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F bar filing5/1/2023 What Is a Financial Account?Ī financial account is more than just a bank account. Some examples include a corporation, partnership, trust, limited liability company, and even an estate. Rather, a “US person” refers to a citizen or resident of the United States, as well as certain entities that were created under US law. Who Is a US Person for FBAR Purposes?Ī US person is more than just an individual. We have prepared a summary explaining the basics of the FBAR, who has to file, and when. Usually, the US Person will get hit with civil penalties - which can range from non-willful penalty waivers in lieu of financial penalties - all the way up to a 50% willfulness penalty for the highest years’ maximum unreported account balances. To reduce or avoid these penalties the IRS has developed several amnesty programs, collectively referred to as offshore voluntary disclosure. Foreign Bank and Financial Account violations may result in Civil and/or Criminal FBAR penalties - although criminal penalties are rare. Still, the IRS is tasked with assessing and enforcing FBAR Penalties - which has been a US Government compliance priority for several years now. Unlike other international information reporting forms, the FBAR is not a Tax Form. Technically speaking, the FBAR refers to the Report of Foreign Bank and Financial Accounts, which is filed by US Persons on FinCEN Form 114 and enforced by the Internal Revenue Service in accordance with Money and Finance (not Internal Revenue Code) section 5314 et seq. The US Government requires US Taxpayers who own foreign assets and accounts to disclose this foreign account information on FinCEN Form 114 - otherwise known as the FBAR - in addition to filing a US Tax Return.
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