Foreign Bank Account Reporting (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).
We specialize in FBAR reporting. The FBAR is required because foreign financial institutions may not be subject to the same reporting requirements as domestic financial institutions. 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. Investigators use FBARs to help identify or trace funds used for illicit purposes or to identify unreported income maintained or generated abroad.
FBAR Criminal Penalties: Tax evasion can carry a prison term of up to five years and a fine of up to $250,000. Filing a false return can mean up to three years in prison and a fine of up to $250,000. Failing to file a tax return can mean a one year prison term and a fine of up to $100,000. Failing to file FBARs can be considered criminal as well, with monetary penalties up to $500,000 and prison for up to ten years. We can file past FBAR reports and workout tax settlements, as well as provide all in-house tax services regarding any of your tax or FBAR needs.
FBAR Civil Penalties: The civil penalty for failing to file an FBAR is $10,000 for each non-willful violation. But note that the government can apply this penalty per account and per year. That means your penalty exposure goes up the more accounts you have and the more years you fail to comply. If a violation is determined willful, the penalty is the greater of $100,000 or 50% of the amount in the account for each violation. Again, each year you did not file is a separate violation.
FBARs are important to the IRS enforcement efforts regarding foreign accounts and income tax compliance. At Chawla & Associates, we are experts in assisting our clients to comply with FBAR reporting requirements. We have unmatched experience dealing with challenging FBAR enforcement actions and have successfully reduced FBAR-related penalties for our clients.