Report of Foreign Bank and Financial Accounts FINCEN Form 114

October 31 2020 FBAR Deadline | FBAR Tax Lawyer & Attorney

US taxpayers can still timely file their 2019 FBAR (Report of Foreign Bank and Financial Accounts) by the new October 31 2020 FBAR deadline. This FBAR deadline extension is highly unusual and requires some explanation.

October 31 2020 FBAR Deadline: What is FBAR?

The Report of Foreign Bank and Financial Accounts (“FBAR”) is officially known as FinCen Form 114. This form must be filed by US persons with an ownership interest in or signatory authority or any other authority over foreign bank and financial accounts if the aggregate value of such accounts exceeds $10,000 at any point during a calendar year. This is a very important US international information return; a failure to timely and correctly file an FBAR may result in an imposition of draconian FBAR penalties. This is why it is so important to learn about FBAR deadlines.

October 31 2020 FBAR Deadline & FinCEN Mistake

The 2019 FBAR deadline extension became possible as a result of an incorrect message posted by FinCEN on its BSA (Bank Secrecy Act) website. On October 14, 2020, FinCEN posted a message that incorrectly stated that the 2019 FBAR deadline was extended to December 31, 2020 for all FBAR filers. Within twenty-four hours, FinCEN removed the message.

On October 16, 2020, FinCEN posted a corrected message that stated that the extension to December 31, 2020, was intended only for victims of recent natural disasters listed in FinCEN’s October 6, 2020 notice.

Since, however, there were filers who have missed the October 15 deadline due to the incorrect October 14 message, FinCEN decided to allow these filers to have an extra couple of weeks to file their 2019 FBARs. For this reason, FinCEN established a new October 31 2020 FBAR deadline for all FBAR filers (except those who were victims of natural disasters listed in the aforementioned October 6 list).

October 31 2020 FBAR Deadline & December 31 2020 FBAR Deadline

Thus, there are two separate FBAR filing deadline extensions still outstanding. The first one is the October 31 2020 FBAR deadline which applies to all FBAR filers except the ones who are also eligible for the second deadline extension.

The second deadline extension to December 31, 2020 applies only to victims of natural disasters listed in FinCEN’s October 6, 2020 notice.

Contact Sherayzen Law Office for Professional Help with FBAR Compliance

Sherayzen Law Office is a leading US international tax law firm that specializes in US international tax law and FBAR compliance. We have filed thousands of FBARs for our clients. We have also helped US taxpayers from over 70 countries to deal with FBAR filing violations for prior years, including as part of a voluntary disclosure (such as Streamlined Domestic Offshore Procedures, Streamlined Foreign Offshore Procedures, Delinquent FBAR Submission Procedures and Reasonable Cause disclosures). Our FBAR clients include individuals, corporations, partnerships, estates, trusts and disregarded entities.

We can help you! Contact Us Today To Schedule Your Confidential Consultation!

Form 114 Trust Filers | FBAR Tax Lawyer & Attorney Nevada Las Vegas

FinCEN Form 114 trust filers constitute a highly problematic category of FBAR filers. Form 114 trust filers are problematic not so much because the FBAR requirement itself is unclear, but, rather, because the trustees do not realize that this requirement applies to them. In this article, I would like to educate potential Form 114 trust filers about the FBAR requirement and when it applies to them.

Form 114 Trust Filers: FBAR Background Information

The Report of Foreign Bank and Financial Accounts, FinCEN Form 114, commonly known as FBAR, was created in the 1970s as a result of the Bank Secrecy Act of 1970. Originally designed to fight financial crimes and terrorism, FBAR turned into a formidable weapon for the IRS after 2001 to fight US international tax noncompliance.

The biggest reason why FBAR became such a useful tool to fight US international tax compliance are the draconian penalties associated with FBAR noncompliance. FBAR has a full range of penalties from criminal (i.e. a person actually going to jail for FBAR noncompliance) to non-willful (which may apply in situations when a person did not even know that FBAR existed).

A US person must file FBAR if he has a financial interest in or signatory authority over foreign financial accounts and the aggregate value of these foreign financial accounts exceeds $10,000 at any time during the calendar year. Prior to 2016 FBAR, the FBAR deadline was June 30 of each year. Starting 2016 FBAR, the FBAR deadline is aligned with the tax return deadline, including automatic extension to October 15 (this is still true as of the tax year 2021). This may change in the future years.

