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Child FBAR Obligations | FBAR Tax Lawyer & Attorney

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Child FBAR filing obligations is a topic that comes up fairly often in my practice. In this short essay, I will discuss whether a child is required to file an FBAR and how it should be done.

Child FBAR Obligations: What is FBAR

FBAR is a common abbreviation for the Report of Foreign Bank and Financial Accounts, officially called FinCEN Form 114, Report of Foreign Bank and Financial Accounts (used to be TD F 90-22.1). This form is used by US persons to report to the IRS a financial interest in or signatory authority over foreign financial accounts.  This is one of the most important forms that US taxpayers need to file in order to comply with their US international tax law requirements. A failure to file an FBAR when required may result in an imposition of severe IRS penalties.

Child FBAR Obligations: No Age Limitations

All US Persons are potentially subject to the FBAR requirement with no regard for their age. In other words, minor children with foreign accounts that satisfy the FBAR filing threshold must file FBARs. Even a newborn infant may have to file an FBAR. See BSA Electronic Filing Requirements For Report of Foreign Bank and Financial Accounts (FinCEN Form 114), p. 6.

Child FBAR Obligations: How to file a Child’s FBAR

While a child is responsible for the filing of his own FBAR, the child’s parent, guardian or other legally responsible person must file the FBAR for the child if the child is unable to do it himself.  Id. In such cases, the responsible person, parent or guardian must sign the FBAR on behalf of the child as “Parent/Guardian filing for child”.

Contact Sherayzen Law Office for Professional Help with Your Child FBAR Obligations

Parents often overlook their children’s FBAR obligations.  Time and again, I discover that otherwise fully-compliant taxpayers completely neglected their children’s FBARs.

If your child has not filed the required FBARs or he needs help complying with his current FBAR obligations, contact Sherayzen Law Office for professional help.  We are a highly-experienced team of international tax professionals led by an international tax attorney, Mr. Eugene Sherayzen.  We have helped hundreds of people around the world with their FBAR obligations, including offshore voluntary disclosures, and we can help you!

Contact Us Today to Schedule Your Confidential Consultation!

Tax Treaty Election FBAR Obligations | FBAR Lawyer & Attorney

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In my practice, I often receive calls from people who are confused about their FBAR obligations.  A recent call raised an important issue of whether a tax treaty election may affect one’s FBAR obligations.  In this brief article, I would like to address this issue of tax treaty election FBAR obligations.

Tax Treaty Election FBAR Obligations: What is FBAR ?

FinCEN Form 114, Report of Foreign Bank and Financial Accounts (used to be TD F 90-22.1) is commonly known as FBAR, the Report of Foreign Bank and Financial Accounts. This form is used by US persons to report to the IRS a financial interest in or signatory authority over foreign financial accounts.  This is one of the most important forms that US taxpayers need to file in order to comply with their US international tax law requirements. A failure to file an FBAR when required may result in an imposition of severe IRS penalties.

Tax Treaty Election FBAR Obligations: US Person

In another article, I already addressed in great detail the definition of a US Person.  Here, I will just briefly state the categories of persons who fall under the definition of a US Person for FBAR purposes:

(1) US citizens;

(2) residents of the United States;

(3) an entity, such as a corporation, partnership and a limited liability company, created or organized in the United States or under the laws of the United States;

(4) a trust formed under the laws of the United States; and

(5) an estate formed under the laws of the United States.

Tax Treaty Election FBAR Obligations: US Person & Tax Treaty Election

Now, we have come to the critical point and the main subject of this essay: would a tax treaty election to be treated as a resident of another country under a valid income tax treaty affect one’s FBAR obligations? In other words, can you elect out of being a US Person by making a tax treaty election?

The main general answer is no – a tax treaty does not and cannot affect FBAR filing obligations. See Amendment to the Bank Secrecy Act Regulations—Reports of Foreign Financial Accounts, 76 Fed. Reg. 10, 234 & 238 (Feb. 24, 2011); also, IRM 4.26.16.2.1.2(6) (11-06-15).  If a person meets the definition of a resident alien under IRC §7701(b) (i.e. he meets the FBAR definition of a US Person), even if he is not treated as a resident for income tax purposes due to an election under an income tax treaty, he will still be subject to FBAR.

