Do You Have To File An FBAR Now?
Published Wednesday, April 27, 2016 at: 7:00 AM EDT
If you have substantial assets in a bank or financial institution outside the United States, you may meet a key tax-filing deadline. The IRS requires you to file a special form—Report of Financial Bank and Financial Accounts, commonly known as FBAR—by your tax return due date. If you fail to comply you could face hefty penalties.
What's more, next year, you'll have to file the FBAR even sooner. In a little-noticed change in the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, a highway spending measure, the due date for filing FBARs was moved up from June 30 to April 15, the deadline for filing individual tax returns.
The FBAR filing requirement is intended to discourage taxpayers from hiding assets in offshore accounts and evading tax liability. It applies to your bank and financial accounts in every area outside the U.S., Puerto Rico, the Northern Mariana Islands, and the territories and possessions of the U.S. (including Guam, American Samoa, and the Virgin Islands).
You're required to file an FBAR if the aggregate value of assets in your foreign bank accounts exceeded $10,000 at any time during the prior year, even if your account balance later fell below that minimum.
The Financial Crimes Enforcement Network (FinCEN), a branch of the Treasury Department, works with the IRS to oversee FBAR filings. If you fail to make this filing, the violation is deemed to be "willful," and you could be hit with a fine equal to $100,000 or 50% of the balance in the foreign account—whichever is greater—for each violation. Even harsher penalties may be imposed for acts of fraud or providing false information. In the worst-case scenario, you might be sentenced to up to five years in prison (or 10 if you're found guilty of obstruction of justice).
FBARs must be reported electronically on FinCEN Form 114. This form asks you to include a statement explaining the reasons for any late filing.
If you've failed to file an FBAR on time, it could take a while for the IRS to catch up to you—as long as six years in some cases. If you've missed the deadline, you could benefit from a special amnesty program, the Offshore Voluntary Disclosure Program (OVDP). The IRS recently streamlined the procedures for participating in the OVDP.
© 2022 Advisor Products Inc. All Rights Reserved.
- Views On Retirement Communities
- SS Benefits: Tax Danger Ahead!
- What Will Your Social Security Benefits Come To?
- Market Timing Is An Inexact Science
- Still Time To Save $1 Million?
- When One Roth IRA Is Not Enough
- When To Use An Installment Sale
- Women Save More For Retirement Than Men But Have Less
- 5 Ways To Boost Retirement Savings
- Do Roth IRA Math Before Converting
- 7 Tax Breaks Set To Last Forever
- Retirement Plan Choices For The Self-Employed
- Do You Know If Your Business Really Is Small?
- 5 Reasons To Amend Your Estate Plan
- New Law Says Tax Debtors May Lose Their Passports