Report of Foreign Bank and Financial Accounts FINCEN Form 114

FBAR United States Definition | FBAR Lawyer & Attorney Minneapolis MN

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The United States is defined differently with respect to different parts (and, sometimes even within the same part) of the United States Code. There is a specific definition of the United States for FBAR Purposes. In this brief essay, I would like to discuss the FBAR United States Definition and explain its importance to FBAR compliance.

Importance of FBAR United States Definition to FinCEN Form 114

Before we discuss the FBAR United States Definition, we need to the context in which it is used and why it is important for US international tax purposes. FBAR is a common acronym for the Report of Foreign Bank and Financial Accounts, FinCEN Form 114. It used to be known under a different name – TD F 90-22.1.

FBAR is part of Title 31, Bank Secrecy Act, but the IRS has administered FBAR since 2001. The IRS primarily uses FBAR not to fight financial crimes (which was its original purpose), but for tax enforcement. In particular, the IRS found that FBAR is an extremely useful tool for combating tax evasion associated with a strategy of hiding money in secret foreign bank accounts.

FBAR’s draconian penalties is what makes this form the favorite with the IRS, but much hated by US taxpayers. The penalties range from a jail sentence to civil willful penalties and even civil non-willful penalties which may exceed a taxpayer’s net worth.

It is precisely these penalties which make it absolutely necessary for US taxpayers to understand when they need to file FBARs. One of the aspects of this understanding is the FBAR United States Definition, which allows one to determine two things. First, the FBAR United States Definition is used to define the United States for the purposes of the Substantial Presence Test. Second, the FBAR United States Definition allows one to classify bank accounts as foreign or domestic for FBAR compliance purposes.

FBAR United States Definition

31 CFR 1010.100(hhh) contains the FBAR United States Definition. Under this provision, the United States is defined as: the States of the United States, the District of Columbia, the Indian Lands (as defined in the Indian Gaming Regulatory Act) and the territories and insular possessions of the United States. As of February 3, 2019, the US territories and insular possessions refer to: Puerto Rico, Guam, American Samoa, US Virgin Islands and Northern Mariana Islands.

Contact Sherayzen Law Office for Professional FBAR Help

If you have undisclosed foreign accounts, contact Sherayzen Law Office for professional help. We have successfully helped hundreds of US taxpayers around the world with their FBAR issues, and We can help You! Contact Us Today to Schedule Your Confidential Consultation!

2018 FBAR Currency Conversion Rates | FBAR Tax Lawyer & Attorney

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2018 FBAR and 2018 Form 8938 instructions both require that 2018 FBAR Currency Conversion Rates be used to report the required highest balances of foreign financial assets on these forms. In the case of 2018 Form 8938, the 2018 FBAR Currency Conversion Rates is the default choice, not an exclusive one.

The U.S. Department of Treasury  already published the 2018 FBAR Currency Conversion Rates online (they are called “Treasury’s Financial Management Service rates” or the “FMS rates”).

Since the 2018 FBAR Currency Conversion Rates are very important to US taxpayers, international tax lawyers and international tax accountants, Sherayzen Law Office provides the table below listing the official 2018 FBAR Currency Conversion Rates (note that the readers still need to refer to the official website for any updates).

 

