Offshore accounts are held by many Americans, whether they live at home in California or abroad in the UK, Brazil, China, or Ecuador. For individuals living in the U.S., reasons for holding foreign accounts and assets can include asset protection programs, investments, or accounts to transmit remittances to family members in foreign nations. Still, other people who live in the United States but travel frequently may keep foreign accounts and assets in foreign currencies for purposes of convenience. For expatriates living abroad, keeping foreign accounts is more of a necessity than it is a matter of convenience. Individuals living and working abroad may come to hold a stake in foreign retirement or pension plans through the course of their employment.
The fact of the matter is that most of the scenarios above will give rise to at least one disclosure obligation: Report of Foreign Bank and Financial Accounts or FBAR. Depending on the aggregate value of assets and accounts, additional disclosure obligations including FATCA may apply. Furthermore, if the American taxpayer derives any interest or income from foreign accounts or assets, he or she is typically required to report and pay taxes on this worldwide income for every year it exists.
The tax attorneys of the NewPoint Law Group, LLP can assist Californians and expats in satisfying their foreign disclosure obligations. Our legal team can help you file FBAR and handle any foreign tax obligations you may have. To schedule a confidential consultation with strategic tax attorneys who can minimize foreign taxes while maintaining compliance with the U.S. Tax Code, call 1-800-358-0305 today.
Who Is Required to File FBAR?
In reality, most of the individuals described in the paragraphs above are required to file an FBAR. This is due to the fact that the filing threshold for the FBAR filing obligation is extremely modest. In fact, individuals holding just $10,000 in aggregated foreign accounts or assets are required to file FBAR. Most foreign accounts or assets where an individual holds a financial interest or signature authority are included against the $10,000 filing threshold.
When Is My FBAR Due? How Do I File?
Your FBAR disclosure must be submitted by June 30, 2016 for it to be a timely disclosure. Many people believe that it is possible to seek an extension of time to file FBAR – like they would with their income tax filing. Unfortunately, these individuals are often shocked and left scrambling at the last minute because there is simply no mechanism to apply for an extended FBAR due date.
The only way to file FBAR is online. There are no means available to file an FBAR on a paper form or through the mail. Taxpayers who must file an FBAR are required to log in to FinCEN’s web portal and complete an online or PDF version of FinCEN Form 114. This form requires the individual to make disclosures regarding foreign financial accounts that he or she has an interest in or has signature authority. Covered individuals who fail to file by the June 30th due date will submit a late filing and fall out of compliance with their offshore disclosure obligation.
What Are the Consequences for Failing to File FBAR?
Individuals who fail to file FBAR can face serious penalties even if their noncompliance is attributed to a mistake, forgetfulness, or even a lack of knowledge regarding the reporting obligation. Individuals who fail to file FBAR due to a mistake or error can face a potential penalty of up to $10,000 to punish their noncompliance. However, this penalty pales in comparison to those that can be imposed for willful violations of one’s FBAR reporting obligation. A willful failure to disclose is typically considered a compliance failure that results from intentional or voluntary disregard of a known legal duty. Willful FBAR disclosure obligation can be penalized by the greater of $100,000 or 50% of the account balance. Clearly, these are significant fines regardless of whether the violation is accidental or willful. Making an FBAR filing is an essential step in protecting your foreign assets.
Work with a Sacramento Tax Attorney to Satisfy Your FBAR and International Tax Obligations
Individuals holding foreign accounts and assets should consult with a careful and strategic tax attorney to assess their international tax payment and foreign disclosure obligations. To discuss your situation with a Sacramento tax lawyer from the NewPoint Law Group, call our firm at 1-800-358-0305 today.