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  • Home
  • About
    • Ronson J. Shamoun, ESQ., LL.M.
    • Chandara Diep, ESQ., LL.M.
    • Joseph Cole, ESQ., LL.M.
    • Devon J. Arabo, ESQ., LL.M.
    • Lauren Suarez, ESQ., LL.M.
    • Daniel Huynh, Esq., LL.M.
    • Christopher Engelmann, ESQ., LL.M.
    • Leslie Miranda, Esq., LL.M.
    • Brian M. Malloy, Esq.
    • Steve S. Mattia, Esq.
    • Sam Imandoust, ESQ., LL.M
    • Kaveh Imandoust, JD, MBT, CPA
    • Andrea Cisneros Valdez, Esq., LL.M.
    • Martin Schainbaum, ESQ., LL.M.
    • Dod Ghassemkhani, ESQ.
    • Vincent Renda, Esq.
    • Pedro Bernal, Esq.
    • Melanie M. Shamoun
    • Sandie Portilla
    • Renae Arabo
    • Sabri P. Shamoun
    • Hilary Dargavell
    • Lupita C. Torres
    • Jewell Cornejo
    • Kesia Belford
    • Remy Hogan
    • Judith Jeremie
    • Marley Smith-Peters
    • Melanie Chan
    • Tanner DeMera
    • Charles Ecker
    • Anna Gurr
    • Asia Smith
  • Practices
    • ERTC – Call Us Before It’s Too Late!
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      • IRS TAX MATTERS
        • IRS Appeals
          • IRS Appeals Process
          • Contesting an IRS Levy
          • Why Retain RJS LAW for IRS Appeals
          • 4 Tips For Navigating The IRS Rapid Appeals Process
        • IRS AUDITS
          • IRS Correspondence Audits
          • What are IRS Field Audits?
          • Initial IRS Compliance Center Audits
          • IRS Office Audits
          • What happens in an IRS Audit?
          • Taxpayer Rights Under IRS Publication 1
          • IRS Warns Taxpayers About Scam
        • NOTICES
          • IRS Notices
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          • FTB Notices
          • Avisos en Español
        • IRS Collections
          • Avoiding and Eliminating IRS Tax Liens
          • Collection Due Process Hearing
          • CP 501 – IRS Notice
          • Failure to file a tax return: What happens?
          • How the IRS calculates interest
          • How to get a tax levy released
          • ACS – Automated Collection System
          • IRS Collections Process
          • IRS Interest Abatement
          • IRS Revenue Officers
          • Jeopardy Assessments and Jeopardy Levies
          • National Tax Agencies
          • RJS LAW Approach to Collections
          • IRS Statute of Limitations on Collections
          • Streamlined Installment Agreements
          • Tax Penalty Abatement
          • Taxpayer Assistance Orders
        • IRS Payroll Tax
          • Independent Contractor Reclassification Audits
          • IRS Forms 940 and 941
          • IRS Trust Fund Interviews
          • Payroll Tax Liability Payment Options
          • Trust Fund Recovery Penalties
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          • Offer in Compromise and Dissipated Assets
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          • Offer in Compromise Alternatives
          • Actual IRS Offer in Compromise Results
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        • California State Tax Matters – California Franchise Tax Board | FTB | EDD
          • California Residency Audits
          • Discharging State Income Taxes in Bankruptcy
          • State Tax Practice – Outside of California
      • CRIMINAL TAX ISSUES
        • Criminal Investigation Division
        • IRS Criminal Investigation Division Tactics
        • Criminal Tax Defense – Tax Crimes
        • Currency Transaction Records & Suspicious Activity Reports
        • IRS Methods of Proof: Tax Fraud and Evasion
        • Methods IRS Agents Use to Locate Assets
        • IRS Special Agent Visits
        • Are You a Criminal Investigation Target?
        • Criminal Tax Attorney vs. White Collar Defense
      • CORPORATE TAXES
      • TAX COURT LITIGATION
      • Innocent Spouse Relief
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    • Trust & Estate Administration
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  • Tax Institute
    • 8th Annual USD School of Law – RJS LAW Tax Controversy Institute – July 28th, 2023
    • 7th Annual USD School of Law – RJS LAW Tax Controversy Institute – July 15th 2022
    • 6th Annual USD School of Law – RJS LAW Tax Controversy Institute
    • 5th Annual USD School of Law – RJS LAW Tax Controversy Institute
    • 4th Annual USD School of Law – RJS LAW Tax Controversy Institute
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Own a Foreign Bank Account? Be Prepared to File an FBAR to Avoid Penalties

Foreign Bank Account

Foreign Bank Account And Financial Accounts Reporting

If you own or are listed as a signer on foreign bank or financial account(s), it must be reported annually if the aggregate balance of the account(s) was equal to or greater than $10,000 USD at any point during the year.  Failure to do so may result in penalties starting at $10,000 USD per form not reported*. EACH bank or financial account is required to be reported through Form FinCEN 114 also known as Foreign Bank Account Reporting (“FBAR”). 

