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2020 FBAR Conversion Rates | FBAR Tax Lawyer & Attorney

The 2020 FBAR conversion rates are highly important in US international tax compliance. The 2020 FBAR and 2020 Form 8938 instructions both require that 2020 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 2020 FBAR conversion rates is the default choice, not an exclusive one). In other words, the 2020 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 2020 FBAR conversion rates online (they are called “Treasury’s Financial Management Service rates” or the “FMS rates”).

Since the 2020 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 2020 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 – AFGHANI77.0900
ALBANIA – LEK100.3500
ALGERIA – DINAR132.2120
ANGOLA – KWANZA649.6000
ANTIGUA – BARBUDA – E. CARIBBEAN DOLLAR2.7000
ARGENTINA – PESO89.2500
ARMENIA – DRAM515.0000
AUSTRALIA – DOLLAR1.2940
AUSTRIA – EURO0.8150
AZERBAIJAN – NEW MANAT1.7000
BAHAMAS – DOLLAR1.0000
BAHRAIN – DINAR0.3770
BANGLADESH – TAKA85.0000
BARBADOS – DOLLAR2.0200
BELARUS – NEW RUBLE2.5980
BELGIUM – EURO0.8150
BELIZE – DOLLAR2.0000
BENIN – CFA FRANC529.0000
BERMUDA – DOLLAR1.0000
BOLIVIA – BOLIVIANO6.8100
BOSNIA – MARKA1.5940
BOTSWANA – PULA10.7990
BRAZIL – REAL5.1940
BRUNEI – DOLLAR1.3220
BULGARIA – LEV1.5940
BURKINA FASO – CFA FRANC529.0000
BURMA-KYAT1,326.0000
BURUNDI – FRANC1,930.6100
CAMBODIA (KHMER) – RIEL4,051.0000
CAMEROON – CFA FRANC529.2600
CANADA – DOLLAR1.2750
CAPE VERDE – ESCUDO89.8300
CAYMAN ISLANDS – DOLLAR0.8200
CENTRAL AFRICAN REPUBLIC – CFA FRANC529.2600
CHAD – CFA FRANC529.2600
CHILE – PESO709.7500
CHINA – RENMINBI6.5400
COLOMBIA – PESO3,414.5000
COMOROS – FRANC400.6200
CONGO – CFA FRANC529.2600
COSTA RICA – COLON609.1000
COTE D’IVOIRE – CFA FRANC529.0000
CROATIA – KUNA5.9500
CUBA – Chavito1.0000
CYPRUS – EURO0.8150
CZECH REPUBLIC – KORUNA20.7540
DEM. REP. OF CONGO – FRANC1,966.4800
DENMARK – KRONE6.0650
DJIBOUTI – FRANC177.0000
DOMINICAN REPUBLIC – PESO58.1400
ECUADOR – DOLARES1.0000
EGYPT – POUND15.6900
EL SALVADOR – DOLARES1.0000
EQUATORIAL GUINEA – CFA FRANC529.2600
ERITREA – NAKFA15.0000
ESTONIA – EURO0.8150
ETHIOPIA – BIRR39.1810
EURO ZONE – EURO0.8150
FIJI – DOLLAR2.0040
FINLAND – EURO0.8150
FRANCE – EURO0.8150
GABON – CFA FRANC529.2600
GAMBIA – DALASI52.0000
GEORGIA – LARI3.2700
GERMANY – EURO0.8150
GHANA – CEDI5.8100
GREECE – EURO0.8150
GRENADA – EAST CARIBBEAN DOLLAR2.7000
GUATEMALA – QUENTZAL7.7800
GUINEA BISSAU – CFA FRANC529.0000
GUINEA – FRANC9,990.0000
GUYANA – DOLLAR215.0000
HAITI – GOURDE71.6060
HONDURAS – LEMPIRA25.0000
HONG KONG – DOLLAR7.7530
HUNGARY – FORINT296.7600
ICELAND – KRONA127.1100
INDIA – RUPEE73.0340
INDONESIA – RUPIAH14,028.0000
IRAN – RIAL42,000.0000
IRAQ – DINAR1,138.0000
IRELAND – EURO0.8150