The main exception to this rule would be an abandonment of US permanent residency through a tax treaty election, because it would affect the definition of a resident alien under IRC §7701(b).

Contact Sherayzen Law Office for Help with Your FBAR Compliance and FBAR Voluntary Disclosure

Sherayzen Law Office specializes in FBAR compliance and Offshore Voluntary Disclosures that involve prior FBAR noncompliance. We have helped hundreds of US taxpayers around the world with their FBAR issues, and we can hep you!

Contact Us Today to Schedule Your Confidential Consultation!

2021 FBAR Deadline in 2022 | FinCEN Form 114 International Tax Lawyer & Attorney

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The 2021 FBAR deadline is a critical deadline for US taxpayers this calendar year 2022. What makes FBAR so important are the draconian FBAR penalties which may be imposed on noncompliant taxpayers. Let’s discuss the 2021 FBAR deadline in more detail.

2021 FBAR Deadline: Background Information

The official name of FBAR is FinCEN Form 114, the Report of Foreign Bank and Financial Accounts. US Persons must file FBAR if they have a financial interest in or signatory or any other authority over foreign financial accounts if the highest aggregate value of these accounts is in excess of $10,000. FBARs must be timely e-filed separately from federal tax returns.

Failure to file an FBAR may result in the imposition of heavy FBAR penalties. The FBAR penalties vary from criminal penalties and willful penalties to non-willful penalties. You can find more details about FBAR penalties in this article.

2021 FBAR Deadline: Pre-2016 FBAR Deadline

For the years preceding 2016, US persons needed to file FBARs by June 30 of each year. For example, the 2013 FBAR was due on June 30, 2014. No filing extensions were allowed.

The last FBAR that followed the June 30 deadline was the 2015 FBAR; its due date was June 30, 2016. Due to the six-year FBAR statute of limitations, however, it is important to remember this history for the purpose of offshore voluntary disclosures and IRS FBAR audits. The 2015 FBAR’s statute of limitations will expire only this year – on June 30, 2022.

2021 FBAR Deadline: Changes to FBAR Deadline Starting with the 2016 FBAR

For many years, the strange FBAR filing rules greatly confused US taxpayers. First of all, it was difficult to learn about the existence of the form. Second, many taxpayers simply missed the unusual FBAR filing deadline.

The US Congress took action in 2015 to alleviate this problem. As it usually happens, it did so when it passed a law that, on its surface, had nothing to do with FBARs. The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (the “Act”) changed the FBAR deadline starting with 2016 FBAR. Section 2006(b)(11) of the Act requires the FBARs to be filed by the due date of that year’s tax return (i.e. usually April 15), not June 30.

Furthermore, during the transition period (which continues to this date), the IRS granted to US taxpayers an automatic extension of the FBAR filing deadline to October 15. Taxpayers do not need to make any specific requests in order for an extension to be granted.

Thus, starting with the 2016 FBAR, the Act adjusted the FBAR due date to coincide with the federal income tax filing deadlines. This is the case even if federal law requires a different filing date. For example, in situations where the tax return due date falls on a Saturday, Sunday, or legal holiday, the IRS must delay the due date until the next business day; the FBAR deadline will follow suit and also shift to the next business day.

2021 FBAR Deadline

Based on the current law, the 2021 FBAR deadline will be April 18, 2022. However, it is automatically extended to October 17, 2022.

The 2021 FBAR must be e-filed through the US Financial Crimes Enforcement Network’s (FinCEN) BSA E-filing system.

Contact Sherayzen Law Office for Professional Help With Your FBAR Compliance

If you have unreported foreign accounts, contact Sherayzen Law Office as soon as possible. Sherayzen Law Office is a leader in US international tax compliance and offshore voluntary disclosures. We have successfully helped hundreds of US taxpayers around the globe with their FBAR compliance and FBAR voluntary disclosures; and we can help you!

Contact Us Today to Schedule Your Confidential Consultation!

