FBAR Filing / FBAR Representation / FBAR Reporting / FBAR Services
We are comprised of tax attorneys, IRS tax lawyers, certified public accountants, and former IRS agents, managers and tax instructors.
We have over 206 years of professional tax experience and over 60 years of working directly for the Internal Revenue Service in the local, district, and regional tax offices of the IRS.
We can help take the worry, anxiety and stress away from anyone dealing with FBAR issues.
While at the Internal Revenue Service we taught tax law.
Our tax attorneys are experts in FBAR Tax Representation, FBAR Filing and all related international tax services.
We can file past FBAR reports, workout tax settlements and provide all in-house tax services regarding any of your tax or FBAR needs.
We can help take the worry, anxiety and stress away from anyone dealing with FBAR issues.
Who has to file a FBAR?
If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, the Bank Secrecy Act may require you to report the account yearly to the Internal Revenue Service by filing Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR).
FBAR is a Government tool – Report of Foreign Bank and Financial Accounts (FBAR)
The FBAR is a tool to help the United States government identify persons who may be using foreign financial accounts to circumvent United States law.
The FBAR is required because foreign financial institutions may not be subject to the same reporting requirements as domestic financial institutions. Investigators use FBARs to help identify or trace funds used for illicit purposes or to identify unreported income maintained or generated abroad.
IRS has reported that since the inception of the FBAR Program the Federal Government has collected over $4.4 Billion.
At the end of this year they will be over 80 countries that have signed a tax treaty to turn over information to the US government regarding the financial interest of taxpayers in the United States thus more need for FBAR representation.
IRS is dedicating many more tax dollars and manpower because of the large stream of revenue this generates. Taxpayers should beware, the IRS is coming full force.
FBAR Tax Representation and Tax Relief for IRS FBAR Problems
Michael D. Sullivan, Former IRS Agent L.L.C. is a professional tax firm specializing in tax services and relief for any IRS problems or tax situations pertaining to FBAR tax or Offshore Tax Issues. We are FBAR representation specialists.
The U.S. Government has been very active in Offshore Activity and has dedicated millions of dollars to the FBAR cases for revenue source it generates in the form of civil and criminal penalties. Because of this the IRS is training many new agents to become specialist in FBAR. In addition, the Government has sought out the assistance of foreign countries in identifying expatriates who have interests in foreign financial accounts.
Who should File FBAR, Reporting and Filing
Report of Foreign Bank and Financial Accounts (FBAR)
If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, exceeding certain thresholds, the Bank Secrecy Act may require you to report the account yearly to the Internal Revenue Service by filing electronically a Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR). See the ‘Who Must File an FBAR’ section below for additional criteria.
Current FBAR Guidance
FinCEN introduces new forms
On September 30, 2013, FinCEN posted, on their internet site, a notice announcing FinCEN Form 114, Report of Foreign Bank and Financial Accounts (the current FBAR form). FinCEN Form 114 supersedes TD F 90-22.1 (the FBAR form that was used in prior years) and is only available online through the BSA E-Filing System website.
The system allows the filer to enter the calendar year reported, including past years, on the online FinCEN Form 114. It also offers an option to “explain a late filing,” or to select “Other” to enter up to 750-characters within a text box where the filer can provide a further explanation of the late filing or indicate whether the filing is made in conjunction with an IRS compliance program.
Anyone with $10,000 in one or more foreign financial accounts (determined by taking the maximum balance of each account at any time during the year, summing the maximums, and comparing the sum to $10,000) must file Form TD F 90-22.1 (the FBAR).
The form must be received on or before June 30th, so that means you need to take care of this now if this reporting requirement applies to you. There are no extensions available for the FBAR.
Exception to FBAR Reporting Requirements
Exceptions to the FBAR reporting requirements can be found in the FBAR instructions. There are filing exceptions for the following United States persons or foreign financial accounts:
- 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 governmental 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; and
- Foreign financial accounts maintained on a United States military banking facility.
Look to the form’s instructions to determine eligibility for an exception and to review exception requirements.
