Do you have offshore accounts? Is so, this is a must-see!
Stanley Foodman, of Foodman CPAs & Advisors fields questions regarding the responsibilities of an offshore account owner and filing with the IRS.
Q: Hi Stanley, I have some FBAR concerns. Can you please tell me, what is an FBAR?
A: An FBAR is a report that has to be made to the US Treasury every year of a tax payer’s foreign financial accounts.
Q: Stanley, what is FinCEN?
A: FinCEN is the Financial Crimes Investigative Center for the US Treasury.
Q: Who has to file an FBAR?
A: Every US taxpayer who has offshore accounts whose aggregate value is in excess of $10,000 USD at any moment during a year has to file an FBAR by a date certain in the following year and has to be filed with FinCEN.
Q: Here comes the most important question? What happens if I don’t file the FBAR?
A: The tax payer that is supposed to file an FBAR and fails to file an FBAR, there is a minimum penalty of $10,000 for non-willful failure to file an FBAR. If on the other hand, FinCEN and the IRS feel that an FBAR was not filed, and wasn’t filed on purpose, then the taxpayer can be subject to penalties of as high as $100,000 or 50% of the highest value of their offshore accounts for the year that wasn’t reported. In addition to which, they can also be subject to prosecution and criminal penalties and incarceration.