Do You Need to File an FBAR in 2021?
Posted in Offshore Account Update on December 17, 2020 | Share
For many individuals and businesses, filing their annual income tax return is not their only filing obligation on April 15. Many U.S. taxpayers must also file FinCEN Form 114, Report Foreign Bank and Financial Accounts (FBAR), with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN). Do you need to file an FBAR on April 15, 2021? Washington D.C. FBAR attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, explains:
Are You Required to File an FBAR?
The FBAR filing requirement applies to U.S. citizens, residents, businesses, trusts and estates that own offshore bank accounts. Specifically, it applies to those that have more than $10,000 in one or more offshore bank accounts at any point during the tax year. This is an aggregate threshold, meaning that you must file an FBAR if the total value of all of your offshore accounts exceeds $10,000 at any time.
Importantly, the FBAR filing requirement applies not only to individuals and entities that own offshore bank accounts but to individuals and entities that have signature authority over offshore bank accounts as well. There are virtually no exceptions to the FBAR filing requirement—even entities that are “disregarded” for federal income tax purposes must still file FBARs with FinCEN.
What if You Have Failed to File an FBAR in the Past?
If you have only recently learned about the FBAR filing requirement and are now aware that you have failed to file required FBARs in the past, what should you do? Should you simply amend your pat returns and start complying from this point forward?
This is referred to as a “quiet disclosure;” and, as we have discussed previously, it can be a dangerous option. Amending your past returns is not sufficient to correct FBAR filing deficiencies, and disclosing your past violations in this manner could lead to an audit or investigation and substantial penalties. There are better options available, and you will want to discuss your options with a Washington D.C. FBAR attorney.
The two primary options for correcting past FBAR violations are: (i) the Internal Revenue Service’s (IRS) streamlined filing procedures, and (ii) IRS Criminal Investigations’ (IRS CI) Voluntary Disclosure Practice. Each of these are options in different circumstances, and each carries its own potential consequences, so it will be important for you to choose carefully with the help of experienced tax counsel.
How Do You File an FBAR?
FinCEN requires all FBARs to be filed electronically using the Bank Secrecy Act (BSA) E-Filing System. FBARs for the 2020 tax year must be filed by April 15, 2021. However, if you need to correct past FBAR filing deficiencies, you should not simply attempt to correct your past mistakes with your 2021 filing, but instead, seek guidance from an FBAR attorney regarding your voluntary disclosure options with the IRS.
Request a Confidential Consultation with Washington D.C. FBAR Attorney Kevin E. Thorn, Managing Partner of Thorn Law Group
Do you have questions about FBAR compliance? If so, we can help you understand what is required, and we can help you meet your obligations to FinCEN and the IRS in 2021. To schedule a confidential consultation with Washington D.C. FBAR attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 202-349-4033, email email@example.com or contact us online today.