ISRAEL – SHEKEL3.2130
ITALY – EURO0.8150
JAMAICA – DOLLAR150.0000
JAPAN – YEN103.0800
JORDAN – DINAR0.7080
KAZAKHSTAN – TENGE421.2700
KENYA – SHILLING109.1000
KOREA – WON1,087.6600
KOSOVO – EURO0.8150
KUWAIT – DINAR0.3040
KYRGYZSTAN – SOM82.6500
LAOS – KIP9,280.0000
LATVIA – EURO0.8150
LEBANON – POUND1,500.0000
LESOTHO – MALOTI14.6730
LIBERIA – DOLLAR163.0000
LIBYA – DINAR1.3330
LITHUANIA – EURO0.8150
LUXEMBOURG – EURO0.8150
MADAGASCAR – ARIARY3,824.8000
MALAWI – KWACHA820.0000
MALAYSIA – RINGGIT4.0200
MALDIVES – RUFIYAA15.4200
MALI – CFA FRANC529.0000
MALTA – EURO0.8150
MARSHALL ISLANDS – DOLLAR1.0000
MARTINIQUE – EURO0.8150
MAURITANIA – OUGUIYA37.0000
MAURITIUS – RUPEE39.5500
MEXICO – PESO19.9130
MICRONESIA – DOLLAR1.0000
MOLDOVA – LEU17.0800
MONGOLIA – TUGRIK2,849.7700
MONTENEGRO – EURO0.8150
MOROCCO – DIRHAM8.9170
MOZAMBIQUE – METICAL 74.2000
NAMIBIA – DOLLAR14.6730
NEPAL – RUPEE117.0000
NETHERLANDS – EURO0.8150
NETHERLANDS ANTILLES – GUILDER1.7800
NEW ZEALAND – DOLLAR1.3830
NICARAGUA – CORDOBA34.9000
NIGER – CFA FRANC529.0000
NIGERIA – NAIRA385.0000
NORWAY – KRONE8.5300
OMAN – RIAL0.3850
PAKISTAN – RUPEE159.7500
PANAMA – BALBOA1.0000
PANAMA – DOLARES1.0000
PAPUA NEW GUINEA – KINA3.5090
PARAGUAY – GUARANI6,891.9600
PERU – SOL3.6190
PHILIPPINES – PESO48.1730
POLAND – ZLOTY3.7130
PORTUGAL – EURO0.8150
QATAR – RIYAL3.6400
REP. OF N MACEDONIA – DINAR50.1300
REPUBLIC OF PALAU – DOLLAR1.0000
ROMANIA – NEW LEU 3.9660
RUSSIA – RUBLE74.4600
RWANDA – FRANC950.0000
SAO TOME & PRINCIPE – NEW DOBRAS20.0510
SAUDI ARABIA – RIYAL3.7500
SENEGAL – CFA FRANC529.0000
SERBIA – DINAR95.8000
SEYCHELLES – RUPEE20.9100
SIERRA LEONE – LEONE9,997.0000
SINGAPORE – DOLLAR1.3220
SLOVAK REPUBLIC – EURO0.8150
SLOVENIA – EURO0.8150
SOLOMON ISLANDS – DOLLAR7.7340
SOMALI – SHILLING575.0000
SOUTH AFRICA – RAND14.6730
SOUTH SUDANESE – POUND177.0000
SPAIN – EURO0.8150
SRI LANKA – RUPEE185.0000
ST LUCIA – E CARIBBEAN DOLLAR2.7000
SUDAN – SUDANESE POUND55.0000
SURINAME – GUILDER14.2900
SWAZILAND – LANGENI14.6730
SWEDEN – KRONA8.1720
SWITZERLAND – FRANC0.8810
SYRIA – POUND1,256.0000
TAIWAN – DOLLAR28.0740
TAJIKISTAN – SOMONI11.3250
TANZANIA – SHILLING2,314.0000
THAILAND – BAHT29.9200
TIMOR – LESTE DILI1.0000
TOGO – CFA FRANC529.0000
TONGA – PA’ANGA2.1980
TRINIDAD & TOBAGO – DOLLAR6.6980
TUNISIA – DINAR2.6830
TURKEY – LIRA7.4240
TURKMENISTAN – NEW MANAT3.4910
UGANDA – SHILLING3,649.0000
UKRAINE – HRYVNIA28.3000
UNITED ARAB EMIRATES – DIRHAM3.6730
UNITED KINGDOM – POUND STERLING0.7320
URUGUAY – PESO42.1400
UZBEKISTAN – SOM10,471.9200
VANUATU – VATU106.2300
VENEZUELA – BOLIVAR SOBERANO1,104,430.5870
VENEZUELA – FUERTE (OLD)248,832.0000
VIETNAM – DONG23,070.0000
WESTERN SAMOA – TALA2.4440
YEMEN – RIAL480.0000
ZAMBIA – NEW KWACHA21.1400
ZIMBABWE – RTGS79.7420

