Federal authorities have the power to investigate assets held in overseas bank accounts by American citizens. The Internal Revenue Service (IRS) requires U.S. persons with offshore bank accounts to report their holdings using a document that is known as a Report of Foreign Bank and Financial Accounts, or FBAR.
Filing an FBAR is mandatory for anyone with assets above a certain threshold. A skilled tax attorney could help you address these any issues related to the FBAR and resolve them in a favorable way to avoid hefty penalties. If you are concerned about noncompliance, a Rockville FBAR lawyer could represent your best opportunity to make sure everything is reported or disclosed correctly.
For many individuals or businesses with overseas assets, it is necessary to file an FBAR statement each year through the Department of the Treasury’s website. These filings are due each year on April 15 but the Financial Crimes Enforcement Network (FinCen) will automatically allow an extended deadline of October 15 without needing to put in a request.
Whether or not filing a report is necessary will depend on the amount of money the taxpayer holds overseas. If the aggregate amount that they hold exceeds $10,000 on any given day in the year, then that taxpayer must file an FBAR. Even if it is in multiple accounts and is far less than $10,000 at the time of filing, they must report all of it. Importantly, this is only for financial assets held in bank accounts – it does not consider the value of any personal or real property that exists overseas. Any assets held in a banking facility for the U.S. military are exempt from an FBAR filing.
FBAR requirements apply to any “United States person” that has accounts with more than $10,000 overseas. The term “United States person” applies to U.S. citizens, lawful permanent residents, as well as business entities.
There can be questions as to which entities must comply with FBAR requirements. This is especially true of foreign nationals living in the United States, as well as members of certain business entities like LLCs. A Rockville FBAR lawyer could advise a taxpayer as to whether they are bound by FBAR requirements based on their residential status.
The penalties for the failure to comply with FBAR reporting requirements can vary, and can be civil or criminal in nature. The severity of these penalties will depend, in part, on whether the violation was willful or non-willful.
The civil penalty for a non-willful violation can be as much as $10,000 per incident. Non-willful violations refer to unintentional or accidental failures to comply with reporting requirements. In cases where the IRS can establish an individual willfully failed to meet these requirements, the civil penalty could be as much as $100,000 or 50% of the aggregate value, whichever is greater.
The criminal penalties are rare and depend on the offense charged. For example, filing a false FBAR form could result in up to three years in prison, while tax evasion charges could lead to five years in prison. A local FBAR attorney could explain the liabilities that might come with not filing this document.
There are many federal regulations and tax rules regarding assets held in other countries. These complex rules can make it easy for an honest reporting error to occur. If you are concerned about FBAR reporting deficiencies, or if you need to address your foreign assets with the IRS, legal help is available. Contact a Rockville FBAR lawyer today.
Pontius Tax Law, PLLC is a tax law firm that strives to resolve sensitive tax problems through trust, dedication and value. The law firm was founded by John Pontius with offices in Washington, DC, Rockville, MD, Bethesda, MD, Vienna, VA, and Alexandria, VA. Mr. Pontius represents individual and business clients with sensitive and serious tax matters before the Internal Revenue Service and state taxing authorities. His client base is local, national, and international.
Over the course of his career, Mr. Pontius has represented businesses and individuals with complex tax issues in the following areas: FBAR examinations, offshore and domestic disclosures, FATCA, FIRPTA, tax planning, unfiled tax returns, release of tax liens and levies, trust fund recovery penalty, IRS and state audit examinations, as well as appeals, penalty abatement, U.S. Tax Court litigation, along with defense of tax fraud and evasion. If you require assistance from a tax lawyer, contact Mr. Pontius to discuss your situation.