The federal government has broad investigative powers into the financial assets of Americans—even those accounts held overseas. The IRS taxes American citizens and residents on the income related to their financial accounts worldwide and the federal government relies on taxpayers to disclose these accounts as part of the process.
One of the documents used in this process is referred to as a Report of Foreign Bank and Financial Accounts (FBAR). The law requires that you file an FBAR along with your tax returns under certain circumstances. If you have failed to file your disclosure or are unsure if these rules apply to you, a Vienna FBAR lawyer might be able to help. A seasoned tax attorney could help you work out compliance issues or address filing delinquencies.
FBAR requirements are fairly straightforward. These disclosures are mandatory for a “United States person” with overseas accounts that hold more than $10,000. For these purposes, a United States person is an American citizen, an American business, or a lawful permanent resident.
The process of filing an FBAR statement is done online. Any United States taxpayer that meets the threshold requirement must file an FBAR statement annually through the Financial Crimes Enforcement Network (FinCEN) using the U.S. Department of the Treasury website.
The deadline for filing this disclosure falls on April 15 each year and it applies to financial accounts that were open at any point in the entire previous calendar year. FinCEN will grant an automatic extension until October 15 with no extension request needed.
For many taxpayers, filing a late FBAR disclosure is an unavoidable reality. Whether it is due to a genuine mistake or due to other factors out of their control, these late filings can and do happen. Thankfully, there is a process for delinquent FBAR submissions that could help a taxpayer avoid any penalties. This option does not have a time limit. However, since civil penalties for delinquent FBAR filings only go back six years, there is little reason to make submissions for anything older than six years.
The process itself requires more than just filing the FBAR disclosure after the deadline has expired. In addition, taxpayers must also include a written narrative that explains how their late filing was non-willful.
There are other limits to a delinquent FBAR filing. A taxpayer cannot take advantage of this filing if they are currently under investigation by the IRS. This option is also only available if they have not received notice of the delinquent FBAR from the IRS. In other words, a taxpayer can only pursue this option on their own—not at the prompting of the federal government.
Filing FBARs late can be stressful, but they often represent a taxpayer’s best chance of avoiding penalties. A Vienna attorney could advise on the Delinquent FBAR Submission Procedures.
If you have foreign financial accounts that exceed $10,000, you are required to comply with the FBAR filing requirements. If you are not in FBAR compliance, your Vienna FBAR lawyer could also help you carefully address these deficiencies and avoid an IRS investigation. Reach out today to learn more.