Despite the passing of the June 30th filing deadline, the international tax experts at LSL CPAs can still offer help with the annual reporting requirements to the Treasury Department of Foreign Bank And Financial Accounts (FBAR). The due date for filing the form has indeed passed. Still, the approach that the international tax consultants at LSL CPAs take with the United States Treasury Department and the IRS is better late than never.
United States citizens and residents must report all their worldwide income and disclose their foreign financial assets and bank accounts.
Foreign financial assets must be disclosed to the IRS on Form 8938, filed with the taxpayer’s Form 1040. IRS Form 8938 must be filed by the due date of the taxpayer’s 1040 tax return, including any extensions granted. FBARs (Form TD F 90-22.1) are filed independently with the US Treasury Department. The FBAR is due on June 30th; no further extensions are permitted.
FBARs are required to be filed by taxpayers if they had over $10,000 in foreign accounts at any time during the year or if they had a signature authority over such foreign accounts. The threshold for filing Form 8938 is $50,000, measured on the last day of the tax year.
In years past, US citizens or residents who did not disclose their foreign bank accounts had little to worry about such reporting requirements. The reason was that the IRS did not have a mechanism to obtain such information from third parties. This has changed with the recent enactment of The Foreign Account Tax Compliance Act “FATCA.” Under the FATCA regime, foreign financial institutions must now disclose to US authorities the names of all their US account holders. In addition, the year-end account balances of such foreign accounts and any earnings in the accounts must be reported.
If you forgot to file your FBAR, it is always better to be late than never filing. With FATCA mandatory reporting now in place, the IRS will eventually find out, and the penalties will only increase. What is even more important to understand is that not disclosing such information about foreign accounts voluntarily will only worsen the situation.
LSL CPAs do not take such reporting requirements lightly because the criminal and civil penalties for noncompliance are significant. Civil penalties for a non-willful violation can range up to $10,000 per violation. If the violation is considered willful, civil penalties can range up to $100,000 or 50% of the amount in the account at the time of the violation. 50% is a steep price to pay for any violation.
Even more frightening is that criminal penalties for violating the FBAR requirements can range up to a $500,000 fine, ten years imprisonment, or both. Civil and criminal penalties may be jointly imposed. The IRS has the authority to enforce such assessments. If the IRS Criminal Investigation Division takes on a case, it can take years to clear even an innocent taxpayer’s name.
Although this content contains accurate information, it is inherently limited because of the length of the article and the complexity of the FBAR reporting requirements. As a result, it presents only a partial view of the subject matter. The information presented is only a starting point that needs to be expanded and applied by an international tax expert to be truly effective.
If you have not reported your Foreign Bank and Financial Accounts to the Treasury Department and you need help, contact the international tax team at LSL CPAs. Regarding FBAR reporting requirements and other international tax issues, you should always work with an experienced international tax professional. Please call international tax consultant Yana Weaver at 714.569.100 to access the help you need.
