The United States government knows all about our finances, both domestically and abroad. Depending on what kind of financial accounts or holdings you have in a foreign bank or financial institution, you might have to file something called a Report of Foreign Bank and Financial Accounts (FBAR). It is crucial that you file your FBAR on time, or there could be serious consequences.
Your FBAR is due on April 15th, which happens to be the same day that federal tax returns are due. This can make remembering the deadline easier, but your FBAR is not filed in the same place. If you try to file your FBAR with the IRS like you would your taxes, you might be in trouble. Your FBAR must be filed with FinCEN, which is a separate entity from the IRS. If you file your FBAR in the wrong place, you will need to correct it before penalties are imposed. You might face civil penalties which consist mostly of fines. However, if the authorities believe you willfully refused to file your FBAR is intentionally included false information, you might face certain criminal penalties.
If you need to file your FBAR, call our tax accountants with US Tax Help at (541) 362-9127.
When You Have to File Your FBAR
Much like your tax returns, your FBAR must be filed by a specific date every year. Also like your tax returns, the filing deadline for your FBAR is April 15th. Unlike your tax returns, you are permitted an automatic extension until October 15th if you need it. Many people file FBARs from overseas, and filing it by the standard deadline might not be possible. If you need more time to prepare your FBAR, get help from a tax accountant or lawyer so you are not penalized for being late. Additional extensions are available under special circumstances, like natural disasters.
You are required to file an FBAR if you have assets, accounts, or holdings with foreign banks or financial institutions that are valued at no less than $10,000 at some point during the calendar year. If you have multiple accounts, you must file an FBAR if their aggregate value is at least $10,000, even if their individual worth is a bit less.
Depending on your financial situation, you might need time to prepare your FBAR. If your finances are complex or connected to a business, getting everything ready to file on time might be challenging. If you are worried you might miss the deadline, talk to a tax accountant for help.
Where You Must Submit FBAR Forms
While your FBAR is due at the same time as your tax returns, they are not filed together. Your taxes are filed with the IRS, but your FBAR must be filed with the Financial Crimes Enforcement Network. More specifically, you must use the Bank Secrecy Act (BSA) E-Filing System connected with FinCEN to submit your FBAR. Sending your FBAR with your taxes to the IRS is not an uncommon mistake, but it might cause you to miss the filing deadline.
This is often a source of confusion, as people sometimes assume that their taxes and FBARs go to the same place. Many cases of late FBARs are due to people filing the forms in the wrong place and not realizing the mistake until the authorities contact them.
If this happens to you, do not panic. Typically, when something like this happens because of an unintentional mistake, the government will not impose criminal penalties. However, if you do not correct the mistake in a timely manner, you might face civil penalties, such as fines or late fees.
What Happens if Your FBAR is Late
If your FBAR is late or contains information that is incorrect, inaccurate, or incomplete, the government will come asking questions. Depending on the situation, there is a chance you will face civil penalties. Usually, these include fines, but not much more. However, if this is not your first time filing a late or incorrect FBAR, the fines might be pretty expensive.
Criminal penalties are where things get serious. Remember, an accidental oversight is not a crime, and you should not be charged if your late FBAR was truly just a mistake. However, the Bank Secrecy Act, which governs how and when FBARs are filed, is designed to prevent certain financial crimes and fraud. If you do not file your FBAR, you might raise the suspicions of the federal government, and they might investigate.
Possible criminal charges for a late or incorrect FBAR can be serious. Potential charges depend on what crime the authorities believe you have committed. Charges for things like money laundering, tax evasion, or just a willful failure to report are all possible.
Typically, one violation due to a clerical oversight or just an honest mistake will not lead to criminal penalties as long as you correct the problem in a timely manner. Even so, having a lawyer help you with this kind of mistake might be a good idea.
How You Can Get Help if Your FBAR is Late or Inaccurate
Filing your FBAR might not be simple or easy, especially if you are unfamiliar with the process, live overseas, or have especially complicated finances. One strategy is to hire a professional tax accountant or CPA. Someone like this should be familiar with the laws and requirements of FBARs, and they can make sure your forms are filed in the right place at the right time. They can also help you avoid mistakes so that you do not incur fines later.
If you have already filed your FBAR and there is something wrong, or it was filed late, you should consider hiring an attorney. Even if the issue is minor and criminal charges are unlikely, a lawyer can help you explain what happened and hopefully avoid any serious investigation or penalties.
Contact US Tax Help for Assistance with your FBAR
If you need to file your FBAR, call our tax accountants with US Tax Help at (541) 362-9127.