All taxpayers are reminded about FBAR reporting this year, as the process has changed. If…
Top FBAR Reporting Error
The most common FBAR reporting mistake is simply failing to file. Some U.S. persons continue to deliberately conceal assets in secret offshore bank accounts in the hope of evading U.S. tax authorities. In many other cases, however, Americans living and working outside the U.S., recent immigrants, foreign citizens who are resident in the U.S., and U.S. children who received gifts or bequests from their foreign parents are simply unaware of their FBAR filing obligations. Despite well-publicized enforcement actions against financial institutions and individual account holders, as well as corresponding amnesty programs, many U.S. persons with foreign financial accounts remain unaware of the FBAR reporting obligations.
U.S. persons with ownership or signature authority over foreign financial accounts should obtain complete copies of their account records and fully educate themselves regarding FBAR reporting obligations and, when necessary, seek advice from U.S. tax professionals in advance of the June 30 filing deadline.
Those who fail to resolve prior reporting errors can expect harsh treatment from U.S. tax authorities and remain exposed to substantial penalties and possible criminal prosecution. Similarly, U.S. courts have not been sympathetic to uninformed foreign account.holders who failed (deliberately or otherwise) to investigate their reporting obligations. In some cases, U.S. courts have imposed a penalty equal to 50 percent of the highest account balance for each year that remained open under the statute of limitations. Many who deliberately concealed offshore bank accounts have been prosecuted and received prison terms.