On behalf of Silver Tax Group posted in Offshore Accounts on Tuesday, March 13, 2018.
Americans holding onto foreign accounts need to record their holdings on the Report of Foreign Bank and Financial Accounts form (FBAR). Those filing an FBAR have until the middle of April to report such information. Some may get an extension until October 15.
But it is important not to be casual about FBAR filing requirements. The IRS takes FBAR reporting seriously.
Who has to file an FBAR?
Those required to file an FBAR include those with interest in or authority over such accounts to report account values exceeding $10,000. This requirement is applicable to:
- U.S citizens and residents
- Entities including corporations, limited liability companies and partnerships
- Any trust created under the laws of the United States
- Estates created under United States laws containing ownership of foreign accounts
In the event you find out you should have filed an FBAR, the IRS has in place an electronic system for such a delinquent filing. This system provides a means for explaining why the filing is late. If the IRS rules such a violation was due to a reasonable cause, there will be no penalties.
What should you do?
But while the IRS provides options, it is still a good idea to discuss such matters with an attorney to make certain you fully understand your legal options. What you deem a reasonable cause and what the IRS deems a reasonable cause may be two different things. Also, the best option is always dependent upon your individual circumstances.
The penalties for not reporting can mean fines of up to $100,000. Even if you do not face a penalty of that severity, you may lose 50 percent of the value of the account. Besides civil penalties for failure to properly report account information and earnings on the FBAR, noncompliance can result in criminal penalties as well.
With so much at stake, no one wants to take chances regarding penalties the IRS may impose.