Deadline to Reporting Foreign Accounts Approaches for 2024

Deadline to Reporting Foreign Accounts Approaches 

For the past several years, the FBAR has been on automatic extension. This means that U.S. Taxpayers worldwide have until October 15th to file the FBAR, even if they did not request an extension for their tax return. For most Taxpayers, the issue with the FBAR is not current-year filing, but rather how to handle prior-year non-compliance. Once a person realizes that they are required to file the FBAR in the current year, it is not uncommon for them to also learn that they should have been filing the FBAR form (FinCEN Form 114) in prior years as well. Making matters more confusing is all the misinformation and fear-mongering  Taxpayers will find online. A few free consultations later, the Taxpayer is falsely led to believe that they will be spending 50 years in prison with the Feds coming to bang down their door any minute. In reality, the IRS has developed various procedures to assist Taxpayers with safely getting into compliance — and the procedures for filing current-year FBARs for compliant Taxpayers are relatively straightforward. Let’s take a look.

No Prior Requirement to File FBAR

First, if this is the first year that the Taxpayer is required to file the FBAR, then for the most part the FBAR is an international information reporting form that can be managed without the help of a lawyer. While many of the other foreign tax forms can be very complicated and involve complex and detailed tax calculations, the FBAR is not too bad. It typically just requires the filer to include the maximum balance of their accounts. Noting, that it is not a test, and the Taxpayer will not get graded by the IRS.  In addition, the Supreme Court ruling in Bittner limits the IRS to the amount of non-willful penalties they can issue against Taxpayers (most FBAR violations are non-willful).

First-Time Filing FBAR, Missed Other International Reporting Forms

Sometimes, the Taxpayer may have not been late in filing the FBAR in prior years, but it turns out that they should have been filing other international information reporting forms in prior years, such as Form 5471 or Form 8938. In this type of situation, the Taxpayer will want to consider submitting to one of the offshore disclosure programs to resolve the prior reporting issues. Noting, FBAR penalties are based on the failure to file in prior years, so if this is the first year the FBAR is due, the Taxpayer should be able to circumvent FBAR penalties as part of their submission.

Missed FBAR Prior Years and Other Foreign Tax Forms

Many Taxpayers will learn in the current year that they missed filing the FBAR along with several other international information reporting forms in prior years. These Taxpayers may be eligible for one (or more) of the offshore tax amnesty programs depending on the:

• • • nature of the noncompliance,

    • whether they have been compliant with their U.S. annual tax filings (aside from the offshore component), and

    • whether they are willful or non-willful.

Taxpayers should consider the different options sooner than later because once they get hit with fines and penalties, they become ineligible for the offshore disclosure programs.

Late Filing Penalties May Be Reduced or Avoided

For Taxpayers who did not timely file their FBAR and other international information-related reporting forms, the IRS has developed many different offshore amnesty programs to assist Taxpayers with safely getting into compliance. These programs may reduce or even eliminate international reporting penalties.

Current Year vs. Prior Year Non-Compliance

Once a Taxpayer missed the tax and reporting (such as FBAR and FATCA) requirements for prior years, they will want to be careful before submitting their information to the IRS in the current year. That is because they may risk making a quiet disclosure if they just begin filing forward in the current year and/or mass filing previous year forms without doing so under one of the approved IRS offshore submission procedures. Before filing prior untimely foreign reporting forms, Taxpayers should consider speaking with a Board-Certified Tax Law Specialist who specializes exclusively in these types of offshore disclosure matters.

Avoid False Offshore Disclosure Submissions (Willful vs Non-Willful)

In recent years, the IRS has increased the level of scrutiny for certain streamlined procedure submissions. When a person is non-willful, they have an excellent chance of making a successful submission to Streamlined Procedures. If they are willful, they would submit to the IRS Voluntary Disclosure Program instead. But, if a willful Taxpayer submits an intentionally false narrative under the Streamlined Procedures (and gets caught), they may become subject to significant fines and penalties. 

Need Help Finding an Experienced Offshore Tax Attorney?

When it comes to hiring an experienced international tax attorney to represent you for unreported foreign and offshore account reporting, it can become overwhelming for Taxpayers trying to trek through all the false information and nonsense they will find in their online research. There are only a handful of attorneys worldwide who are Board-Certified Tax Specialists and who specialize exclusively in offshore disclosure and international tax amnesty reporting. 

*This resource may help Taxpayers seeking to hire offshore tax counsel: How to Hire an Offshore Disclosure Lawyer.

Golding & Golding: About Our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, specifically IRS offshore disclosure. 

Contact our firm today for assistance.