Country – Currency

Foreign Currency to $1.00
AFGHANISTAN – AFGHANI

74.576
ALBANIA – LEK

107.05
ALGERIA – DINAR

117.898
ANGOLA – KWANZA

310.0000
ANTIGUA – BARBUDA – E. CARIBBEAN DOLLAR

2.7000
ARGENTINA – PESO

37.642
ARMENIA – DRAM

485.0000
AUSTRALIA – DOLLAR

1.4160
AUSTRIA – EURO

0.8720
AZERBAIJAN – NEW MANAT

1.7000
BAHAMAS – DOLLAR

1.0000
BAHRAIN – DINAR

0.3770
BANGLADESH – TAKA

84.0000
BARBADOS – DOLLAR

2.0200
BELARUS – NEW RUBLE

2.1600
BELGIUM – EURO

0.8720
BELIZE – DOLLAR

2.0000
BENIN – CFA FRANC

568.6500
BERMUDA – DOLLAR

1.0000
BOLIVIA – BOLIVIANO

6.8500
BOSNIA – MARKA

1.7060
BOTSWANA – PULA

10.6610
BRAZIL – REAL

3.8800
BRUNEI – DOLLAR

1.3610
BULGARIA – LEV

1.7070
BURKINA FASO – CFA FRANC

568.6500
BURUNDI – FRANC

1790.0000
CAMBODIA (KHMER) – RIEL

4103.0000
CAMEROON – CFA FRANC

603.8700
CANADA – DOLLAR

1.3620
CAPE VERDE – ESCUDO

94.8800
CAYMAN ISLANDS – DOLLAR

0.8200
CENTRAL AFRICAN REPUBLIC – CFA FRANC

603.8700
CHAD – CFA FRANC

603.8700
CHILE – PESO

693.0800
CHINA – RENMINBI

6.8760
COLOMBIA – PESO

3245.8000
COMOROS – FRANC

428.1400
CONGO, DEM. REP – CONGOLESE FRANC

1630.0000
COSTA RICA – COLON

603.5000
COTE D’IVOIRE – CFA FRANC

568.6500
CROATIA – KUNA

6.3100
CUBA – PESO

1.0000
CYPRUS – EURO

0.8720
CZECH REPUBLIC – KORUNA

21.9410
DENMARK – KRONE

6.5170
DJIBOUTI – FRANC

177.0000
DOMINICAN REPUBLIC – PESO

49.9400
ECUADOR – DOLARES

1.0000
EGYPT – POUND

17.8900
EL SALVADOR – DOLARES

1.0000
EQUATORIAL GUINEA – CFA FRANC

603.8700
ERITREA – NAKFA

15.0000
ESTONIA – EURO

0.8720
ETHIOPIA – BIRR

28.0400
EURO ZONE – EURO

0.8720
FIJI – DOLLAR

2.1080
FINLAND – EURO

0.8720
FRANCE – EURO

0.8720
GABON – CFA FRANC

603.8700
GAMBIA – DALASI

50.0000
GEORGIA – LARI

2.6700
GERMANY – EURO

0.8720
GHANA – CEDI

4.8250
GREECE – EURO

0.8720
GRENADA – EAST CARIBBEAN DOLLAR

2.7000
GUATEMALA – QUENTZAL

7.7150
GUINEA – FRANC

9076.0000
GUINEA BISSAU – CFA FRANC

568.6500
GUYANA – DOLLAR

215.0000
HAITI – GOURDE

77.1180
HONDURAS – LEMPIRA

25.0000
HONG KONG – DOLLAR

7.8320
HUNGARY – FORINT

280.1700
ICELAND – KRONA

116.1100
INDIA – RUPEE

69.8000
INDONESIA – RUPIAH

14440.0000
IRAN – RIAL

42000.0000
IRAQ – DINAR

1138.0000
IRELAND – EURO

0.8720
ISRAEL – SHEKEL

3.7490
ITALY – EURO

0.8720
JAMAICA – DOLLAR

126.0000
JAPAN – YEN

109.8500
JERUSALEM – SHEKEL

3.7490
JORDAN – DINAR

0.7080
KAZAKHSTAN – TENGE

375.1500
KENYA – SHILLING

101.8000
KOREA – WON

1114.4900
KOSOVO – EURO

0.8720
KUWAIT – DINAR

0.3030
KYRGYZSTAN – SOM

69.8000
LAOS – KIP

8535.0000
LATVIA – EURO

0.8720
LEBANON – POUND

1500.0000
LESOTHO – SOUTH AFRICAN RAND

14.3500
LIBERIA – DOLLAR

156.7100
LIBYA – DINAR

1.3860
LITHUANIA – EURO

0.8720
LUXEMBOURG – EURO

0.8720
MACAO – MOP

no listing
MACEDONIA FYROM – DENAR

53.5000
MADAGASCAR – ARIARY

3470.2000
MALAWI – KWACHA

733.0000
MALAYSIA – RINGGIT

4.1300
MALI – CFA FRANC

568.6500
MALTA – EURO

0.8720
MARSHALL ISLANDS – DOLLAR

1.0000
MARTINIQUE – EURO

0.8720
MAURITANIA – OUGUIYA

36.0000
MAURITIUS – RUPEE

34.1500
MEXICO – PESO

19.6540
MICRONESIA – DOLLAR

1.0000
MOLDOVA – LEU

16.9930
MONGOLIA – TUGRIK

2642.9200
MONTENEGRO – EURO

0.8720
MOROCCO – DIRHAM

9.5300
MOZAMBIQUE – METICAL

61.5300
MYANMAR – KYAT

1535.0000
NAMIBIA – DOLLAR

14.3500
NEPAL – RUPEE

111.6000
NETHERLANDS – EURO

0.8720
NETHERLANDS ANTILLES – GUILDER

1.7800
NEW ZEALAND – DOLLAR

1.4900
NICARAGUA – CORDOBA

32.3000
NIGER – CFA FRANC