Reporting and Filing Information
A person who holds a foreign financial account may have a reporting obligation even though the account produces no taxable income.
Checking the appropriate block on FBAR-related federal tax return or information return questions (for example, on Schedule B of Form 1040, the “Other Information” section of Form 1041, Schedule B of Form 1065, and Schedule N of Form 1120) and filing the FBAR, satisfies the account holder’s reporting obligation.
The FBAR is not filed with the filer’s federal income tax return.
The granting, by the IRS, of an extension to file federal income tax returns does not extend the due date for filing an FBAR. You may not request an extension for filing the FBAR.
The FBAR is an annual report and must be received by the Department of the Treasury in Detroit, MI, on or before June 30th of the year following the calendar year being reported. While FinCEN strongly encourages individuals to electronically file FBARs, the form can be mailed to one of the two addresses below, provided that the mailing is received by June 30, 2013:
File by mailing the FBAR to:
United States Department of the Treasury
P.O. Box 32621
Detroit, MI 48232-0621
If an express delivery service is required for a timely filed FBAR, address the parcel to:
IRS Enterprise Computing Center
ATTN: CTR Operations Mail room, 4th Floor
985 Michigan Avenue
Detroit, MI 48226
Delivery messenger service contact telephone number: (313) 234-1062.
Account holders who do not comply with the FBAR reporting requirements may be subject to civil penalties, criminal penalties, or both.
Electronic Filing for FBAR Forms – MANDATORY Beginning July 1, 2013
On June 29, 2011, FinCEN announced that all FinCEN forms must be filed electronically with certain exceptions. The FBAR was granted a general exemption from mandatory electronic filing through June 30, 2013. E-filing is a quick and secure way for individuals to file FBARs. Filers will receive an acknowledgement of each submission. For more information about FBAR e-filing, read the FinCEN news release.
New Reporting Requirements by U.S. Taxpayers Holding Foreign Financial Assets (Form 8938)
Taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS on Form 8938, Statement of Specified Foreign Financial Assets. The new Form 8938 filing requirement does not replace or otherwise affect a taxpayers requirement to file FBAR.
A chart providing a comparison of Form 8938 and FBAR requirements, and other information to help taxpayers determine if they are required to file Form 8938, may be accessed from the IRS Foreign Account Tax Compliance Act Web page.
FBAR Penalties, procedures and applications.
The IRS has been delegated authority to assess FBAR civil penalties. There are civil penalties for negligence, pattern of negligence, non-willful, and willful violations. Each case is different and the results vary from cases to case.
IRS penalties are be asserted only to promote compliance with the FBAR reporting and record keeping requirements.
In exercising IRS discretion, tax examiners consider whether the issuance of a warning letter and the securing of delinquent FBARs, rather than the assertion of a penalty, will achieve the desired result of improving compliance in the future. We hope!
FBAR civil penalties have varying upper limits, but no floor.
The IRS audit examiner discretion is necessary because the total amount of penalties that can be applied under the statute can greatly exceed an amount that would be appropriate in view of the violation. You must hope the tax examiner is fair and uses good judgement.
IRS tax examiners are expected to exercise discretion, taking into account the facts and circumstances of each case, in determining whether penalties should be asserted and the total amount of penalties to be asserted.
Because FBAR penalties do not have a set amount, IRS has developed penalty mitigation guidelines to assist examiners in the exercise of their discretion in applying these penalties.
The FBAR mitigation guidelines are only intended as an aid for the examiner in determining an appropriate penalty amount.
The IRS tax examiner must still consider whether a warning letter or a penalty amount that is less than what would be called for under the mitigation guidelines would be more appropriate given the facts and circumstances of a particular case.
FBAR penalties are determined per account, not per unfiled FBAR, for each person required to file.
IRS penalties apply for each year of each violation.All the more need for competent and experienced FBAR representation.
As noted above, however, examiners are expected to exercise discretion, taking into account the facts and circumstances of each case, in determining whether penalties should be asserted and the total amount of penalties to be asserted.
Call us for a no cost professional consult for FBAR representation and FBAR filing.
