The IRS really, REALLY wants your FBAR

Penalties?

• If non-filing is accidental, up to $10,000.
• If non-filing is intentional, up to the greater of $100,000 or 50 percent of account balances. Plus criminal penalties may also apply.

Haven’t filed FBAR in the Past?
The OVDI (Offshore Voluntary Disclosure Incentive) program is still open, albeit with a higher penalty. Lots if Internet chatter about OVDI exists. For more information on various strategies available for OVDI, please click OVDI on the drop down Category list in the right sidebar. Yes, we prepare OVDI applications, including amended returns.
What is FBAR?
Expat CPAs usually say it’s a form used by the IRS to help track foreign banking transactions by US “persons”. Tracking means:

• Looking for taxable income that should have been reported on your Form 1040 or business return.
• Looking for illegal foreign banking transactions. Like money laundering .

A US person includes US residents; entities, including but not limited to, corporations, partnerships, or limited liability companies created or organized in the United States or under the laws of the United States; and trusts or estates formed under the laws of the United States.
You file FBAR separately from your Form 1040. So it’s not like Form 2555 that you file with your Form 1040. For more FBAR information, click FBAR in the Forms drop down list on the right sidebar.
How to get the correct dollar value for FBAR

• Look at your bank statements for the year.
• Find the time period when you had the most assets in those accounts.
• Convert that highest amount to US dollars using the end of the year conversion rate.
• Enter the US dollar amount on FBAR.

Who has to File?

• Did you control a non-US bank account?
• Did the highest total balance in your non-US bank accounts ever exceed $10,000 for the year?
• Are you a US person as defined above?

If you answered yes to all three questions you have to file FBAR.
FBAR vs. Form 8938
They’re similar. Expat CPAs worry about the stiff penalties for not filing Form 8938 because it’s new and folks living outside the US might not be aware of the new reporting requirements. Click on 8938 in the Forms list for more info.
Are there exceptions for filing FBAR?
Yes. Here’s the IRS list:

• Certain foreign financial accounts jointly owned by spouses.
• United States persons included in a consolidated FBAR.
• Correspondent/nostro accounts.
• Foreign financial accounts owned by a govermental entity.
• Foreign financial accounts owned by an international financial institution.
• IRA owners and beneficiaries.
• Participants in and beneficiaries of tax-qualified retirement plans.
• Certain individuals with signature authority over but no financial interest in a foreign financial account.
• Trust beneficiaries.
• Foreign financial accounts maintained on a United States military banking facility.

Our CPA who was a manager in the international division of the IRS suggests filing, and then opting out to try to reduce the tax. Our Tax atty agrees.

The information provided herein is not intended as legal, accounting, financial or any type of advice for any specific individual or other entity. You should contact an appropriate professional for any such advice.