FinCEN Form 114 Trust Filers: Trusts Must File FBARs

All US persons who meet the FBAR filing requirements must file the form by the required deadline. The term “US persons” includes not just individuals and businesses, but also estates and trusts. A trustee’s failure to timely file an accurate FBAR may result in the imposition of FBAR penalties on the trust.

All types of trusts (as long as they are US persons) must file FBARs, including non-grantor trusts and grantor trusts. It is important to emphasize that the fact that all trust income passes to the grantor or another owner of the trust does not absolve the trust from its obligation to file FBARs.

Contact Sherayzen Law Office for Professional Help With FinCEN Form 114 Trust Filings and Trust Offshore Voluntary Disclosures

Unfortunately, many trustees still miss the fact that they must file FBARs on behalf of the trust. As I stated above, this may expose the trust to significant FBAR penalties.

Hence, if you are a trustee of a trust which has not complied with its FinCEN Form 114 obligations, then contact Sherayzen Law Office for professional help as soon as possible. We have successfully helped hundreds of US taxpayers, including trusts, to resolve their prior FinCEN Form 114 noncompliance. We can help you!

Contact Us Today to Schedule Your Confidential Consultation!

§318 Downstream Corporate Attribution | Corporate Tax Lawyer & Attorney

This article continues a series of articles on the constructive ownership rules of the IRC (Internal Revenue Code) §318. Today, we will discuss corporate attribution rules, even more specifically the §318 downstream corporate attribution rules.

§318 Downstream Corporate Attribution: Two Types of Attribution

There are two types of §318 corporate attribution rules: downstream and upstream. Under the downstream corporate attribution rules, stocks owned by a corporation are attributed to this corporation’s shareholders. The upstream corporate attribution rules are exactly the opposite: stocks (in another corporation) owned by shareholders are attributed to the corporation. As stated above, this article will focus on the downstream attribution rules; the upstream attribution rules will be covered in a future article.

§318 Downstream Corporate Attribution: Main Rule

Under §318(a)(2)(C), if a person owns, directly and indirectly, 50% or more in value of the stock “such person shall be considered as owning the stock owned, directly or indirectly, by or for such corporation, in that proportion which the value of the stock which such person so owns bears to the value of all the stock in such corporation.”

There are two critical parts of this downstream attribution rule: 50% threshold and proportionality. Let’s discuss each part in more detail.

§318 Downstream Corporate Attribution: 50% Threshold

A person must own directly or indirectly 50% or more of the stock value of a corporation in order for the §318 corporate attribution rules to apply. Under Treas. Reg. §1.318-1(b)(3), in determining whether the 50% threshold is satisfied, one must aggregate all stocks that the person actually and constructively owns.

The valuation of stocks should be determined in reference to the relative rights of the outstanding stock of a corporation. All restrictions, such as limitations on transferability, should be considered. On the other hand, the presence or absence of control of the corporation is irrelevant. This means that the value of stocks may differ from the voting power associated with these stocks.

Let’s use the following fact scenario to demonstrate the potential complexity of stock valuation: C, a C-corporation, has two classes of stocks – 100 shares of common stock with a value of $1 each and 50 shares of preferred stock with a value of $1 each (i.e. the total value of common stock is $100 and the total value of preferred stock is $50) – with only common stocks having voting rights; A owns 60 shares of common stock and 10 shares of preferred stock (i.e. his common stock is worth $60 and his preferred stock $10); C owns all of the outstanding shares of another corporation, X. The issue is how many shares of X should be attributed to A?

The answer is none. A does not constructively own any of X’s shares because his total value of C’s stocks is below 50% (the value of his stocks is $60 + $10 = $70, but the total value of C’s stocks is $100 + $50 = $150). The fact that A controls C through his 60% voting power is irrelevant.

§318 Downstream Corporate Attribution: Proportionality

As it was stated above, if the 50% corporate ownership threshold is met, then the shareholder will be considered a constructive owner of shares owned by the corporation in another corporation in proportion to the value of his stock.

While this looks like a straightforward rule, there is one problem. Whether the 50% threshold is satisfied should be determined by the combination of actual and constructive stock ownership. Does it mean that the attribution of corporate stocks under §318 should be in proportion to the value of both actual and constructive ownership combined? Or, does the proportionality of attribution based solely on the actual stock ownership in the holding corporation?

As of the time of this writing, the IRS still has not issued any guidance on this problem. Hence, taking either position is fine by an attorney as long as it is reasonable under the facts.

