Under the Bank Secrecy Act, a “U.S. person” must report specified foreign financial accounts like his or her bank account, brokerage account, and mutual fund to the Treasury Department and keep a record of those accounts. These accounts can be reported by filing a Report of Foreign Bank and Financial Accounts (FBAR) on FinCEN Form 114. The purpose of the law is to monitor money laundering
This form is a part of the Bank Secrecy Act and has been existing since the ’90s. It is made by the U.S. treasury and handed to IRS for compliance. It is not filed under the Internal Revenue Code, but the IRS must receive it on or before the due date. The due date for the FBAR filing cannot be extended by filing for an extension. A U.S. person living abroad, a U.S. citizen, G.C. Holders, L1/L2, H1/H4, F1 completing five years in the U.S. must fill this form.
Unknown FBAR facts everyone should know.
· Both small or large non-compliance are equal victims of this law
· Investigators use FBARs to:
· Identify and trace funds used for illicit purposes
· Identify unreported Income maintained or generated abroad.
· Unreported Income is subject to additional penalty and taxes
Benefits of FBAR
· Allows taxpayers to become compliant with IRS
· New FATCA treaty will enable Bank to declare your account automatically
· Eliminates the risk of criminal prosecution or substantial penalty or both
· Provides the opportunity to reasonably estimate tax impact and financial damage in the earlier stage
· More you delay, higher the penalty
If you are unsure whether you need to file an FBAR form, you can contact us anytime. Our qualified tax professionals who have experience with FBARs will answer you and protect you from paying penalties for not filing this report