Commonly Asked and Answered FAQ
- What is an FBAR?
A. An FBAR is a Report of Foreign Bank and Financial Accounts. The form number is TD F 90-22.1 (PDF). You can find this on our website.
- Q. Who must file an FBAR?
A. Any United States person who has a financial interest in or signature authority or other authority over any financial account in a foreign country, if the aggregate value of these accounts exceeds $10,000 at any time during the calendar year.
- Q. What is a foreign country?
A. A “foreign country” includes all geographical areas outside the United States, the commonwealth of Puerto Rico, the commonwealth of the Northern Mariana Islands, and the territories and possessions of the United States (including Guam, American Samoa, and the United States Virgin Islands).
- Q. What is a United States person?
A. “United States person” includes a citizen or resident of the United States, a domestic partnership, a domestic corporation, and a domestic estate or trust.
- Q. Is a single-member LLC, which is a disregarded entity for U.S. tax purposes, a United States person for FBAR purposes?
A. Yes, the tax rules concerning disregarded entities do not apply with respect to the FBAR reporting requirement. FBARs are required under Title 31, not under any provisions of the Internal Revenue Code.
- Q. What constitutes signature or other authority over an account?
A. A person has signature authority over an account if such person can control the disposition of money or other property in it by delivery of a document containing his or her signature (or his or her signature and that of one or more other persons) to the bank or other person with whom the account is maintained.
Other authority exists in a person who can exercise power that is comparable to signature authority over an account by direct communication to the bank or other person with whom the account is maintained, either orally or by some other means.
- Q. Is a U.S. resident with power of attorney on his elderly parents’ accounts in Canada required to file an FBAR, even if the resident never exercised the power of attorney?
A. Yes, if the power of attorney gives the U.S. resident signature authority, or other authority comparable to signature authority, over the financial accounts.
Whether or not such authority is ever exercised is irrelevant to the FBAR filing requirement. See Notice 2010-23 for information regarding an extended due date to report signature authority over a foreign financial account.
- Q. How do filers report their accounts to the IRS?
A. Filers report their foreign accounts by (1) completing boxes 7a and 7b on Form 1040 Schedule B, box 3 on the Form 1041 “Other Information” section, box 10 on Form 1065 Schedule B, or boxes 6a and 6b on Form 1120 Schedule N and (2) completing Form TD F 90-22.1 (PDF).
- Q. When is the FBAR due?
A. The FBAR is due by June 30 of the year following the year that the account holder meets the $10,000 threshold.
The granting, by IRS, of an extension to file Federal income tax returns does not extend the due date for filing an FBAR. Filers cannot request an extension of the FBAR due date. .
If a filer does not have all the available information to file the return by June 30, they should file as complete a return as they can and amend the document when the additional or new information becomes available.
- Q. Where are FBAR forms available?
A. FBAR forms are available:
Online via IRS.gov in PDF.
Online via Department of the Treasury’s Financial Crimes Enforcement Network Web site in PDF.
By calling the IRS at 800-829-3676.
- Q. Does the IRS have an email address to send questions regarding the FBAR?
A. You can send questions concerning the FBAR to FBARquestions@irs.gov. The email system does not accept actual FBAR reports.
- Q. How do I verify that my FBAR was filed?
A. Ninety days after the date of filing, the filer can request verification that the FBAR was received. An FBAR filing verification request may be made by calling 866-270-0733 and selecting option 1. Up to five documents may be verified over the phone.
There is no fee for this verification.
Alternatively, an FBAR filing verification request may be made in writing and must include the filer’s name, taxpayer identification number and the filing period.
There is a $5 fee for verifying five or fewer FBARs and a $1 fee for each additional FBAR. A copy of the filed FBAR can be obtained at a cost of $0.15 per page. Check or money order should be made payable to the United States Treasury.
