Staying Compliant with FBAR (Report of Foreign Bank and Financial Accounts)
- Bank accounts;
- Securities or brokerage accounts;
- Mutual funds;
- Debit cards;
- Prepaid debit cards;
- Some pension accounts; and
- Some retirement plans
In order to comply with the IRS’ reporting requirement, you need to fill out the Form TD F 90- 22.1 form. This is the Report of Foreign Bank and Financial Accounts (commonly referred to as an “FBAR” form).
These reporting requirements were enacted as part of the Foreign Account Tax Compliance Act (FATCA) in 2010.
Ramifications of Failing to Comply with FBAR
It is important to stay on top of the FBAR filing requirements because neglecting to do so could expose you to both civil and criminal penalties. In fact, the IRS has recently increased efforts to enforce FBAR filing requirements and U.S. taxpayers with unreported foreign bank accounts can expect to be the likely targets of aggressive enforcement efforts by the agency.
As a general rule, the civil penalty for willfully failing to file an FBAR form could be up to $100,000 or 50 percent of the total balance of the foreign account per violation. If it was determined that you simply neglected to file the FBAR (i.e., it was not an intentional violation), the IRS could still levy a $10,000 civil penalty.
In addition to civil fines, you could also be at risk of being subjected to criminal penalties. Potential criminal penalties for failing to comply with the FBAR filing requirements include:
- Conviction of tax evasion which entails a prison term of up to five years and a fine of up to $250,000;
- Conviction for filing a false return resulting in a prison term of up to three years and a fine of up to $250,000
- Failing to file an FBAR form subjects a taxpayer to a potential prison term of up to ten years and criminal penalties of up to $500,000.
Benefits of Retaining a Knowledgeable Tax Lawyer
Navigating the complexities associated with FBAR reporting requirements can be stressful and time intensive. You should also have a basic understanding of the Offshore Voluntary Disclosure Program (OVDP). To ensure you meet all of the necessary filing requirements is to retain the services of an experienced tax lawyer who has guided clients through the maze of the FBAR rules and regulations.
Have Questions? Speak to an Experienced Tax Attorney Today
Whether you are encountering issues with tax debt from your business, or individually, Anderson Bradshaw Tax Consulting is here to help. Our tax professionals and Consultants are skilled and experienced with all tax matter and can help you through your unique tax situation, including ways to secure tax debt relief. With over three decades of experience in the industry, we have seen many different tax issues and have learned the best ways to handle them based on our clients’ unique situation. Call us today at 877-550-3911 to schedule a free 30-minute Tax Consultation or fill out this form to receive a complimentary Tax Evaluation.