568.6500
NIGERIA – NAIRA

361.0000
NORWAY – KRONE

8.6800
OMAN – RIAL

0.3850
PAKISTAN – RUPEE

138.6000
PALAU – DOLLAR

1.0000
PANAMA – BALBOA

1.0000
PAPUA NEW GUINEA – KINA

3.2840
PARAGUAY – GUARANI

5956.0000
PERU – NUEVO SOL

3.3750
PHILIPPINES – PESO

52.4900
POLAND – ZLOTY

3.7530
PORTUGAL – EURO

0.8720
QATAR – RIYAL

3.6400
ROMANIA – NEW LEU

4.0690
RUSSIA – RUBLE

69.6800
RWANDA – FRANC

890.0000
SAO TOME & PRINCIPE – NEW DOBRAS

21.5350
SAO TOME & PRINCIPE – DOBRAS

20941.0080
SAUDI ARABIA – RIYAL

3.7500
SENEGAL – CFA FRANC

568.6500
SERBIA – DINAR

103.3900
SEYCHELLES – RUPEE

13.5500
SIERRA LEONE – LEONE

8620.0000
SINGAPORE – DOLLAR

1.3610
SLOVAK REPUBLIC – EURO

0.8720
SLOVENIA – EURO

0.8720
SOLOMON ISLANDS – DOLLAR

7.7520
SOMALI – SHILLING

575.0000
SOUTH AFRICA – RAND

14.3500
SOUTH SUDANESE – POUND

153.7000
SPAIN – EURO

0.8720
SRI LANKA – RUPEE

182.6000
ST LUCIA – EC DOLLAR

2.7000
SUDAN – SUDANESE POUND

47.0000
SURINAME – GUILDER

7.5200
SWAZILAND – LILANGENI

14.3500
SWEDEN – KRONA

8.9380
SWITZERLAND – FRANC

0.9840
SYRIA – POUND

515.0000
TAIWAN – DOLLAR

30.5880
TAJIKISTAN – SOMONI

9.3500
TANZANIA – SHILLING

2295.0000
THAILAND – BAHT

32.3500
TIMOR – LESTE DILI

1.0000
TOGO – CFA FRANC

568.6500
TONGA – PA’ANGA

2.1730
TRINIDAD & TOBAGO – DOLLAR

6.7700
TUNISIA – DINAR

3.0090
TURKEY – LIRA

5.2830
TURKMENISTAN – NEW MANAT

3.4910
UGANDA – SHILLING

3705.0000
UKRAINE – HRYVNIA

27.7000
UNITED ARAB EMIRATES – DIRHAM

3.6730
UNITED KINGDOM – POUND STERLING

0.7810
URUGUAY – PESO

32.3200
UZBEKISTAN – SOM

8310.0000
VANUATU – VATU

111.6900
VENEZUELA – BOLIVAR – SOBERANO

563.9800
VENEZUELA – BOLIVAR – FUERTE

248832.0000
VIETNAM – DONG

23190.0000
WESTERN SAMOA – TALA

2.5350
YEMEN – RIAL

480.0000
ZAMBIA – NEW KWACHA

11.9000
ZIMBABWE – DOLLAR

1.0000

FinCEN Form 114 and FBAR Are the Same Form | FBAR Tax Lawyers

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In my practice, I often receive phone calls from prospective clients who treat FinCEN Form 114 and FBAR as two different forms. Of course, these are the same forms, but I have asked myself: why do so many taxpayers believe that FinCEN Form 114 and FBAR are two different forms?

The simplest answer, of course, would be that taxpayers are simply so unfamiliar with US international tax law that they do not know the form with which both titles, FinCEN Form 114 and FBAR, should be associated. There is definitely a lot of truth to this conclusion, but it does not tell the whole story.

Upon more profound exploration, I found that a significant amount of potential clients believed that either FBAR or FinCEN Form 114 was a tax form while the other form was something else. In other words, some of the taxpayers think that FinCEN Form 114 is a tax form while FBAR is not a tax form while other taxpayers believe that FBAR is a tax form while FinCEN Form 114 is something else.

After making this discovery, I realized that the very nature of FBAR is at the heart of the problem, because FBAR is not a tax form and has nothing to do with Title 26 (i.e. the Internal Revenue Code) of the United States Code. Rather, the Report of Foreign Bank and Financial Accounts, FinCEN Form 114, commonly known as FBAR, was created by the Bank Secrecy Act of 1970. The Bank Secrecy Act forms part of Title 31 of the United States Code. In fact, prior to September 11, 2001, the IRS had almost nothing to do with FBAR.