§318 Downstream Corporate Attribution: S-Corporations

It should be emphasized that the §318 downstream corporate attribution rules do not apply S-corporations with respect to attribution of corporate stock between an S-corporation and its shareholders. Rather, in such cases, the S-corporation is treated as a partnership and its shareholders as partners. See §318(a)(5)(E). Hence, generally, corporate stocks owned by an S-corporation are attributed on a proportionate basis even to shareholders who own less than 50% of the value of the S-corporation stock.

Keep in mind, however, that the usual constructive ownership rules for corporations and shareholders apply for the purpose of determination of whether any person owns stock in an S-corporation.

Contact Sherayzen Law Office for Professional Help With US International Tax Law

US tax law is incredibly complex, and this complexity increases even more at the international level. US taxpayers who deal with US international tax law without assistance of an experienced international tax lawyer run an enormous risk of violating US tax laws and incurring high IRS penalties.

Sherayzen Law Office is a highly experienced international tax law firm which specializes in US international tax compliance and offshore voluntary disclosures. We have helped hundreds of US taxpayers to successfully resolve their US international tax compliance issues, and We Can Help You!

Contact Us Today to Schedule Your Confidential Consultation!

FinCEN Form 114 Estate Filers | FBAR Tax Lawyer & Attorney

Many taxpayers and even tax professionals are completely unaware of the fact that FBAR needs to be filed not just by individuals, businesses and trusts, but also by estates. In this article, I will discuss FinCEN Form 114 Estate filers (i.e. estates that need to file FinCEN Form 114).

FinCEN Form 114 Estate filers: FBAR Background Information

FinCEN Form 114, commonly known as FBAR, was created in the 1970s as a result of the Bank Secrecy Act of 1970. The original purpose of the form was to fight financial crimes and terrorism; FinCEN was in charge of FBAR rulemaking and FBAR enforcement. After September 11, 2001, the US Congress turned over the function of FBAR enforcement to the IRS.

While the initial justification for the IRS involvement was fighting terrorism, it soon became clear that the IRS would use its new FBAR powers for international tax enforcement. This is exactly what happened; FinCEN Form 114 turned into the most formidable and scary weapon of the IRS to force US taxpayers to turn over their foreign bank account information.

FinCEN Form 114 Estate filers: FBAR Filing Requirements

If a US person has a financial interest in or signatory authority over foreign financial accounts and the aggregate value of these foreign financial accounts exceeds $10,000 at any time during the calendar year, then he has to file FBAR for that year. FBAR requires its filers determine the highest value of each of his accounts in “native” currency (i.e. the currency in which the account is denominated) first and then report this highest balance in US dollars. The Department of the Treasury publishes every year special FBAR currency conversion rates.

Prior to 2016 FBAR, the FBAR deadline was June 30 of each year. Starting 2016 FBAR, the FBAR deadline is aligned with the tax return deadline; as of the tax year 2019, the FBAR deadline is automatically extended to October 15. This may change in the future years.

FinCEN Form 114 Estate filers: Estates Must File FBARs

It is not just individuals, businesses and trusts who are required to file FinCEN Form 114. Estates must also file FBARs for any foreign accounts in the estate. It should be remembered that indirect ownership of foreign accounts (for example, through corporate shares in the estate) may also result in the requirement to file FBARs. Failure to file FinCEN Form 114 timely may result in the imposition of FBAR penalties on the estate.

FinCEN Form 114 Estate filers: Executor Liability for Decedent’s FBAR Noncompliance

If you are an executor of an estate and you discovered that the decedent should have filed FinCEN Forms 114 for prior years but never did so, then you need to explore your offshore voluntary disclosure options as soon as possible. There is a powerful incentive for the executors to resolve the decedent’s FBAR noncompliance – failure do so may result in the imposition of FBAR penalties on the executor of the estate.

Contact Sherayzen Law Office for Professional Help With FinCEN Form 114 Estate Filings and Offshore Voluntary Disclosure

If you are an executor or a personal representative of an estate and there is a reason to believe that the decedent failed to file FBARs in the past, then contact Sherayzen Law Office for professional help as soon as possible.

We have helped hundreds of US taxpayers, including estates, to successfully resolve their FinCEN Form 114 noncompliance. We can help you!

Contact Us Today to Schedule Your Confidential Consultation!

2019 FBAR Conversion Rates | FBAR Tax Lawyer & Attorney

The 2019 FBAR conversion rates are highly important in US international tax compliance. The 2019 FBAR and 2019 Form 8938 instructions both require that 2019 FBAR conversion rates be used to report the required highest balances of foreign financial assets on these forms (in the case of Form 8938, the 2019 FBAR conversion rates is the default choice, not an exclusive one). In other words, the 2019 FBAR conversion rates are used to translate foreign-currency highest balances into US dollars for the purposes of FBAR and Form 8938 compliance.

