What is FBAR Reporting of Foreign Bank Accounts: IRS Overview

What is FBAR Reporting of Foreign Bank Accounts: IRS Overview

What is FBAR Reporting?

FBAR Reporting: The FBAR refers to the IRS requirement for US Persons with Foreign Bank and Financial Accounts to report their overseas accounts on the annual FinCEN Form 114. More specifically, the US Government requires US Persons (US Citizens, Lawful Permanent Residents, Foreign Nationals who meet the Substantial Presence Test, and certain entities) to report their foreign bank and financial accounts (including investment accounts, foreign pension, etc.) each year. While there are several international information reporting forms that may be required by US Taxpayers — the most common form by far is the FBAR — even though technically the FBAR form is not actually a tax form, but rather a Title 31 Money and Finance form (and not Title 26).  The reason why the IRS is involved with the FBAR is because since 2003, the Internal Revenue Service has been tasked with enforcement of FBAR compliance and penalty enforcement. Our Board-Certified Tax Law Specialist team has authored hundreds of articles on matters involving the FBAR — but in this brief article, we will focus specifically on the basics of reporting.

When is Foreign Bank Account Reporting (FBAR) Due?

The FBAR Form is is due to be reported by April 15, but the form is on automatic extension (at least for now at the time of this article) until October. So, if you are reading this before October — you may not be late.

What is Included for FBAR Reporting

The FBAR is used to report Foreign Bank and Financial Accounts. The term is much more encompassing that it may seem at first glance, and includes items such as:

  • Bank Accounts
  • Investment Accounts
  • Life Insurance Policies
  • Foreign Pension
  • Stock Accounts
  • Fund Accounts

What Form is Used for Foreign Bank Account Reporting

The FBAR is reported by electronically filing a FinCEN Form 114 directly on the FinCEN website. A Form 8938 may also be required.

What About Late FBAR Reporting

If you missed the due date to report the FBAR, then you would submit to one of the IRS Offshore Amnesty Programs in order to get into FBAR Reporting compliance — and there are several amnesty programs available. If instead of pursuing amnesty, you just file the forms without the amnesty — it is considered a quiet disclosure — and that may result in fines and penalties that are much higher than you would have sustained under the amnesty programs.

FBAR Reporting Penalties for Late Filing

There may be significant fines and penalties for not reporting the FBAR timely. The FBAR Penalties for late reporting can be broken down into two main categories: Civil FBAR penalties and Criminal FBAR penalties. Civil FBAR penalties can be further broken down into willful violations and non-willful violations.

Delinquent FBAR Reporting Amnesty Programs

The FBAR Amnesty Programs are programs developed by the Internal Revenue Service to assist Taxpayers who are already out of compliance for non-reporting.

Some of the more common programs, include:

Our International FBAR Lawyers Represent Clients Worldwide

Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure

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