It was only after the 9/11 terrorist attacks in the United States when the Congress decided to turn over the enforcement of FBAR to the IRS. Initially, the official purpose was to facilitate the Treasury Department’s fight against terrorism. Within a year, though, it became clear that the IRS would use FBAR in its fight against offshore tax evasion and other noncompliance with US international tax laws.

Using the draconian FBAR penalty structure (at that time, the form was still called TD F 90-22.1) against noncompliant US taxpayers turned out to be a highly effective intimidation tool for the IRS – a tool which works very well even today. Once the Treasury Department mandated the e-filing of FBARs, the name of FBAR was changed from TD F 90-22.1 to FinCEN Form 114.

Thus, the confusion over the relationship between FinCEN Form 114 and FBAR stems from FBAR’s peculiar legal history. Most of US taxpayers do not know any of it; they are simply confused by the fact that the IRS is enforcing a form that has two names and which has nothing to do with the Internal Revenue Code.

FBAR Noncompliance & Taxpayer’s Options | FBAR Lawyer & Attorney

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FBAR noncompliance is the worst nightmare for US taxpayers due to enormous FBAR penalties even for non-willful taxpayers. US Taxpayers who are not facing an IRS examination or a DOJ (US Department of Justice) lawsuit have three options with respect to their FBAR noncompliance: (1) do nothing with respect to correcting their prior FBAR noncompliance, close the accounts and hope that the IRS will never discover them; (2) do a quiet disclosure; and (3) come forward and voluntarily disclose their unfiled FBARs.

I already explored the highly-risky strategy of a quiet disclosure in another article. In this article, I will focus on option #1 – doing nothing about prior FBAR noncompliance. In the next article, I will discuss the option of Offshore Voluntary Disclosure as a way to deal with prior FBAR noncompliance.

This article does not constitute legal advice, but merely provides information for educational purposes.

Advantages of Doing Nothing With Respect to Prior FBAR Noncompliance

Doing nothing with respect to FBAR noncompliance is a position that some taxpayers prefer, because it requires no action, no immediate legal expenses and no immediate payment of IRS penalties.

In other words, if a taxpayer chooses to do nothing with respect to his late unfiled FBARs and his strategy is successful, he stands to gain in two aspects: (1) he spends no effort, time or money on correcting his past FBAR noncompliance; and (2) if (and this is big “if”) the IRS never finds out about his past FBAR noncompliance, he will not pay any penalties. This whole strategy is based on the hope that the IRS will not find out about their FBAR noncompliance.

Disadvantages of Doing Nothing With Respect to Prior FBAR Noncompliance Even If the Strategy Is Successful

From legal perspective, this strategy of doing nothing can be classified as very risky. If unsuccessful, a noncompliant taxpayer who chooses to do nothing stands to lose a lot more than he could ever gain if his strategy works.

Let’s analyze the disadvantages of doing nothing based on two scenarios: the strategy is successful and the strategy is unsuccessful.

Even if the strategy is ultimately successful and the IRS does not find out about FBAR noncompliance, there is still a heavy psychological price to pay for this success, because the taxpayer will not find out about the success of his strategy until the FBAR statute of limitations expires. In other words, for six long years, the taxpayer will not have any peace of mind and will constantly worry about his potential FBAR penalty exposure. If the taxpayer does not close his foreign accounts, the waiting period could be extended even further.

Moreover, if FBAR noncompliance is combined with income noncompliance and failure to file other US international information returns, the statute of limitations on the tax returns might be open for an indefinite period of time (especially if the IRS can assert a fraud claim against the noncompliant taxpayer).

I have personally seen the psychological effects of such pressure on some of my clients. It was simply destroying their lives. Eventually, they could not live like this and came to me to do an offshore voluntary disclosure to resolve their prior FBAR noncompliance.

Disadvantages of Doing Nothing With Respect to Prior FBAR Noncompliance Where the Strategy Fails

If the success of this strategy exhorts such a heavy price, its failure may potentially result in disastrous consequences. Let’s explore the main two reasons why the strategy of doing nothing is so disfavored among international tax lawyers.

First, as described above, the current international tax enforcement structure severely undermines the entire basis for the strategy – i.e. hope that the IRS will not find out about FBAR noncompliance is simply too risky in the contemporary world dominated by FATCA, CRS and a widely-spread web of bilateral and multilateral automatic information exchange treaties. It is still possible that the IRS will not find out about a US person’s foreign accounts, but it is becoming less and less likely.

