Delinquent FBAR Streamlined Filing: The Delinquent FBAR Streamlined Filing rules are complicated. We have developed an introductory guide to help you submit FBAR with your IRS Streamlined Filing Submission. The FBAR is the Foreign Bank Account Reporting Form. It is an important aspect to any streamlined procedure submission. The FBAR was developed by FinCEN (Financial Crimes Enforcement Network) and enforced by the IRS. The form is also referred to as FinCEN Form 114. In recent years, the IRS has taken an aggressive position towards foreign accounts compliance.
Delinquent FBAR: How to Safely Late File Offshore Accounts
The IRS has updated the Delinquent FBAR & Streamlined Filing rules. For reference, the FBAR is different than FATCA (Foreign Account Tax Compliance Act), and has been around for 50-years. Here are 10-Important Tips when it comes times to submit the FBAR under the Streamlined Procedures:
*At our main site, we have many resources devoted to FBAR. The focus of this article is to reintroduce the basics.
FBAR is More than Just Bank Accounts
While the name FBAR may lead you to believe (understandably so) that the reporting is limited to foreign bank accounts – that is incorrect. The FBAR includes Foreign Bank and Financial Accounts.
Common types of accounts to report on the FBAR, includes:
- Bank Accounts
- Stock Accounts
- Investment Accounts
- Mutual Funds
- Pension & Retirement
- Foreign Life Insurance Policies
What if The Money Does Not Have to Belong to You?
If your name is associated with the account, either as the owner, co-owner or signatory – then you typically have to report the money.
Practice Pointer: Under the streamlined procedures, you can seek to have the value of money that does not belong to you excluded from the penalty base, since that money is not yours.
FBAR Threshold Filing Requirement
The threshold filing requirements are relatively low. It is based on an aggregate value of all accounts, not each individual account value. And, if the total aggregate value of all the accounts exceeds more than $10,000 – you have to report all the accounts.
Open, Closed, and Dormant Accounts
If an account is opened, then it is reported on the FBAR. If the account is dormant (but open) then it is also reported on the FBAR. This is very common in countries such as India, where the accounts sometimes never “officially” close. As to closed accounts, they are reported one more time in the year following the closure.
Example: Account was opened in 2010 and closed in 2019. In 2020, when a person files the 2019 FBAR, they will include the account that closed (one last-time), because technically the account was still open at some point in 2019.
Maximum Balance vs. Year-End Balance
For the FBAR, the applicant submits the maximum balance. Sometimes, depending on the country, institution, and type of account (such as a passbook account), this may not possible. There are options to assist you with how to report in this type of scenario, and the options will depend on your specific facts and circumstances.
Year-end value is used solely for the Streamlined Procedures, in order to calculate the 5% penalty — not to report the FBAR. If the maximum value is not known, sometimes the year-end value may work as a substitute FBAR value.
Closed Accounts & Streamlined Penalty
The Streamlined Procedure penalty is based solely on the December 31st value of the accounts. So, if the account is reported on the FBAR but closed in the same year, it is not computed into the penalty.
Because unless the account was closed on 12/31, then the 12/31 (December 31st) value of an account closed before that date would be zero.
Double-Counting & Streamlined Penalty
This may be one of the five most common questions we receive (and a very good question). The FBAR is not used to total your foreign account balances. Rather, the FBAR is used to report the balances. So, if you transferred the same money 5-times during the year, it may appear you have 5x the value of the money.
The reason the IRS uses the year-end value when computing the streamlined penalty, is to avoid any double-counting.
Joint Accounts & Streamlined Penalty
Sometimes, a joint account is owned 50% by each account holder. Sometimes it is an uneven split, and sometimes one of the owners of the account is only on the account in namesake. A common example of the latter is when a parent includes the child on the account. These are all issues that can be dealt with at the time of submission, and generally the penalty can be avoided on any money that is not owned by the streamlined applicant.
Other International Information Reporting Forms
The FBAR is only one of many different international information reporting forms. It is the most commonly filed form, and also carries the stiffest penalties.
Some other forms to also be aware of, include:
- Form 5471
- Form 5472
- Form 8621
- Form 8865
- Form 8938
Forgot an FBAR Account After Your Streamlined was Submitted?
This is neither tragic nor fatal. Everyone makes mistakes. If you missed an account during the submission process, it can rectified – usually without much issue or impact on the submission package.
We Specialize in Streamlined Filing Compliance Procedures
We specialize exclusively in international tax, and specifically IRS offshore disclosure.
We have successfully represented clients in more than 1,000 streamlined and voluntary offshore disclosure submissions nationwide and in over 70-different countries. We have represented thousands of individuals and businesses with international tax problems.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe.
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We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants and Financial Professionals worldwide.
Less than 1% of Tax Attorneys Nationwide Are Certified Specialists
Our lead attorney is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.
Recent Case Highlights
- We represented a client in an 8-figure disclosure that spanned 7 countries.
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- We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.
- We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.
How to Hire Experienced Offshore Counsel?
Generally, experienced attorneys in this field will have the following credentials/experience:
- Board Certified Tax Law Specialist credential
- Master’s of Tax Law (LL.M.)
- Dually Licensed as an EA (Enrolled Agent) or CPA
- 20-years experience as a practicing attorney
- Extensive litigation, high-stakes audit and trial experience
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No matter where in the world you reside, our international tax team can get you IRS offshore compliant.
We specialize in FBAR and FATCA. Contact our firm today for assistance with getting compliant.
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