The U.S. Department of Treasury  already published the 2019 FBAR conversion rates online (they are called “Treasury’s Financial Management Service rates” or the “FMS rates”).

Since the 2019 FBAR conversion rates are highly important to US taxpayers, international tax lawyers and international tax accountants, Sherayzen Law Office provides the table below listing the official 2019 FBAR 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 – AFGHANI77.6250
ALBANIA – LEK108.2100
ALGERIA – DINAR118.7800
ANGOLA – KWANZA475.0000
ANTIGUA – BARBUDA – E. CARIBBEAN DOLLAR2.7000
ARGENTINA – PESO59.8700
ARMENIA – DRAM475.0000
AUSTRALIA – DOLLAR1.4250
AUSTRIA – EURO0.8900
AZERBAIJAN – NEW MANAT1.7000
BAHAMAS – DOLLAR1.0000
BAHRAIN – DINAR0.3770
BANGLADESH – TAKA85.0000
BARBADOS – DOLLAR2.0200
BELARUS – NEW RUBLE2.1040
BELGIUM – EURO0.8900
BELIZE – DOLLAR2.0000
BENIN – CFA FRANC582.0000
BERMUDA – DOLLAR1.0000
BOLIVIA – BOLIVIANO6.8300
BOSNIA – MARKA1.7410
BOTSWANA – PULA10.5490
BRAZIL – REAL4.0200
BRUNEI – DOLLAR1.3450
BULGARIA – LEV1.7410
BURKINA FASO – CFA FRANC582.0000
BURMA-KYAT1,475.0000
BURUNDI – FRANC1,850.0000
CAMBODIA (KHMER) – RIEL4,051.0000
CAMEROON – CFA FRANC578.1200
CANADA – DOLLAR1.3000
CAPE VERDE – ESCUDO99.2910
CAYMAN ISLANDS – DOLLAR0.8200
CENTRAL AFRICAN REPUBLIC – CFA FRANC578.1200
CHAD – CFA FRANC578.1200
CHILE – PESO751.4800
CHINA – RENMINBI6.9610
COLOMBIA – PESO3,278.7500
COMOROS – FRANC439.0600
CONGO – CFA FRANC578.1200
COSTA RICA – COLON569.6500
COTE D’IVOIRE – CFA FRANC582.0000
CROATIA – KUNA6.4900
CUBA – Chavito1.0000
CYPRUS – EURO0.8900
CZECH REPUBLIC – KORUNA22.1650
DEM. REP. OF CONGO – FRANC1,650.0000
DENMARK – KRONE6.6520
DJIBOUTI – FRANC177.0000
DOMINICAN REPUBLIC – PESO52.6600
ECUADOR – DOLARES1.0000
EGYPT – POUND16.0000
EL SALVADOR – DOLARES1.0000
EQUATORIAL GUINEA – CFA FRANC578.1200
ERITREA – NAKFA15.0000
ESTONIA – EURO0.8900
ETHIOPIA – BIRR31.8000
EURO ZONE – EURO0.8900
FIJI – DOLLAR2.1420
FINLAND – EURO0.8900
FRANCE – EURO0.8900
GABON – CFA FRANC578.1200
GAMBIA – DALASI51.0000
GEORGIA – LARI2.8700
GERMANY – EURO0.8900
GHANA – CEDI5.6600
GREECE – EURO0.8900
GRENADA – EAST CARIBBEAN DOLLAR2.7000
GUATEMALA – QUENTZAL7.6900
GUINEA BISSAU – CFA FRANC582.0000
GUINEA – FRANC9,380.0000
GUYANA – DOLLAR215.0000
HAITI – GOURDE87.6550
HONDURAS – LEMPIRA25.0000
HONG KONG – DOLLAR7.7860
HUNGARY – FORINT294.2900
ICELAND – KRONA120.7600
INDIA – RUPEE71.0000
INDONESIA – RUPIAH13,895.0000
IRAN – RIAL42,000.0000
IRAQ – DINAR1,138.0000
IRELAND – EURO0.8900
ISRAEL – SHEKEL3.4540
ITALY – EURO0.8900
JAMAICA – DOLLAR136.0000
JAPAN – YEN108.5300
JERUSALEM – SHEKEL3.4540
JORDAN – DINAR0.7080
