Foreign Bank Account Reporting Common Questions

Foreign Bank Account Reporting Common Questions

Foreign bank accounts have become a hot topic in America. In an effort to correct the large compliance gap that exists from unreported Foreign Bank Accounts, the IRS mines data to find businesses that do not comply, and your Foreign Bank helps them do it.

The following article features common questions regarding Foreign Bank Accounts and the filing requirements outlined by the IRS. If you need help with FBAR filings for 2019 or if you have been contacted by the IRS regarding your FBAR filings, the tax attorneys at J David Tax Law in Orlando, FL can help. Click here to request a no-cost, no-obligation consultation.

Common Questions About Foreign Bank Accounts

When did the IRS begin requiring Foreign Bank Accounts to file an annual report?

Introduced as a federal law in 2010, the Foreign Account Tax Compliance Act (FATCA) requires all US citizens living in America or abroad to file a foreign bank account annual report. This report is called an FBAR filing.

How will the IRS know I have a Foreign Bank Account?

When FATCA was passed in 2010, it also included the requirement for foreign financial institutions to begin reporting on July 1, 2014 all accounts held by US Citizens. The IRS will find out about your foreign bank account because your bank is required to tell them you have it.

What are the FBAR Filing basics?

You must file Form 114 with the Financial Crimes Enforcement Network (FinCEN), a division of the Treasury Department if your accounts reach a combined total of more than $10,000 during the year. You will file this report at the same time you file your taxes each year. Depending on your account totals, you may also be required to file Form 8938 and Schedule B. For more on the Filing Basics, click here to visit our FBAR Practice Areas Page.

What will the IRS do if I missed my FBAR Filing deadline?

To help identify noncompliant taxpayers, since 2015, the IRS has been able to mine the data they receive from Foreign Banking Institutions. If you are an American taxpayer with money overseas and you have not been filing your reports, the clock is ticking. Do not wait for the IRS to contact you about your missed FBAR filing! You can save yourself a lot of money and grief if you take action before receiving a notice from the IRS.

Failure to report your foreign bank accounts when you file your taxes each year could earn penalties up to 50% of your account value on the date the report was due, however, if you are non-willful in your FBAR filing, the IRS may reduce the penalty, up to $10,000 per occurrence. What is said to the IRS and how your report is filed impacts if the IRS considers you to be willful or non-willful, so we advise working with experienced professionals to handle your FBAR filings. Our tax attorneys in Orlando, FL are eager to assist you.

Should I simply start filing the missed reports?

If you missed your FBAR filing requirements, we strongly advise you to seek professional advice from the Tax Attorneys at J David Tax Law in Orlando, FL. Missing one detail on your report can cause you to incur penalties. An IRS investigation can also be triggered if you start filing missed reports. Our experienced tax attorneys can help guide you through the FBAR filing process.

Are there IRS programs or payment plans available?

To be eligible for IRS programs like the Offshore Voluntary Disclosure Program and Streamlined Disclosure, taxpayers should act immediately. As soon as the IRS begins enforcement action against you, it can cause you to lose eligibility for IRS programs and/or the IRS could put your foreign bank on a list that requires higher offshore compliance penalties.

Don’t wait if you missed your FBAR filing!

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