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FBAR Help: Don't Wait Until It's Too Late!

by: Anthony Parent   2012-04-26

The FBAR is a misunderstood form; by taxpayers, tax professionals, and even the IRS.  Worse, there can be harsh consequences for technical errors.

 

What is an FBAR form?

Simply put, the FBAR is a reporting form for those who hold $10,000 or more (in the aggregate) in a foreign financial account. It is called the Report of Foreign Bank Accounts, or TD F 90.22-1 or FinCEN Form 114. Yet the law requires more than bank accounts to be reported. The form is much more complicated that it appears, and the consequences of errors can be severe (but don't have to be!).

 

What should be reported on an FBAR?

There is where people sometimes get confused. They think only bank accounts need to be reported. Not so. You must also include things like life insurance policies, mutual funds, accounts you only have signatory authority on, and more.

 

What are the penalties of filing my FBAR late, or not filing at all?

There is no “late FBAR penalty”. There are only non-filing penalties, and the IRS can assess you those non-filing penalties if you file even one day late. If it is determined that you were willful in non-filing, the penalty can be up to 50% of the account value the date the FBAR was due. The higher the account balance, the higher the penalty with a cap of 50%.

 

The maximum non-willful penalty is $10,000 per occurrence. We are often able to get clients into programs where the penalty may only be 5% of the account balance, or no penalty at all.

 

I was supposed to file an FBAR, but did not. If you file my FBAR now, it will be my first time to ever report it. Will it raise a red flag and increase my chance of being audited? 

Our experience has been that the IRS doesn’t look at FBARs as a primary determiner of whether or not to audit someone. Rather, the IRS will look to see if someone already under audit has an FBAR requirement, and then check to see if that FBAR requirement was fulfilled or not.

 

It's important to note that if you're asking that question it means that right now you 100% know about the FBAR filing requirement. If you do not file an FBAR now, the IRS could later say you willfully did not file an FBAR. 

 

What should I do if I have late or unfiled FBAR Forms? Or if I am under audit or investigiation?

Our website is loaded with helpful information on FBAR penalties. You may be able to find answers to your questions by going to our FBAR knowledge base

 

Alternatively, you may want to consider hiring us to help you. Here are some key benefits of using the law firm of Parent & Parent LLP to help you with your late FBARs:

  • The attorney-client privilege attaches to any communciations to our firm
  • We are experts at uncovering and reducing other international penalties that you may have never heard about, like hidden penalties on life insurance, and foreign pensions
  • We are truly on the side of our clients. We are the only national law firm working to repeal the Foreign Account Tax Compliance Act (FATCA) and to reduce the IRS's power to assess FBAR penalties.

 

If you need assistance, contact us. We can help. Call us at 888-727-8796 or email info@irsmedic.com.


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