KAZAKHSTAN – TENGE381.1800
KENYA – SHILLING101.2500
KOREA – WON1,153.7000
KOSOVO – EURO0.8900
KUWAIT – DINAR0.3030
KYRGYZSTAN – SOM69.6000
LAOS – KIP8,865.0000
LATVIA – EURO0.8900
LEBANON – POUND1500.0000
LESOTHO – MALOTI14.0560
LIBERIA – DOLLAR186.9900
LIBYA – DINAR1.3960
LITHUANIA – EURO0.8900
LUXEMBOURG – EURO0.8900
MADAGASCAR – ARIARY3,627.2000
MALAWI – KWACHA760.0000
MALAYSIA – RINGGIT4.0890
MALDIVES – RUFIYAA15.4200
MALI – CFA FRANC582.0000
MALTA – EURO0.8900
MARSHALL ISLANDS – DOLLAR1.0000
MARTINIQUE – EURO0.8900
MAURITANIA – OUGUIYA37.0000
MAURITIUS – RUPEE36.2000
MEXICO – PESO18.8920
MICRONESIA – DOLLAR1.0000
MOLDOVA – LEU17.1000
MONGOLIA – TUGRIK2,733.5200
MONTENEGRO – EURO0.8900
MOROCCO – DIRHAM9.5970
MOZAMBIQUE – METICAL 60.8500
NAMIBIA – DOLLAR14.0560
NEPAL – RUPEE113.7500
NETHERLANDS – EURO0.8900
NETHERLANDS ANTILLES – GUILDER1.7800
NEW ZEALAND – DOLLAR1.4830
NICARAGUA – CORDOBA33.8000
NIGER – CFA FRANC582.0000
NIGERIA – NAIRA361.0000
NORWAY – KRONE8.7820
OMAN – RIAL0.3850
PAKISTAN – RUPEE154.8500
PANAMA – BALBOA1.0000
PANAMA – DOLARES1.0000
PAPUA NEW GUINEA – KINA3.3110
PARAGUAY – GUARANI6,442.3301
PERU – SOL3.3140
PHILIPPINES – PESO50.6400
POLAND – ZLOTY3.7890
PORTUGAL – EURO0.8900
QATAR – RIYAL3.6400
REP. OF N MACEDONIA – DINAR54.7600
REPUBLIC OF PALAU – DOLLAR1.0000
ROMANIA – NEW LEU4.2560
RUSSIA – RUBLE62.2730
RWANDA – FRANC925.0000
SAO TOME & PRINCIPE – NEW DOBRAS22.1220
SAUDI ARABIA – RIYAL3.7500
SENEGAL – CFA FRANC582.0000
SERBIA – DINAR104.9200
SEYCHELLES – RUPEE13.6200
SIERRA LEONE – LEONE9,639.5898
SINGAPORE – DOLLAR1.3450
SLOVAK REPUBLIC – EURO0.8900
SLOVENIA – EURO0.8900
SOLOMON ISLANDS – DOLLAR8.0650
SOMALI – SHILLING575.0000
SOUTH AFRICA – RAND14.0560
SOUTH SUDANESE – POUND160.0000
SPAIN – EURO0.8900
SRI LANKA – RUPEE181.3000
ST LUCIA – E CARIBBEAN DOLLAR2.7000
SUDAN – SUDANESE POUND45.0000
SURINAME – GUILDER7.5200
SWAZILAND – LANGENI14.0560
SWEDEN – KRONA9.3010
SWITZERLAND – FRANC0.9660
SYRIA – POUND435.0000
TAIWAN – DOLLAR29.9420
TAJIKISTAN – SOMONI9.6500
TANZANIA – SHILLING2,293.0000
THAILAND – BAHT29.7700
TIMOR – LESTE DILI1.0000
TOGO – CFA FRANC582.0000
TONGA – PA’ANGA2.2090
TRINIDAD & TOBAGO – DOLLAR6.6970
TUNISIA – DINAR2.7720
TURKEY – LIRA5.9420
TURKMENISTAN – NEW MANAT3.4910
UGANDA – SHILLING3,660.0000
UKRAINE – HRYVNIA23.6900
UNITED ARAB EMIRATES – DIRHAM3.6730
UNITED KINGDOM – POUND STERLING0.7580
URUGUAY – PESO37.1300
UZBEKISTAN – SOM9,500.0000
VANUATU – VATU112.8000
VENEZUELA – BOLIVAR SOBERANO70,675.7400
VENEZUELA – FUERTE (OLD)248,832.0000
VIETNAM – DONG23,171.0000
WESTERN SAMOA – TALA2.5370
YEMEN – RIAL480.0000
ZAMBIA – NEW KWACHA14.0500
ZIMBABWE – RTGS16.2800