Report of Foreign Bank and Financial Accounts (FBAR)
Many individual and business taxpayers are often surprised to learn they are required to report certain financial account holdings held outside the U.S. Citizens, residents, expatriates, corporations, trusts, or other businesses are required to submit an FBAR filing when they have signatory authority over a foreign financial account that exceeds $10,000 USD at any point during the year. This includes foreign bank accounts, brokerage/investment accounts, offshore pension plans and more. If there is involvement with a foreign financial institution, then it is essential to review if any filing requirements exist.
Are there penalties for failing to file an FBAR?
Unfortunately, there are penalties for failing to file an FBAR. In cases where there is reasonable cause to fail to file on time and all information has been submitted, then it is likely no penalty will be imposed. However, if a failure arises from non-willful conduct then a penalty of $10,000 per violation will be assessed. In situations where an individual willfully fails to submit or intentionally files one that is incorrect or incomplete, then the penalty increases to $100,000 or 50% of the account balance, whichever is greater. It is important to note willful failures can be subject to criminal prosecution as well.
Given the significant penalties for failing to comply, it is important to work with an experienced international tax accountant to guide efforts. Calvetti Ferguson works with expatriates to identify filing requirements, assess current and past year obligations, and manage the filing process from start to finish. We also help clients identify and compile the necessary documentation which also needs to be submitted. In other words, we manage the entire process to ensure you are in full compliance.
- Assessment of current financial situation to determine if an FBAR filing is required for the immediate past year and other periods.
- Preparation of current and past year FBAR filings.
- Preparation of appropriate documentation for inclusion with IRS filings.
- Assistance reducing penalties assessed for failure to file.
If you have questions about your FBAR filing requirements, including how signatory authority impacts your situation, Calvetti Ferguson can help.