October 31 2020 FBAR Deadline | FBAR Tax Lawyer & Attorney

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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!

The Tinkov Case: Concealment of Foreign Assets During Expatriation

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On March 5, 2020, the Internal Revenue Service (“IRS”) and the U.S. Department of Justice (“DOJ”) announced that Mr. Oleg Tinkov was arrested in London in connection with an indictment concerning concealment of about $1 billion in foreign assets and the expatriation income in connection with these assets. Let’s discuss the Tinkov case in more detail.

The Tinkov Case: Alleged Facts

According to the indictment, Oleg Tinkov was the indirect majority shareholder of a branchless online bank that provided its customers with financial and bank services. The indictment alleges that, as a result of an initial public offering (IPO) on the London Stock Exchange in 2013, Tinkov beneficially owned more than $1 billion worth of the bank’s shares. He allegedly owned these shares through a British Virgin Island (“BVI”) structure.

The indictment further alleges that three days after the IPO, Mr. Tinkov renounced his U.S. citizenship or expatriated. Expatriation is a taxable event subject to the expatriation tax. As a an expatriated individual, Mr. Tinkov should have reported to the IRS the gain from the constructive sale of his worldwide assets and pay the expatriation tax on such a gain to the IRS. Yet, he allegedly never did it.

Instead, Mr. Tinkov filed an allegedly false 2013 tax return with the IRS that reported income of less than $206,000. Moreover, the IRS further alleges that he filed a false 2013 Initial and Annual Expatriation Statement reporting that his net worth was $300,000.

The Tinkov Case: Potential Noncompliance Penalties

If convicted, Mr. Tinkov faces a maximum sentence of three years in prison on each count. He also faces a period of supervised release, restitution, and monetary penalties. Other penalties (including Form 5471, Form 8938 and FBAR penalties) may be imposed.

The Tinkov Case: Presumption of Innocence

The readers should remember that an indictment is a mere allegation that crimes have been committed. The defendant (in this case, Mr. Tinkov) is presumed innocent until proven guilty beyond a reasonable doubt.

The Tinkov Case: Lessons from This Case

The Tinkov Case offers a number of useful lessons concerning US international tax compliance, particularly U.S. expatriation tax laws. Let’s concentrate on the three most important lessons.

First, a U.S. citizen or a long-term U.S. permanent resident must carefully consider all tax consequences of expatriation. Such a taxpayer must engage in careful, detailed tax planning prior to expatriation. Mr. Tinkov did not do such planning and renounced his U.S. citizenship merely three days before the IPO. By that time, the value of his assets was already easily established beyond reasonable dispute.

Second, one must be very careful and accurate with one’s disclosure to the IRS. Mr. Tinkov’s 2013 U.S. tax return and the Expatriation Statement contained information vastly different from the one that the IRS was able to acquire during its investigation. It is no wonder that the IRS concluded that he willfully filed false returns to the IRS, especially since it does not appear that his submissions to the IRS attempted to explain the gap between the returns and the information that IRS had or acquired later during an investigation.

Finally, expatriation cases involving sophisticated tax structures, especially those incorporated in an offshore tax-free jurisdiction, are likely to face a closer scrutiny and even a criminal investigation by the IRS. We have seen the confirmation of this fact in many cases already. In this case, Mr. Tinkov’s BVI corporation, which protected his indirect ownership of his online bank, was a huge red flag. His attorneys should have predicted that this structure alone would invite an IRS investigation of his expatriation.

Contact Sherayzen Law Office for Professional Help With Your U.S. International Tax Compliance and Offshore Voluntary Disclosures

If you are a U.S. taxpayer with assets in a foreign country, contact Sherayzen Law Office for professional help with your U.S. international tax compliance. If you have already violated U.S. international tax laws concerning disclosure of your foreign assets, foreign income or expatriation, then you need to secure help as soon as possible to conduct an offshore voluntary disclosure to lower your IRS penalties.

We have helped hundreds of US taxpayers around the globe with their U.S. international tax compliance and offshore voluntary disclosures. We can help you!

Contact Us Today to Schedule Your Confidential Consultation!