Who must file?

An individual is responsible for filing an FBAR if that person has: (1) a financial interest or name attached to a foreign bank account or financial account; and, (2) the foreign bank account or financial accounts(s) have an aggregate value of $10,000 USD at any point during the reporting calendar year.

To emphasize, the bank or financial account does not have to be in your name. If you have an interest or a signature on an account and if that account exceeds or has exceeded $10,000 USD at any time during the year, you must report.

What is a Financial and Foreign Financial Account?

A financial account can encompass a wide array of accounts. Most commonly these accounts include fixed deposit accounts, checking, and/or savings accounts. They may also include accounts such as insurance policies with a cash value, escrow accounts, shares in foreign mutual fund accounts or other similar investment vehicles.

A financial account is considered a foreign financial account when the account is physically located outside of the United States – whether it is owned by a United States financial institution or not.

A Common Issue – Joint Accounts and Signature Authority

A joint account is an account in which more than one person has an ownership interest and/or are a signer on the account.  Joint ownership of an account may exist even though an individual does not necessarily maintain or exercise financial control of the account for whatever reason. While some may believe they are not required to file an FBAR, they are indeed as their signature on the account provides a certain degree of control over the assets and are a party to communications between the bank or financial institution.

Another way to put it is the account does not need to be under your name. If you have any interest or signature on it, it needs be reported through the FBAR. For example, if you have a company offshore and the company has a foreign bank account, that account should be reported.  Additionally, parents may add an offspring’s name to a foreign bank account to ensure access in the event of an emergency.  Assuming the account had a value of or greater than $10,000 USD at any time within the calendar year, the existence of the foreign account must be reported on the offspring’s annual tax return. 

FBAR Reporting Exceptions – Foreign Bank Account

There are few exceptions to the FBAR. These exceptions may include but are not limited to: (1) participants in and/or beneficiaries of certain Tax-Qualified Retirement Plans; (2) IRA Owners and Beneficiaries; (3) United States Military Banking Facility; and (4) Trust Beneficiaries.

Filing Deadlines

Individuals with foreign bank or financial accounts meeting the reporting requirements must file their FBAR reports with the Department of the Treasury annually by April 15th of the year following the reporting year. However, individuals failing to meet this deadline are usually granted an automatic extension to October 15th.

To file your FBAR, you MUST use FinCEN’s BSA E-Filing System.  Applications to file may be found at: CLICK HERE

Penalties

Penalties may start at $10,000 USD per form not reported*. In certain situations, penalties may be avoided if there is reasonable cause for the failure to report and the issue is corrected. If non-reporting is willful, then the penalty amount can rise to $100,000 USD or 50% of the account balance at the time of the violation – whichever is greater.

Questions

The FBAR can be difficult to calculate and report. The RLS LAW International Tax Department, has qualified and experienced attorneys that had handled hundreds of cases related to FBARS.  Our sophisticated International Tax Department is ready to assist in preparing and reporting your FBAR as well as assisting those who failed to report. If you have questions, please call for a free consultation and assessment at 619-595-1655. You can also contact us via the web at www.RJSLawFirm.com. We look forward to hearing from you.


*Note: There are two cases from two different circuits where it was found that the penalty should be imposed per form (that is, per year) and not per bank account.  These two cases are U.S. v. Bittner, No. 4:19-cv-415, June 29, 2020 (Eastern District of Texas) and U.S. v. Kaufman, No. 3:18-CV-00787 (KAD), Jan. 11, 2021 (District of Connecticut).

Published by Andrea Cisneros Valdez and Andrew Rice

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Filed Under: Foreign Bank Account, International Tax, International Tax Attorney Tagged With: Foreign Bank Account, international tax, international tax attorney, international tax attorney san diego

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