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FBAR Voluntary Disclosure | International Tax Lawyer & Attorney

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I often receive calls from prospective clients who talk about FBAR voluntary disclosure. They usually have no clear idea of what is meant by this term and what its requirements are. In this article, I will discuss this concept of FBAR Voluntary Disclosure and explain how this concept covers a variety of offshore voluntary disclosure options.

FBAR Voluntary Disclosure: What is FBAR?

Before we discuss the meaning of FBAR Voluntary Disclosure, we need to understand what “FBAR” is. FBAR is an acronym for Report of Foreign Bank and Financial Accounts, officially known as FinCEN Form 114. US Persons must file FBAR to report their financial interest in or signatory authority or any other authority over foreign bank and financial accounts if the aggregate value of these accounts exceeds $10,000 at any point during a calendar year.

FBAR Voluntary Disclosure: Why FBAR Compliance Is So Important?

US taxpayers who fail to comply with their FBAR obligations may find themselves in an extremely difficult legal position, because FBAR has a highly complex and an exceptionally severe penalty system, which includes even criminal penalties for FBAR noncompliance. The form’s civil penalties include not only willful penalties, but also non-willful penalties – i.e. the IRS can assess FBAR penalties even if a taxpayer’s failure to file his FBARs was unintentional and accidental.

FBAR Voluntary Disclosure: What is Voluntary Disclosure?

“Voluntary disclosure” is a process by which taxpayers voluntarily self-correct their past noncompliance. When this process involves foreign assets, it is called “offshore voluntary disclosure”.

FBAR Voluntary Disclosure: Offshore Voluntary Disclosure Options (Tax Year 2020)

The IRS has created a number of voluntary disclosure programs to encourage taxpayers to come forward and correct their past US tax noncompliance. These offshore voluntary disclosure options include: Streamlined Domestic Offshore Procedures, Streamlined Foreign Offshore Procedures, Delinquent FBAR Submission Procedures, Delinquent International Information Return Submission Procedures (effectively discontinued several weeks ago), IRS Criminal Investigation Voluntary Disclosure Practice (used to be called “Traditional IRS Voluntary Disclosure”) and the now-closed OVDP (Offshore Voluntary Disclosure Process) and OVDI (Offshore Voluntary Disclosure Initiative).

Moreover, there is also a voluntary disclosure based on Reasonable Cause exception that is sometimes called “noisy disclosure”. This is not an official IRS voluntary disclosure program, but simply a voluntary disclosure venue based on specific provisions in the Internal Revenue Code.

Finally, some taxpayers attempt to do “quiet disclosures”. A quiet disclosure can mean a range of actions voluntarily taken by a taxpayer to comply with US international tax laws without officially informing the IRS about his past noncompliance with them. In other words, a taxpayer never takes advantage of any of the voluntary disclosure options and does not claim Reasonable Cause Exception defense; rather, he either files amended tax returns or simply starts to comply with US international tax laws without doing anything about his past noncompliance.

The IRS strongly disfavors quiet disclosures and does not consider them to be voluntary disclosures. In fact, the IRS has officially stated that the agency will try to identify the taxpayers who are doing it and audit them in order to impose penalties for past noncompliance.

FBAR Voluntary Disclosure Versus Offshore Voluntary Disclosure

You probably already noticed that I never listed “FBAR Voluntary Disclosure” as a voluntary disclosure option. The reason is because it is not an official voluntary disclosure option. Rather, FBAR Voluntary Disclosure is merely a term that refers to any offshore voluntary disclosure option involving past FBAR noncompliance (such as Streamlined Domestic Offshore Procedures).

Hence, when a prospective client calls me to discuss his FBAR voluntary disclosure, I know that he does not mean any specific offshore voluntary disclosure program but merely wishes to know what option he should use to voluntarily correct his past FBAR noncompliance.

Contact Sherayzen Law Office About Your FBAR Voluntary Disclosure

If you have not filed your required FBARs for prior years, you should contact Sherayzen Law Office as soon as possible. Sherayzen Law Office is a leader in offshore voluntary disclosures involving FBARs – this is our core specialty.

We have filed thousands of FBARs for hundreds of clients all over the world. We have prepared hundreds of voluntary disclosures under all offshore voluntary disclosure options, including Streamlined Domestic Offshore Procedures and Streamlined Foreign Offshore Procedures. We can help you!

Contact Us Today to Schedule Your Confidential Consultation!

FBAR Safe Deposit Box Reporting | FBAR Tax Lawyer & Attorney

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One of the most common questions that US taxpayers have is regarding FBAR Safe Deposit Box reporting requirements. While the general answer is clear, there may be complications in certain cases.

General FBAR Safe Deposit Box Reporting Requirements

In general, a safe deposit box is not considered to be a financial account and, therefore, not reportable on FBAR.

This is a general rule and it is important to understand that it applies only to a safe deposit box – i.e. an individually secured container, usually held within a larger safe or bank vault. It is important to understand that the bank vault itself is NOT a safe deposit box. In fact, if you were to store gold in a bank vault with bank employees able to directly and legally access the contents of your storage, you would create a reportable account.

The most common example of accounts created by storing items in a bank vault are precious metals, particularly gold and silver (but also any other similar accounts, such as rare minerals accounts).

Exception: FBAR Safe Deposit Box Reporting May Arise If Custodial Relationship Is Established With Respect to the Safe Deposit Box

The great majority of cases are easily resolved under the general rule. However, as I hinted at above, an FBAR safe deposit box reporting requirement may arise if the owner of a safe deposit box enters into a custodial relationship with respect to this safe deposit box.

In such situations, a foreign financial institution is usually given direct legal access to the safe deposit box, is responsible for the safety of its contents and may change the contents according to the instructions from the box’s owner. Of course, in such a case, a safe deposit box can hardly be called in such a way and becomes very similar to a regular bank vault account.

This exception is very rare. I have personally encountered such exceptions only in the context of precious metals accounts.

Contact Sherayzen Law Office for Professional Help With Your FBAR Reporting Requirements

If you need professional help with your FBAR filings, or if you have not timely filed your FBARs for past years and need to resolve your past tax noncompliance, please contact Sherayzen Law Office. Our experienced legal team of tax professionals, headed by our international tax attorney Eugene Sherayzen, will thoroughly analyze your case, determine the US tax reporting requirements that may apply to your case, develop your voluntary disclosure plan and implement it.

Contact Us Today to Schedule Your Confidential Consultation!