Second, since the strategy of doing nothing implies a taxpayer’s conscious choice not to comply with the FBAR requirements, it may turn a relatively simple and non-willful situation into a complex and willful one. In other words, under these circumstances, if the IRS is able to find out about prior FBAR noncompliance, the IRS may pursue willful and, in extreme circumstances, even criminal FBAR penalties.

Contact Sherayzen Law Office for Professional Help With Resolving FBAR Noncompliance Issues

If you never filed your required FBARs and other US tax forms, contact Sherayzen Law Office for professional help. Our legal team is headed by one of the most experienced international tax lawyers in this area – Mr. Eugene Sherayzen. He has helped hundreds of US taxpayers around the world to successfully resolve their prior FBAR noncompliance, and He can help You!

Contact Us Today to Schedule Your Confidential Consultation!

2018 FBAR Civil Penalties | FBAR Tax Lawyer & Attorney

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Following the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, the FBAR civil penalties are adjusted every year by the IRS for inflation. In this brief article, I would like to describe the new 2018 FBAR Civil Penalties that may be assessed by the IRS with respect to FBAR noncompliance.

2018 FBAR Civil Penalties: Pre-2016 FBAR Penalty System

The FBAR penalty system was already complex prior to the FBAR penalty inflation adjustment. It consisted of three different levels of penalties with various levels of mitigation. The highest level of penalties consisted of criminal penalties. The most dreadful penalty was imposed for the willful failure to file FBAR or retain records of a foreign account while also violating certain other laws – up to $500,000 or 10 years in prison or both.

The next level consisted of civil penalties imposed for a willful failure to file an FBAR – up to $100,000 or 50% of the highest balance of an account, whichever is greater, per violation per year.

The third level of penalties were imposed for the non-willful failure to file an FBAR. The penalties were up to $10,000 per violation per year. It is also important to point out that the subsequent laws and IRS guidance imposed certain limitations on the application of the non-willful FBAR penalties.

Finally, there were also penalties imposed solely on businesses for negligent failure to file an FBAR. These penalties were up to $500 per violation; if, however, there was a pattern of negligence, the negligence penalties could increase ten times up to $50,000 per violation.

2018 FBAR Civil Penalties: Penalty Adjustment System

The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 further complicated the already complex FBAR penalty system, including for 2018 FBAR civil penalties.

As a result of the Act, with respect to post-November 2, 2015 violations, the exact amount of penalties will depend on the timing of the IRS penalty assessment, not when the FBAR violation actually occurred.

For example, in 2017, the IRS announced that if the IRS penalty assessment was made after August 1, 2016 but prior to January 16, 2017, then the maximum non-willful FBAR penalty per violation would be $12,459 and the maximum willful FBAR penalty per violation would be the greater of $124,588 or 50% of the highest balance of the account.

Similarly, if the penalty was assessed after January 15, 2017, the maximum non-willful FBAR penalty would increase to $12,663 per violation and the maximum civil willful FBAR penalty would be the greater of $126,626 or 50% of the highest balance of the account.

Now, in 2018, post-January 15, 2017 FBAR penalties are adjusted higher.

2018 FBAR Civil Penalties: 2018 Inflation Adjustment

The new 2018 FBAR civil penalties for FBAR violations have increased as a result of inflation. If a penalty was assessed after January 15, 2017, the maximum 2018 FBAR civil penalties for a non-willful violation increased from $12,663 to $12,921. Similarly, the maximum 2018 FBAR civil penalties for a willful violation assessed after January 15, 2017 increased from $126,626 to $129,210.

It should be emphasized that the IRS currently interprets the term “violation” as a failure to report an account on an FBAR. In other words, these higher 2018 FBAR civil penalties can be assessed on a per-account basis.

Contact Sherayzen Law Office for Professional Help with 2018 FBAR Civil Penalties

If you have not filed your FBAR and you want to do a voluntary disclosure; if you are being audited by the IRS with the possibility of the imposition of FBAR penalties; or FBAR penalties have already been assessed and you believe that they are too high, you should contact Sherayzen Law Office for professional help.

Sherayzen Law Office has helped hundreds of US taxpayers to deal with their FBAR penalties on all levels: offshore voluntary disclosure, FBAR Audit pre-assessment, post-audit FBAR penalty assessment and FBAR litigation in a federal court. We can help You!

Contact Us Today to Schedule Your Confidential Consultation!