Foreign Bank and Financial Account Reporting for 2015 Tax Year FBAR Introduction :-
The Bank Secrecy Act (BSA) gave the Department of Treasury authority to collect information from United States persons who have financial interests in or signature authority over financial accounts maintained with financial institutions located outside of the United States. This provision of the BSA requires that a FinCEN Report 114, Report of Foreign Bank and Financial Accounts (FBAR) be filed if the aggregate maximum values of the foreign financial accounts exceed $10,000 at any time during the calendar year. FinCEN Report 114 supersedes Treasury Form.
Purpose of the FBAR:-
Overseas financial accounts are maintained by U.S. persons for a variety of legitimate reasons, including convenience and access. The FBAR is required because foreign financial institutions may not be subject to the same reporting requirements as domestic financial institutions. The FBAR is also a tool used by the United States government to identify persons who may be using foreign financial accounts to circumvent United States law. Information contained in FBARs can be used to identify or trace funds used for illicit purposes or to identify unreported income maintained or generated abroad.
Who Must File the FBAR?:-
A United States person must file an FBAR if that person has a financial interest in or signature authority over any financial account(s) outside of the United States and the aggregate maximum value of the account(s) exceeds $10,000 at any time during the calendar year.
Who is a United States Person?:-
A "United States person" means: · A citizen or resident of the United States; · An entity created or organized in the United States or under the laws of the United States. The term "entity" includes but is not limited to, a corporation, partnership, and limited liability company; · A trust formed under the laws of the United States; or · An estate formed under the laws of the United States.
Financial Account:-
Financial account includes the following types of accounts:
· Bank accounts such as savings accounts, checking accounts, and time deposits,
· Securities accounts such as brokerage accounts and securities derivatives or other financial instruments accounts,
· Commodity futures or options accounts,
· Insurance policies with a cash value (such as a whole life insurance policy),
· Mutual funds or similar pooled funds (i.e., a fund that is available to the general public with a regular net asset value determination and regular redemptions),
Penalties if you don't file FBAR:-
The penalties for not filing an 'FBAR' are harsh. They range from an automatic penalty of $10,000, which you can expect to be generated by a computer when your late FinCEN Report 114 is received, to 50% of the balance in the account (Calculated yearly) and criminal charges (Potential Jail time) in the event the IRS Criminal Investigator assigned to your case can prove that you willfully withheld this information from the government. This form has been in the news extensively lately due to the increased efforts by the IRS to bring taxpayers into compliance. The most talked about aspect of their efforts is the voluntary disclosure program (Offshore Voluntary Disclosure Initiative); unless you willfully withheld this information from the IRS and intentionally avoided the payment of taxes related to the interest or other financial gains from these accounts, DO NOT GO INTO THE VOLUNTARY DISCLOSURE PROGRAM.
How to file FBAR:-
If there is a question of willfulness in your situation, note that you are best served by our experienced people. Contact us so we can put you in the right direction. Call us at 678 919 7999 / 678-899-6789 or mail us to contact@valuestax.com
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