The request and payment should be mailed to:
IRS Enterprise Computing Center/Detroit
P.O. Box 32063
Detroit, MI 48232
- Q. How does an FBAR filer amend a previously filed FBAR?(talk to an attorney before filing an amended report)
A. FBAR filers can amend a previously filed FBAR by:
Checking the Amended box in the upper right-hand corner of the first page of the form;
Making the needed additions or corrections;
Stapling it to a copy of the original FBAR; and
Attaching a statement explaining the additions or corrections.
- Q. What happens if an account holder is required to file an FBAR and fails to do so?
A. Failure to file an FBAR when required to do so may potentially result in civil penalties, criminal penalties or both. If you learn you were required to file FBARs for earlier years, you should file the delinquent FBAR reports and attach a statement explaining why the reports are filed late.
No penalty will be asserted if the IRS determines that the late filings were due to reasonable cause. Keep copies of what you send for your records.
- Q. Can cumulative FBAR penalties exceed the amount in a taxpayer’s foreign accounts?
A. Yes, under the penalty provisions found in 31 U.S.C. 5314(a)(5), it is possible to assert civil penalties for FBAR violations in amounts that exceed the balance in the foreign financial account.
- Q. How long should account holders retain records of the foreign accounts?
A. Records of accounts required to be reported on an FBAR must be retained for a period of five years. Failure to maintain required records may result in civil penalties, criminal penalties or both.
- Q. For filing FBARs for prior years, should the current FBAR form be used or should the previous version of the form be used?
A. The current FBAR form (revised in October 2008) may be used to report a financial interest in, or signature or other authority over, financial accounts that were maintained in years prior to 2008.
However, since the changes to the current FBAR form reflect a change in the reporting requirements, the instructions for the prior version of the FBAR form (revised in July 2000) may be relied upon for the purpose of determining the filing requirements for properly reporting financial accounts maintained in calendar years prior to 2008.
- Q. Does more than one form need to be filed for a husband and wife owning a joint account?
A. No, provided that the names and Social Security numbers of the joint owners are fully disclosed on the filed FBAR.
A spouse having a joint financial interest in an account with the filing spouse should be included as a joint account owner in Part III of the FBAR. The filer should write “(spouse)” on line 26 after the last name of the joint spousal owner.
If the only reportable accounts of the filer’s spouse are those reported as joint owners, the filer’s spouse need not file a separate report. If the accounts are owned jointly by both spouses, the filer’s spouse should also sign the report.
It should be noted that if the filer’s spouse has a financial interest in other accounts that are not jointly owned with the filer or has signature or other authority over other accounts, the filer’s spouse should file a separate report for all accounts including those owned jointly with the other spouse.
- Q. Are UBS account holders still eligible for the Voluntary Disclosure Practice? The income earned on my client’s foreign account has not been reported on his Form 1040, nor have FBARs been filed.
A. The Voluntary Disclosure Practice is a longstanding practice of IRS Criminal Investigation of taking timely, accurate, and complete voluntary disclosures into account in deciding whether to recommend to the Department of Justice that a taxpayer be criminally prosecuted.
It enables non compliant taxpayers to resolve their tax liabilities and minimize their chances of criminal prosecution. When a taxpayer truthfully, timely and completely complies with all provisions of the Voluntary Disclosure Practice, the IRS will not recommend criminal prosecution to the Department of Justice.
Although the use of special voluntary disclosures by taxpayers with unreported income from offshore accounts expired on Oct. 15, 2009, non compliant taxpayers can still use the VDP to resolve their tax liabilities.
A voluntary disclosure is made by following the procedures described in I.R.M. 22.214.171.124. Tax professionals or individuals who want to initiate a voluntary disclosure should call their local CI office.
FBAR Services of Michael D. Sullivan, Former IRS Agent LLC
• Delinquent FBAR Reports
• FBAR Penalty Abatement
• Statement of Specified Foreign Financial Assets (Form 8938)
• RRSP and RRIF (Form 8891)
• FATCA compliance issues
• IRS representation
• Compliance issues related to renunciation of US citizenship or resident alien status
Why use Michael D. Sullivan, Former IRS Agent L.L.C.
