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FBAR Penalty Statutes of Limitations

What are the FBAR statute of limitations for penalty assessments?  What other FBAR statutes should I be concerned about?  If you have failed to file your FBAR, also known as FinCEN Form 114, you may be asking yourself these questions.  The article below will examine and discuss a few of the related FBAR statutes of limitations.

31 U.S.C. 5321(b)(1) and 5321(b)(2) provide the FBAR penalty assessment statute expiration date and collection statute expiration date, which is part of the Bank Secrecy Act.  The FBAR assessment statute expiration date is six (6) years from the due date of the FBAR, and this applies whether the failure to file the FBAR was willful or non-willful.  It is very important to note that you can also be assessed a penalty for failing to maintain required records.  The FBAR penalty statute of limitation for failing to maintain required records, whether willful or non-willful is also six years, but this statute only begins to run from the date the Internal Revenue Service first requests the records.

That being said, let’s apply these FBAR statute of limitations to an example.  Let’s assume Joe has foreign bank accounts in calendar year 2014 that exceed $10,000, and that for purposes of the FBAR filing, Joe is a U.S. Person.  Joe would thus have been required to file the FBAR (Report of Foreign Bank and Financial Accounts) on June 30, 2015.  Oooops, Joe was unaware of the FBAR filing requirement and did not file FinCEN Form 114.  The FBAR penalty assessment statute of limitations for failing to file the FBAR would expire June 30, 2021.

Now lets apply the FBAR statute of limitations for failing to maintain required records.  We will assume the same facts as above, but Joe also failed to maintain required records.  On April 1, 2016 and IRS or other examiner requested the applicable records to Joe’s foreign bank accounts.  The FBAR assessment statute of limitations for failing to maintain required records would expire on April 1, 2022.

Now that we have determined Joe’s FBAR statute of limitations for assessing a FBAR penalty, does the government have a statute of limitations to file suit?  Yes, there is a two (2) year statute for the government to file a civil action against Joe to recover an FBAR penalty.  However, there is no statute of limitations for the time period in which the government can receive payment from Joe by offsetting certain payments.

The above article has been prepared to provide information relating to FBAR statutes of limitation, but please remember to always discuss your specific facts and circumstances directly with your tax attorney or other counsel.  If you wish to speak with a tax attorney at The McGuire Law Firm, please feel free to contact us at any time.

Denver Tax Lawyer

Forms Filed With the Streamlined Offshore Voluntary Disclosure Program

For many individuals, the Streamlined Offshore Voluntary Disclosure Program provided welcome relief in comparison to the “initial” Offshore Voluntary Disclosure Program.  Many taxpayers with foreign accounts and assets contact wonder what forms and documents must be filed to apply for the Streamlined Offshore Voluntary Disclosure Program.  In general, taxpayer’s must file the necessary FBARs, amend the necessary 1040s (1040X) and Form 14654.  Further, based upon the facts and circumstances, other forms may not be prepared and filed.  You should always discuss your requirements with your tax attorney and/or other tax advisors.  The video below has been prepared to provide additional information regarding the forms filed with the streamlined program.  You can contact The McGuire Law Firm to discuss your issues directly with a tax attorney.

Non-Willful Conduct Under Streamlined Offshore Voluntary Disclosure Program

Non-willful conduct is required under the Streamlined Offshore Voluntary Disclosure Program (Streamlined OVDP).  If the failure to report foreign bank accounts and/or foreign financial assets was non-willful, you may be subject to a lower penalty base.  The key question is, what constitutes non-willful actions by a taxpayer?  Generally, the IRS would consider non-willful to mean the conduct or failure to properly report was due to a mistake, negligence or based upon a good faith misunderstanding of the law.  Perhaps an understandable lack of knowledge may lead to non-willful conduct.

The video below also provides a short explanation of non-willful conduct, which of course is based upon the facts and circumstances of each case.  Please remember to consult with your tax attorney directly if you have questions relating to FATCA, FBAR filings and/or other foreign tax compliance issues.

You can contact The McGuire Law Firm to speak with a tax attorney regarding your issues.

Who Enforces FBAR?

If you have foreign bank accounts or interests in foreign assets, you may be required to file the FBAR, which is the reporting of foreign bank and financial accounts.  That being said, who enforces the FBAR regulations, and collects on penalties that have been assessed?  FinCEN has directed that the enforcement of the FBAR be handled by the Internal Revenue Service.  Thus, if you were assessed a penalty for failing to file the FBAR, the IRS would collect on the penalty.

The video below has been prepared to provide additional information regarding enforcement of the FBAR.

John McGuire is a tax attorney in Denver, Colorado at The McGuire Law Firm.  John’s practice in taxation involves matters before the Internal Revenue Service such as tax audits, FBAR & OVDP matters, tax debts, issues before United States Tax Court and individual & business taxation.  You can speak with a Denver tax attorney at The McGuire Law Firm by calling 720-833-7705 and scheduling a free consultation.

Offshore Voluntary Disclosure Program

What is the Offshore Voluntary Disclosure Program?  Often referred to as the OVDP, this program was created to allow taxpayers with foreign financial accounts and interests to voluntarily disclose their interests for a reduced penalty.  Currently the foreign bank reporting requirements require that taxpayers with foreign financial accounts or interests report these interests when the aggregate amount in the accounts exceeds a certain threshold, which is currently $10,000.  This is often referred to as the FBAR.  When taxpayers fail to report such interests, penalties can be assessed by the Internal Revenue Service.  Thus the OVDP provides a means for taxpayers to be in compliance with the FBAR requirements, and reduce penalties that would apply if they do not voluntarily disclose and are eventually caught by the Internal Revenue Service.  John McGuire is a tax attorney in Denver, Colorado with The McGuire Law Firm and has prepared the video below to provide additional information regarding the Offshore Voluntary Disclosure Program.  You can speak with a tax attorney by contacting The McGuire Law Firm and schedule a consultation.

What is FBAR Form 114?

Form 114 is the form used to report financial interests or signatory authority over foreign financial interests as required under the Report of Foreign Bank and Financial Accounts.  The form is filed yearly, and electronically with the Financial Crimes Enforcement Network (FinCen).  It is important to note that Form 114 is filed separately from your 1040 individual income tax return.  Moreover, certain penalties apply for not filing the Form when you would be required to do so.  The video below has been prepared by a tax attorney to provide additional information regarding Form 114.

Speak with a tax attorney in Denver, Colorado or Golden, Colorado at The McGuire Law Firm regarding your tax questions and issues.

What Act Allows For The FBAR

There are certain requirements for the reporting of Foreign Bank and Financial Accounts, also referred to as FBAR.  Recently, I was asked, where did the Department of Treasury obtain authority to require such reporting and obtain information on certain accounts those holding signature authority or an interest in such account. The Bank Secrecy Act (BSA) is the act that gives authority to the Department of Treasury to require reporting and the compilation of information.  The video below has been prepared by John McGuire, a tax attorney in Denver, Colorado at The McGuire Law Firm.

If you have questions regarding your requirements to report foreign accounts or assets, contact The McGuire Law Firm to schedule a free consultation with a tax attorney in Denver, Colorado.