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The IRS requires certain taxpayers to report offshore bank accounts by filing an online tax form known as FinCEN Form 114. FinCEN, or the Financial Crimes Enforcement Network, is a federal agency within the U.S. Treasury Department that works with the IRS to aggressively enforce taxpayer compliance with foreign account disclosure laws. Failure to file FinCEN Form 114 can result in substantial civil penalties, and potentially, give rise to a criminal investigation for offshore tax evasion and willful failure to comply with foreign information filing requirements related to the FBAR and other required filings.
Supported by our dedicated team of CPAs & CPA Candidates, the Orange County tax attorneys at the Tax Law Office of David W. Klasing possess more than 20 years of experience assisting taxpayers and businesses with foreign account tax compliance issues. Whether you need help reporting a foreign bank account, have questions about whether FinCEN Form 114 applies to you, want to explore your options for making a voluntary disclosure, or require foreign account tax audit representation, our international tax law attorneys are here to offer dependable guidance.
About Filing FinCEN Form 114
FinCEN Form 114 is an electronic tax form for disclosing foreign bank and financial accounts. It must be filed by certain taxpayers, including certain U.S. citizens, resident aliens, trusts, estates, and business entities, under a federal law known as the Bank Secrecy Act (BSA). Appropriately, the BSA is also known as the “Currency and Foreign Transactions Reporting Act.”
Is FinCEN Form 114 Different from FBAR?
The short answer to this question is no. The terms “FinCEN Form 114” and “FBAR,” which stands for “Foreign Bank Account Report,” are used interchangeably to indicate the same tax form. The same form was previously known as Form TD F 90-22.1, which is now obsolete.
When to File FinCEN Form 114
In the past, FinCEN Form 114 was due annually on June 30. However, in 2015, Congress passed comprehensive new transportation laws, which contained provisions changing the FinCEN Form 114 filing date. Under this law, the Surface Transportation and Veterans Health Care Choice Improvement Act, the new due date to file FinCEN Form 114 is generally April 15, coinciding with the traditional due date for federal income tax returns. The date may be delayed in certain years due to the timing of federal holidays.
Who is Required to File FinCEN Form 114 (FBAR)?
You may be required to file an FBAR, or FinCEN Form 114, if the following statements describe your situation:
- You are a “U.S. person,” which means that you are or represent one of the following:
- A U.S. citizen
- A resident alien
- A U.S. business entity, including partnerships, corporations, and limited liability companies (LLCs)
- A trust or estate that was formed in the United States
- You have “a financial interest in or signature authority over” one or more financial accounts located anywhere outside the United States. This extends to bank accounts, securities accounts, and potentially even Bitcoin wallets.
- The total value of all relevant accounts was above $10,000 at any time during the reporting period.
Though exceptions sometimes arise, such as certain exceptions applicable to IRA and trust beneficiaries, it is likely that you will be required to file FinCEN Form 114 if the above criteria describe your financial situation. You are advised to consult with an experienced FBAR attorney regarding your FinCEN Form 114 requirements, as harsh FBAR penalties can result from willful or even unintentional noncompliance.
IRS Penalties for Not Filing FinCEN Form 114
FinCEN Form 114 compliance is essential to avoiding the debilitating penalties that can be imposed for willful or negligent failure to disclose foreign bank and financial accounts. The difference between a “willful” and a “negligent” violation is that the former involves deliberate attempts to avoid the assessment or payment of one’s tax liabilities, whereas the latter involves a careless mistake or misunderstanding of tax laws. While both can have serious consequences, willful FBAR violations are subject to far greater penalties than negligent violations. An FBAR audit may be conducted if a violation appears to have occurred, such as underreporting or failures to file.
The penalties for a negligent failure to file FinCEN Form 114 can include fines of up to $10,000 per each individual instance of noncompliance, meaning multiple failures to file can have truly devastating financial repercussions. If the taxpayer acted willfully to conceal the account, the penalty may be either (1) 50% of the account balance, or (2) a fine of up to $100,000, depending on which amount is greater.
More critically, willful FBAR violations can lead to prosecution for tax evasion or related crimes, opening up the risk of prison time and other penalties. Our Orange County tax evasion lawyers provide aggressive criminal tax representation for taxpayers facing FBAR-related charges in California.
FinCEN Form 114 Tax Lawyers and CPAs in Orange County, CA
Make sure that you are in compliance with FinCEN Form 114 requirements by working with a knowledgeable CPA or FBAR attorney. At the Tax Law Office of David W. Klasing, we have a proven track record in the area of international tax representation for U.S. citizens, expats, foreign companies, and other taxpayers. As an award-winning firm, we take pride in helping our clients resolve complex offshore issues effectively and efficiently. Our goal is to help you achieve compliance with the law, while protecting your legal rights and seeking ways to reduce IRS penalties.
Do not wait until it is already too late to seek help with your FBAR tax issue. Contact the Tax Law Office of David W. Klasing online or call our Orange County tax office in Irvine at (949) 681-3502. You can also reach us by calling (800) 681-1295.
