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FBAR Maximum Account Value Determination | FBAR Tax Lawyer & Attorney

Determination of the FBAR maximum account value is a problem with which every FBAR filer has to deal. In this article, I would like to provide the main guidelines for the determination of the FBAR maximum account value.

FBAR Maximum Account Value Determination: Background Information

The Report of Foreign Bank and Financial Accounts or FBAR requires each filer to disclose his financial interest in or signatory authority or any other authority over foreign bank and financial accounts to the IRS. As part of this disclosure, the filer must calculate and report the maximum account value for each of his foreign accounts on his FBAR.

FBAR Maximum Account Value Determination: Definition of Highest Value

FinCEN defines the maximum value of an account for FBAR purposes as “a reasonable approximation of the greatest value of currency or nonmonetary assets in the account during the calendar year.” In other words, the IRS does not expect you to always get the highest possible value. A reasonable approximation of this value will do if the exact highest value is not possible to determine.

FBAR Maximum Account Value Determination: Usual Problems

There are two main problems that each FBAR filer faces whenever he tries to identify the maximum account value for FBAR purposes. The first and most obvious problem is the determination of the highest account value. How does one determine the highest value for a bank account? What about a securities account where stocks fluctuate all the time? What about a precious metals account which has investments in different precious metals?

Second, FBAR requires that all amounts be stated in US dollars. Hence, an issue arises with respect to proper currency conversion – i.e. what is the proper currency exchange rate? Should the spot rates be used? Or December 31 exchange rates?

Let’s discuss each of these problems in more depth.

FBAR Maximum Account Value Determination: Methodology

Determination of maximum account value depends to a certain degree on the type of an account for which the filer is trying to determine this value. There is no question that, with respect to checking and savings bank accounts, the IRS wants you to use the full-year statements to determine the day on which the highest value was achieved for each of these accounts. This is a simple and effective method.

Determining the maximum value of a securities account is much harder, because securities fluctuate on a daily basis. For this reason, the IRS allows you to rely on periodic account statements to make this determination, especially end-of-year statements. This method is allowed only as long as the statements fairly approximate the maximum value during the calendar year.

Even this method, however, is often insufficient when one deals with mixed-currency accounts, mixed-investment accounts, mixed-metal accounts, et cetera. These situations should be handled on a case-by-case basis by your international tax attorney.

Let’s illustrate the complexity of the issues involved here by a relatively simple example. Generally, an end-of-year statement for an investment account is a good approximation of the maximum value of the account. If, however, there was a withdrawal of funds from the account following a major sale of investments, then the end-of-year statement cannot be relied upon. Instead, one should try a different method to approximate the highest value. One possibility is to use a reliable and known financial website for valuing the remaining assets on the date of the sale plus the proceeds from the sale of investments. The method, however, may fail if the highest value of investments was at the beginning of the year, not the date of sale.

FBAR Maximum Account Value Determination: Currency Conversion

Unlike the identification of the highest account value with its various complications, the currency conversation part of the FBAR maximum account value determination is fairly straightforward. All filers must use the end-of-year FBAR rates published by the Treasury Department. These rates are officially called “Treasury Financial Management Service rates”, but they are commonly called “FBAR rates” by US international tax lawyers. The FBAR rates are division rates, not the multiplication ones. This is standard in US international tax law.

Hence, for the currency conversion purposes, you need to identify the currency in which your account is nominated, find the appropriate FBAR conversion rate for the relevant year and divide your highest balance by the relevant FBAR rate. For your convenience, Sherayzen Law Office also publishes FBAR rates on its website.

Contact Sherayzen Law Office for Professional Help With Your FBAR Preparation

If you are required to file FBARs, contact Sherayzen Law Office for professional help. We have helped hundreds of US taxpayers to comply with their FBAR obligations, and we can help you!

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2015 FBAR (FinCEN Form 114) Due on June 30, 2016

2015 FBAR is one of the most important tax information returns required by the IRS this year. While the 2015 FBAR is not the most complicated form, it is definitely the one that is associated with the most severe penalties.

2015 FBAR History

The FBAR is an abbreviation for the Report of Foreign Bank and Financial Accounts (the “FBAR”). The current official name of the FBAR is FinCEN Form 114 (prior to mandatory e-filing, Form TD F 90-22.1 was the name of the FBAR).

Many of my clients are surprised to learn that FBAR is a tax information return with a long history, dating back to the late 1970s. Its origin lies in the Bank Secrecy Act (31 U.S.C. §5311 et seq.) and it was originally meant to combat money laundering. However, after September 11, 2001, the FBAR enforcement was turned over to the IRS and it became a tax-enforcement tool of heretofore unimaginable power due to its heavy penalties.

Who is Required to File 2015 FBAR

The Department of Treasury (the “Treasury”) requires that an FBAR is filed whenever a US person has a financial interest in or signatory authority over foreign financial accounts and the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year. If you had such a situation in 2015, then you must seek an advice from an FBAR lawyer on whether you need to file the 2015 FBAR.

2015 FBAR Deadline

2015 FBAR must be e-filed with the IRS by June 30, 2016; there are no extensions available – the 2015 FBAR must be received by the IRS no later than June 30, 2016.

Consequences of Failure to File Your 2015 FBAR Timely

If your 2015 FBAR is not timely filed, then it will be considered delinquent and might be subject to severe FBAR civil and criminal penalties, depending on your circumstances. It is also important to point out that an incorrect or incomplete 2015 FBAR will also be considered delinquent with the higher possibility of imposition of the FBAR’s draconian penalties.

