implemented new streamlined filing compliance procedures that were available only to non-resident U.S. taxpayers who failed to file required U.S. income tax returns. Taxpayer submissions were subject to different degrees of review based on the amount of tax due and the taxpayer’s response to a risk questionnaire.
On June 18, 2014, the IRS announced the expansion of these procedures. The expanded procedures are available to a wider population of U.S. taxpayers living outside the country and, for the first time, certain U.S. taxpayers residing in the United States; reference IR-2014-73. For eligible U.S. taxpayers residing outside the United States, all penalties will be waived. For eligible U.S. taxpayers residing in the United States, the only penalty will be a miscellaneous offshore penalty equal to five percent of the foreign financial assets that gave rise to the tax compliance issue. For more information, go to Streamlined Filing Compliance Procedures.
Delinquent FBAR Submission Procedures
Taxpayers who have not filed a required FBAR and are not under a civil examination or a criminal investigation by the IRS, and have not already been contacted by the IRS about a delinquent FBAR, should file any delinquent FBARs according to the FBAR instructions and include a statement explaining why the filing is late. All FBARs are required to be filed electronically through FinCEN’s BSA E-Filing System. Select a reason for filing late on the cover page of the electronic form or enter a customized explanation using the ‘Other’ option. If unable to file electronically you may contact FinCEN’s Regulatory Helpline at 800-949-2732 or 703-905-3975 (if calling from outside the United States) to determine acceptable alternatives to electronic filing.
The IRS will not impose a penalty for the failure to file the delinquent FBARs if income from the foreign financial accounts reported on the delinquent FBARs is properly reported and taxes are paid on your U.S. tax return, and you have not previously been contacted regarding an income tax examination or a request for delinquent returns for the years for which the delinquent FBARs are submitted.
Problem 1 Nobody in the IRS cares
Return Filing Problems (problems 2-5)
Problem 2 Fear of an audit
Problem 3 I cannot file my tax return on time
Problem 4 I cannot afford to pay all my taxes
Problem 5 I need more than a payment extension
Penalties and Interest (problems 6-10)
Problem 6 The IRS issued a computer notice claiming I owe penalties
Problem 7 The IRS added penalties to my previous bill
Problem 8 The IRS added penalties to a bill determined from a tax audit
Problem 9 The IRS assessed the trust fund recovery penalty
Problem 10 The IRS unfairly added interest to my tax bill
Part IV - Computer Notices (problems 11-13)
Problem 11 Erroneous notice received assessing additional taxes
Problem 12 The IRS mailed a computer notice claiming I underreported my income
Problem 13 Valid notice received demanding payment of taxes
Part V - Audit Problems (problems 14-20)
Problem 14 Missing receipts to prove deductions
Problem 15 The IRS claims I earned income I did not report
Problem 16 The IRS said my business was really a hobby -- Disallowed business expense deduction
Problem 17 The IRS's audit results are wrong but the auditor demands I sign the report and pay
Problem 18 I went through appeals but the IRS still says I owe
Problem 19 I did not realize I could appeal an audit decision or believed it was too expensive
Problem 20 I already paid taxes I do not owe because I did not understand my appeal rights
Part VI - Enforced Tax Collection (problems 21-29)
Problem 21 The IRS is threatening a wage or bank levy
Problem 22 I cannot afford an installment payment
Problem 23 The IRS has a wage or bank levy in effect
Problem 24 The IRS filed a tax lien causing credit problems
Problem 25 I cannot get the IRS to recognize my letters and it continues to push ahead for enforced collection
Problem 26 I have not filed tax returns for years
Problem 27 My husband left me with a tax debt that I do not owe and cannot afford to pay
Problem 28 My IRS debt just keeps growing
Problem 29 I cannot afford a tax professional to help with my tax problem
Join our organzation and get help.
If you are presently embroiled in IRS conflict and need word of encouragement, then read the following...
Last year the IRS cancelled 4.9 million penalties, saving taxpayers $11.13 billion in penalties they didn't owe..
When properly challenged, the IRS cancels 60 cents of every dollar assessed in employment tax penalties.
There are four IRS approved programs of tax debt forgiveness.
The IRS settles delinquent tax debt for between 10 to 20 cents on the dollar when a proper request is made for tax debt forgiveness.
By asserting the right to a correspondence audit, the average tax audit bill was reduced by as much as 58%.
Last year, millions of citizens won installment agreements, thus avoiding wage and bank levies and property seizures.
IRS auditors have NO POWER to change your tax liability without YOUR approval.
Much has been made of recent restructuring legislation pointed at ending IRS errors and abuse. Historically, such legislation has had little impact on the agency. The reason is the IRS simply does not tell the truth about taxpayers' rights. Consequently, if you do not understand your rights in a given situation, you cannot expect the IRS to explain them. For example, when was the last time you received a kind letter from the IRS explaining that you paid too much in taxes or overlooked certain rights that might cut your bill? Such letters are rare indeed!
On the other hand, millions of citizen are confronted by the agency for alleged legal failings. Each year the IRS...
Nearly everybody has gone through some kind of IRS enforcement difficulty and we all know somebody who is going through it now. But few have effective solutions. Too often, professional advice from tax accountants is, "well, it's the IRS. You just have to pay." Unfortunately, precious few take the time to understand that there are solutions to every IRS problem. Indeed, there is no such thing as a hopeless tax case. There is always a way to solve the problem.
For many people, this Problem Solver provides an immediate solution to a pressing IRS problem. Simple solutions are provided to problems such as wage and bank levies, IRS computer notices and penalty assessments. In other cases, this Problem Solver serves as a guide to what you must do to ultimately solve your problem. And even if you owe taxes, penalties and interest you cannot pay, you can be forgiven of all or part of your debt.
Because the IRS resists directing you to solutions to most tax problems (especially the problem of excessive tax debt) this IRS Common Problems Solver is designed to fill that void. It describes numerous taxpayer rights and remedies and shows you the steps to take to determine which solution best suits your situation. In addition, you will be introduced to an array of affordable, effective self-help materials and services to help you end your problem.
Too often, the biggest IRS problem for millions of people is the fact that it costs more to fight the agency than it does to just pay the tax. For those who cannot pay the tax or afford professional help, they live only with the promise of life-long indebtedness to the IRS--a hopeless situation. Now there is a solution.
Now, at last, the price of tax freedom is not out of reach for anyone. However, the IRS is always working to close the door to freedom that we have worked so hard to open and expose. The IRS is always working behind the scenes to limit your rights thereby ensuring you are always a slave to tax debt. Therefore, if you have a tax problem, now is the time to address it. It only gets worse as time goes on. As you read this Problem Solver, draw encouragement from the testimonials found throughout the text and act now to solve your problem once and for all.
An organization to help those harmed by the IRS
Who qualifies for OVDP?
The offshore voluntary disclosure program is designed for NRI taxpayers who earn income from overseas while living in the US, and have not previously reported this income.
How to file OVDP or Streamlined OVDP?
Filing OVDP or streamlined OVDP is a complex task. It may include filing amended returns. Taxpayers are usually required to file 6 years of FBAR. A signed certificate stating full disclosure is also required.
Benefit to filing now vs after the window closes?
There is significant risk in filing undisclosed overseas assets after the OVDP window closes. Penalties include 27.5% of each bank account balance as well as other fines. The IRS can also request tax records going back several years. Criminal prosecution is a risk, as well having your passport revoked
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