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

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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!

FinCEN Form 114 Estate Filers | FBAR Tax Lawyer & Attorney

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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!