2020 FBAR Criminal Penalties | FBAR International Tax Lawyers

2020 FBAR criminal penalties is a potential threat to any US taxpayer who willfully failed to file his FBARs or knowingly filed a false FBAR. In this essay, I would like to review the 2020 FBAR criminal penalties that these noncompliant US taxpayers may have to face.

2020 FBAR Criminal Penalties: Background Information

A lot of US taxpayers do not understand why the 2020 FBAR criminal penalties are so shockingly severe. These taxpayers question why failing to file a form that has nothing do with income tax calculation should potentially result in a jail sentence.

The answer to this questions lies in the legislative history of FBAR. First of all, it is important to understand that FBAR is not a tax form. The Report of Foreign Bank and Financial Accounts (“FBAR”) was born in 1970 out of the Bank Secrecy Act (“BSA”), in particular 31 U.S.C. §5314. This means that the initial primary purpose of the form was to fight financial crimes, money laundering and terrorism. In other words, FBAR was not initially created to combat tax evasion.

Rather, FBAR criminal penalties were structured from the very beginning for the purpose of punishing criminals engaged in financial crimes and/or terrorism. This is why the FBAR penalties are so severe and easily surpass the penalties of any tax form.

It was only 30 years later, after the enaction of The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA Patriot Act”), that the enforcement of FBAR was turned over to the IRS allegedly to fight terrorism. Instead, the IRS almost immediately commenced using FBAR to fight the tax evasion schemes that utilized offshore accounts.

The Congress liked the IRS initiative and responded with the American Jobs Creation Act of 2004 (“2004 Jobs Act”). The 2004 Jobs Act further increased the FBAR existing penalties and created an new non-willful penalty of up to $10,000 per violation.

2020 FBAR Criminal Penalties: Description

Now that we understand why the 2020 FBAR criminal penalties are so severe, let’s describe what these penalties actually may be. There are three different 2020 FBAR criminal penalties associated with different FBAR violations.

First, a criminal penalty may be imposed under 26 U.S.C. 5322(a) and 31 C.F.R. § 103.59(b) for willful failure to file FBAR or retain records of a foreign account. The penalty is up to $250,000 or 5 years in prison or both.

Second, when the willful failure to file FBAR is combined with a violation of other US laws or the failure to file FBAR is “part of a pattern of any illegal activity involving more than $100,000 in a 12-month period”, then the IRS has the option of imposing a criminal penalty under 26 U.S.C. 5322(b) and 31 C.F.R. § 103.59(c). In this case, the penalty jumps to incredible $500,000 or 10 years in prison or both.

Finally, if a person willingly and knowingly files a false, fictitious or fraudulent FBAR, he may be penalized under 31 C.F.R. § 103.59(d). The penalty in this case may be $10,000 or 5 years or both.

Contact Sherayzen Law Office for Help With Past FBAR Violations

If you were required to file an FBAR but you have not done it, contact Sherayzen Law Office to explore your voluntary disclosure options. Our international tax law firm specializes in FBAR compliance and we have helped hundreds of US taxpayers around the world to resolve their past FBAR noncompliance while reducing and, in some cases, even eliminating their FBAR penalties.

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

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

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.