Multiple Years of FBAR Delinquency

If you did not file the FBARs in the prior years and you were required to do so, this situation is extremely dangerous (especially in our FATCA-dominated world) and may result in imposition of multiple FBAR penalties. This is why you should seek advice of an experienced FBAR lawyer as soon as possible

Contact Sherayzen Law Office for Assistance with Your FBAR Compliance

If you have not filed your FBARs previously and you were required to do so, contact Sherayzen Law Office for help as soon as possible. Our team of experienced tax professionals, headed by attorney Eugene Sherayzen, has helped hundreds of US taxpayers around the world to lower and even eliminate their FBAR penalties. We can help You!

Contact Us NOW to Schedule Your Confidential Consultation

FBAR Attorney

If you are looking for an attorney to help you with your FBAR issues, contact Sherayzen Law Office.

Sherayzen Law Office is an international tax and business law firm that specializes in FBAR compliance among other international tax issues. Our office is located in Minneapolis, but we have clients throughout the United States and overseas.

Helping U.S. taxpayers who have FBAR issues is one of our most important specializations. FinCEN Form 114 formerly Form TD F 90-22.1, the Report of Foreign Bank and Financial Accounts (commonly known as the “FBAR”), is not the most complex form in the Internal Revenue Code, but it is definitely one of the most severe forms when it comes to penalties. A lot of U.S. taxpayers either do not know about this form, do not realize how important it is, or they already realized that they should have filed the FBAR earlier and do not know how to get out of the vicious cycle of non-compliance.

Our international tax firm is highly experienced in these delinquent FBAR matters, including the voluntary disclosure process. We will analyze your case thoroughly, determine your FBAR liability and identify your voluntary disclosure options. Once you make your choice with respect to your voluntary disclosure option, we will create and implement a customized case strategy, including preparation of all of the necessary tax forms and legal briefs.

Clients of Sherayzen Law Office enjoy the personal attention of Mr. Eugene Sherayzen, the firm’s owner, who will be working with you throughout the process in order to make sure that your case proceeds efficiently. He is easily accessible by phone and email throughout the case.

We believe that each case is unique, especially in such complex matters as FBAR voluntary disclosure. Our international tax law firm will be looking for the unique features in your particular fact pattern to determine the most expeditious and favorable manner to proceed with your case.

One the biggest problems facing U.S. taxpayers in finding the right FBAR representation at this point is the tendency among some accounting firms and even law firms to disregard the special circumstances of a case and automatically channel their clients into the 2012 OVDP (Offshore Voluntary Disclosure Program) at the highest penalty rates with the idea that they will figure out later what the strategy of the case will be and whether the taxpayer needs to opt-out of the program.

We believe that this is an incorrect approach which completely disregards the individual circumstances of each taxpayer and may subject them to an unnecessarily high penalties and additional legal and accounting fees. Each case should be thoroughly analyzed at the beginning of the process before the taxpayers enters the 2012 OVDP, not in the middle or even at the end of the voluntary disclosure.

Contact Sherayzen Law Office for Help with FBARs

If you have any undisclosed foreign financial accounts, contact Sherayzen Law Office as soon as possible for an individual, comprehensive, creative and ethical approach to your voluntary disclosure process.

FBAR (Report on Foreign Bank and Financial Accounts) is due on June 30, 2011

Pursuant to the Bank Secrecy Act, 31 U.S.C. §5311 et seq., the Department of Treasury (the “DOT”) has established certain recordkeeping and filing requirements for United States persons with financial interests in or signature authority (and other comparable authority) over financial accounts maintained with financial institutions in foreign countries. If the aggregate balances of such foreign accounts exceed $10,000 at any time during the relevant year, FinCEN Form 114 formerly Form TD F 90-22.1 (the FBAR form) must be filed with the DOT.

The FBAR must be filed by June 30 of each relevant year, including this year (2011).  Notice – this year’s FBAR must be received by the DOT on June 30, 2011.  This rule is contrary to your regular tax returns where the mailing date determines whether the filing is timely.  There are no extensions available – the FBAR must be received by June 30 or it will be considered delinquent.

If you have any questions or concerns regarding whether you need to file the FBAR or how to prepare the form, please contact Sherayzen Law Office directly.  Our experienced international tax firm will guide you through this complex tax issue.

 

FBAR: Exclusion of Personal and Homeowner’s Lines of Credit

Often, I receive specific questions from my clients with respect to whether certain types of accounts should be reported on the Report on Foreign Bank and Financial Accounts (“FBAR”). Recently, one of my clients wanted to know whether he needs to report his personal and homeowner’s lines of credits on the FBAR.

A little disclaimer before I deal with the main subject of this essay. In this legal note, I do not discuss the situations where you loaned the money to someone else. This essay focus strictly on the money loaned to you.

Generally, whether the money loaned to you should be reported on the FBAR is a highly fact-dependent situation. Most such loans are not reported on the FBAR, because these loans are not considered assets. However, if a loan can be considered as an asset because of the way it is structured or because it is a part of a larger financial arrangement, the loan needs to be reported on the FBAR. You should discuss this situation with an international tax attorney who specializes in FBARs.

The situation with respect to personal and homeowner’s lines of credit, however, is much clearer. The IRS does not regard these lines of credit as assets and does not require you to disclose them on the FBAR. While this is a general rule, you should call us to discuss your specific situation in order to make sure that nothing in your situation makes these lines of credit reportable.

Contact Sherayzen Law Office to Get FBAR Help

If you have any questions with respect to FBAR or voluntary disclosure, Sherayzen Law Office can help. Our international tax firm has guided our clients throughout the United States through voluntary disclosure and FBAR reporting, making sure that the rights of our clients are protected and they pay only fair taxes and penalties.