1. We are comprised of Board Certified Tax Attorneys, Tax Lawyers, CPA’s and Former IRS Agents and Tax Managers.
2. When employed by the IRS we taught Tax Law to new IRS Agents.
3. We have over 205 years of professional tax experience and over 60 years of direct Internal Revenue Service experience in the local, district and regional offices of the IRS.
4. We are “A” Plus rated by the Better Business Bureau.
5. Because of our vast experience at the IRS we know all the tax policies and tax procedures that govern FBAR.
Make sure you choose the right professional firm to handle FBAR your representation.
There are many excellent tax firms and we believe we are among the leaders for FBAR representation, FBAR filing and FBAR settlements.
NATIONAL PRESS RELEASE FOR FBAR REPRESENTATION
The Noose is Tightening on Offshore Tax Evasion Warns FBAR Expert and Tax Attorney at Michael D. Sullivan, Former IRS Agent LLC
According to a recent IRS Press Release, the Treasury Department and the IRS have issued final regulations to combat offshore tax evasion, which will focus on rooting out non-compliance by U.S. taxpayers using foreign accounts. “For those US Taxpayers using foreign bank accounts, the noose is tightening,” says FBAR Tax Attorney, Anthony Verni.
Anthony Verni, Tax Attorny
Miami, FL (PRWEB) January 22, 2013
According to Verni, On January 17, 2013 The U.S. Department of the Treasury and the Internal Revenue Service (IRS) announced the issuance of comprehensive final regulations implementing the information reporting and withholding tax provisions commonly known as the Foreign Account Tax Compliance Act (FATCA), which was enacted by Congress in 2010. These new regulations focus on rooting out non-compliance by U.S. taxpayers using foreign accounts and represent a significant step in establishing a systematic approach to combating tax evasion. For those US Taxpayer using foreign bank accounts, the noose is tightening.
These regulations provide step-by-step process for U.S. account identification, information reporting, and withholding requirements for foreign financial institutions (FFIs), other foreign entities, and U.S. withholding agents, thereby facilitating the identification of US Taxpayers, who maintain foreign accounts through international cooperation.
“These regulations give the Administration a powerful set of tools to combat offshore tax evasion effectively and efficiently,” said Deputy Secretary Neal Wolin. “The final rules mark a critical milestone in international cooperation on these issues, and they provide important clarity for foreign and U.S. financial institutions.”
The final regulations issued on January 17, 2013:
- Build on intergovernmental agreements that foster international cooperation.
- Phase in the timelines for due diligence, reporting and withholding and align them with the intergovernmental agreements.
- Expand and clarify the scope of payments not subject to withholding.
- Refine and clarify the treatment of investment entities. Clarify the compliance and verification obligations of FFIs.
The Treasury has collaborated with foreign governments to develop two alternative model intergovernmental agreements that facilitate the effective and efficient implementation of FATCA.
These models serve as the basis for entering into bilateral agreements with cooperating foreign countries and help implement the law in a manner that: (i) removes domestic legal impediments to compliance; (ii) secures wide-spread participation by every non-exempt financial institution in the partner jurisdiction; (iii) fulfills FATCA’s policy objectives; (iv) and further reduces burdens on FFIs located in partner jurisdictions. Seven countries have already signed or initialed these agreements.
On January 17, 2013 the Treasury announced that Norway has joined the United Kingdom, Mexico, Denmark, Ireland, Switzerland, and Spain as countries that have signed or initialed model agreements. Treasury is engaged with more than 50 countries and jurisdictions to curtail offshore tax evasion, and more signed agreements are expected to follow in the near future.
For a full text of the IRS press release, click on the link below
For further information about FBAR regulations, please contact Mr. Verni at 866-700-1040.
Michael D. Sullivan, Former IRS Agent is a professional tax resolution firm, A+ Rated and accredited by the Better Business Bureau. On staff are Board Certified Tax Attorneys, CPA,s, and Former IRS Agents, Managers and Instructors. We have over 206 years of professional tax experience and over 60 years of direct IRS experience. To learn more about Michael D. Sullivan, Former IRS Agent, LLC, please visit http://freshstarttax.com or call us at (866)700-1040