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Are you a U.S. citizen, U.S. resident, or the owner of a U.S. business entity? Do you control a foreign bank account, such as a checking account, or foreign securities, such as brokerage accounts? If so, you may be required to report the account to the Financial Crimes Enforcement Network, or FinCEN, by filing FinCEN Form 114, also known as the “FBAR.” Compliance with this tax requirement is essential, as failure to file on a timely basis can result in civil and/or criminal penalties, depending on whether the underlying conduct was willful.
If you think you may need to file an FBAR this tax season – or if you have questions about how best to approach reporting undisclosed foreign accounts – the FinCEN Form 114 attorneys and CPAs at the Tax Law Office of David W. Klasing can help. With over 20 years of combined experience in international tax law, our dedicated San Diego FBAR lawyers are known for providing strategic, effective representation in the areas of international tax preparation, voluntary offshore disclosures, streamlined disclosures, FBAR audits, and criminal tax fraud investigations.
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What is the FinCEN Form 114 (FBAR)?
FinCEN Form 114 is a mandatory tax form that must be filed by certain U.S. citizens and resident aliens, in addition to certain U.S. businesses, trusts, and estates. Failure to file FinCEN Form 114 can result in substantial financial penalties, as discussed later in this article.
FinCEN Form 114 exclusively exists in an electronic format, which means it can only be filed online. In the past, FinCEN Form 114 was called Form TD F 90-22.1, a version of the form which no longer exists.
What Does FBAR Stand For?
FinCEN Form 114 is commonly referred to as the FBAR, an acronym which stands for Foreign Bank Account Reporting (or, as the IRS calls it, the “Report of Foreign Bank and Financial Accounts”). The FBAR and FinCEN Form 114 are synonymous.
What is the Deadline for FinCEN Form 114?
Until recently, the deadline to file FinCEN Form 114 was June 30 annually. This changed in 2015, when Congress passed the Surface Transportation and Veterans Health Care Choice Improvement Act. Under the new law, the FBAR filing deadline is generally April 15, coinciding with the deadline to file your personal income tax return. This date may be subject to changes, depending on federal holidays.
Do not panic if you are unable to file your persona tax return and FBAR by the April 15 FBAR deadline: taxpayers can apply for a six-month extension, bringing the adjusted deadline to October 15. As FinCEN notes, it is not necessary to request the extension for FBAR purposes, which occurs automatically with the valid extension of your personal tax return. However, taxpayers must keep in mind that filing deadline extensions are not payment deadline extensions. If taxpayers fail to take this into account, accumulated interest charges and penalties can lead to unpleasant surprises later in the year. Also keep in mind that you must file your FBAR before or at the same time you file your personal tax return. For example, if you file your personal tax returns on 8/15 you must file your FBAR on or before 8/15 even though you may have a valid extension or income tax purposes out to 10/15.
Do I Need to File FinCEN Form 114?
Every year, more than 100 million Americans file an income tax return. Far fewer taxpayers are affected by FinCEN Form 114 reporting requirements, with only 1,163,229 FBAR filings recorded by FinCEN in 2015. So how do you know if you are among the taxpayers who must file an FBAR in 2019? There are three main criteria that trigger FinCEN Form 114 filing requirements:
- You are a “U.S. person,” meaning a (1) U.S. citizen or (2) U.S. resident. Certain estates, trusts, and businesses are also included.
- You have an interest in a foreign financial account, such as a foreign bank account or securities account.
- The value of that account was at least $10,000 at any time during the year. This includes situations where the combined value of two or more foreign accounts was $10,000 or greater.
These criteria provide a general idea of who may be affected by FBAR filing requirements. However, due to the extreme detail and nuance of FinCEN’s regulations, it is wise to review your filing responsibilities with an attorney or CPA who has extensive experience in this complex area of tax law.
What About Foreign Bank Accounts Below $10,000?
Only foreign accounts which meet or exceed the $10,000 threshold are subject to FBAR reporting rules. Other FinCEN criteria also apply, as discussed above.
If you are not sure whether your account must be reported under FBAR regulations, you should clarify the matter with an experienced tax attorney as soon as possible in order to avoid inadvertently missing deadlines – or incurring larger penalties than necessary.
Failure to File FinCEN Form 114 Penalty
A negligent failure to file FinCEN Form 114 is punishable by a fine of up to $10,000 per violation. As a result, expenses can accumulate quickly for taxpayers who have failed to file multiple FBARs.
There are harsher FBAR penalties for “willful,” or intentional, failures to file. If you deliberately failed to file FinCEN Form 114 in an attempt to avoid your tax liabilities, you are not only at risk of being prosecuted for federal tax crimes, but can also be penalized with fines of up to (1) $100,000 per violation or (2) 50% of the account balance – whichever is greater.
International FinCEN Form 114 Tax Lawyers and CPAs in San Diego, CA
When you retain the services of the Tax Law Office of David W. Klasing, you will find San Diego FinCEN Form 114 lawyers, CPAs, and EAs who are dedicated to obtaining the best possible outcome in your case. We will search diligently for ways to lower your tax liabilities, strengthen your international tax planning strategies, bring you into compliance with FBAR-related laws, and mitigate civil or criminal penalties you may be facing.
Contact us online today to arrange a reduced-rate tax consultation or call our San Diego tax office at (619) 780-2538. You can also reach our main office in Irvine, California by calling (800) 681-1295. Please note that appointments with our San Diego tax attorneys must be scheduled in advance.
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Will it cost me more to hire the Tax Law Offices of David W. Klasing, who’s main office and the vast majority of the firm’s staff is located in Irvine California, but an appointment only Satellite office is close to my location, as opposed to a local company? Absolutely not! See our policies that address this issue here:
