FBAR Filings Are Electronic This Year

Major Change to FBAR This Year – Its Electronic

FBAR has became a great revenue source for the US Govt. in last few year.  Although there is no tax revenue that is generated directly from the FBAR filings but FBAR does bring the much needed transparency and makes it very hard for people to hide income/assets in foreign countries.

This year the US Govt is becoming more serious about FBAR and making its grip even stronger by asking all filers to use the new electronic system.  This new system will make the analysis of the FBAR filings much easier and much faster.  Department of Treasury will be able to identify the red flags and take swift actions.  I have a feeling that system might be already tied up with the IRS and may find unreported foreign income and can also flag individuals who might have not filed the FBAR in previous years.

Will you file FBAR this year ?

If yes than I suggest that you are extremely careful with numbers.  Depending upon the dollar amount of your reporting you will be asked different set of questions.  You should carefully understand each question before filling in the data.  Not all income/assets needs to be reported in the FBAR filings.  Over declaring your assets/income can be as troublesome as not declaring or not filing FBAR.

I can suggest couple of things to ensure compliant filing of your FBAR this year.

A.) Print detailed instructions of the FBAR forms (There are different forms based upon your earnings).   Carefully read each form and understand what kind of data needs to reported.  If you are not 100% sure than you may write to Department of Treasury for clarification.  Do not relay on the verbal explanation as that may not be sufficient in case of future audit.

B.) Consult with your Tax Professional who has experience in foreign taxes and the US taxes.  I recommend that you set up a consultation appointment to discuss your international affairs.  This will allow you to clearly understand the rules and remove any ambiguity.

You can also have your tax professional file the FBAR.  They will also have to do it electronically but you will have some peace of mind that it got done right.

Still confused – Join our upcoming webinar about FBAR

There is a special perk for joining our FBAR webinar – you can win a free pair of tickets to marine world 6 flag.

IRS Wins Foreign Account Case Over Former Mobil Senior Executive

IRS (Internal Revenue Service) has achieved a great victory over the former Mobil senior executive Bryan Williams. He was alleged in a case of offshore tax evasion. He concealed foreign bank accounts of him holding millions from IRS.

In between 1993 and 2000 this former executive opened two Swiss offshore in order to hush up his financial activities. He was also accused for purposely failing to fill out documents like foreign bank and financial account forms aka FBAR.

In recent years IRS has become more stringent about the regulations. Different cases like   this have prompted them to take such an action.  The authority has been petitioning for more financial resource so that they can expand the tax evasion programs effectively. Their focus is now to catch and prosecute law breakers.

Initially the judgement was in favor of Williams. But in the year of 2003 Williams was convicted in a separate case. His case involved fraud and conspiracy. He pleaded guilty for this case. This year finally the fourth circuit court of appeals in Richmond,Virginia ruled in favor of IRS (Internal Revenue Service). According to the court documents he has committed a fraud.

Now IRS will impose heavy penalties on Williams for committing such crime. He will have to pay a huge amount  for each year of evasion.

This is  a great lesson for taxpayers. This is the high time everyone should be concerned about the consequences of such fraud. So it’s better to avoid the ways to take the help of abusive tax shelter. Going with legal tax shelter is quite beneficial way to reduce the taxable amount. Charitable donation is a perfect way of legal tax shelter. Apart from this you can go for investments. Investments in real estate or health insurance are also considered as a better way of tax shelter.

If you are holding an illegal foreign account, then you should stop such a financial activity. Any day and any time IRS authority can accuse for doing such frauds. And the rest you know.


Will Mitt Romney (Republican) File for OVDI 2012 ?

The easiest way to evade tax and pile personal savings is to tuck away money in offshore / overseas accounts. Mitt Romney, the republican presidential candidate is currently enjoying attention for having put away his ‘vast wealth’ into overseas establishments. However it is not Romney alone, who stocks money in Swiss bank accounts, provides fund to third world countries (money laundering) and clever as he is he has allocated all asset listings to a certain omnipresent ‘Uncle Sam’.

But can Romney rest in peace? Can the ‘Uncle Sam alibi’ silence his political foes and also the common mass?  This is infact a warning for the others to take due notice of summons for Tax Justice Network. TJN conceptualized by British Houses of Parliament is a research centre that analyzes and reports on ‘how tax evasion on part of high net worthy investors affects national economy’. In its latest report ‘The Price of Offshore revisited’ it presents a detailed study on financial assets invested in foreign fiscal centres and secrecy structures. It traced $21 trillion (a total of US and Japanese economy combined) as reserved with overseas banks.  This amount is exclusive of non-financial assets like real estate holdings, yachts & bonds and equities etc. if these non-cash assets are added to $21 trillion, the amount increases to $32 Trillion, TJN reports.

The IRS is trying hard to convince high net worthy investors to reveal detailed property holdings in order to clear tax with the US government. Infact the IRS has designed two amnesties to encourage the investors bring back national currency from their foreign bank accounts.  Offshore voluntary disclosure programs this year has brought in more than $5 million as taxes, interests and penalties. Almost 33,000 taxpayers revealed their financial holdings in order to dodge criminal charges for evading taxes.

The offshore voluntary disclosure endeavour is an on going process. Penalty charges for those that have avoided paying taxes for overseas assets has gone up by 27.5 % from 25% in last year’s program. However the amnesty is far better for high net worthy investors for it charges only a penalty fee. On the other hand if the IRS discovers foreign assets after the amnesty period is over then they might as well confiscate all fiscal assets or might even send the investor to federal jail.

FBAR Solutions for Indo American Citizens and Residents

American Indians are curious to learn how FBAR impacts their investment in India and Other countries.   Many Indo American tax payers are still unaware of new US regulations and those who do know about FBAR regulations are still wondering of they are required to file FBAR or not.   In a recent interview online Sanjiv Gupta CPA tries to explain the concerns of Indo American citizens.

You can watch this interview regarding FBAR here to learn more.



Offshore Disclosure Program Makes $5 Billion (Infographics)

In this cool inforgraphics, you can easily see why FBAR is such a big deal.  IRS has made over $5 billion dollars from off shore volunteer disclosure scheme. That is lots of money.  So far only 33,000 people have come cleaned using OBDI. This leaves lots of room for IRS to grow their OBDI program.  IRS is also hiring more agents to ensure better compliance while slowly increasing the penalties for those ignoring the law.


Do I need to file FBAR if I didn't earn any interest ?

Recently a gentleman asked a simple question,”Do i need to file FBAR ?”.

And we asked him few other questions:

  • Do you live in United States (Citizen, Green Card Holder, H1 or any other kind of visa) ?
  • Do you have an kind of foreign account ?
  • At any given time, did you have more than $10K in your foreign account ?

If the answer is YES to these questions than you must file FBAR.  But this was very hard for client to understand and he gave us many reasons why he should not be required to file FBAR .  Let me share those reasons with you.

  1. I am not a US Citizen or Green Card Holder.  I am on H1B Visa.
  2. United States do not have any right to know my investment in foreign country.
  3. I declared the money when I sent to India via Bank and therefore US already knows about this.
  4. IRS is confused about the FBAR and have no clue about the requirements.
  5. I didn’t make any kind of money in foreign country.

Some of you may or may not agree with these reasons but all of you will love this reason.

“I read online that I don’t need to file FBAR.”  This statement made me curious to find some information about FBAR online to see what others are saying and here is what I found:

Comments Posted on immigrationvoice.com

I think 2011 FBAR is only for the previous calendar year (2010). I doubt that IRS would go back to 2008 and check. Also you have hardly accumulated any interest for that $25K. But if you still want to be 100% compliant do it. Its just paperwork and hassle.

I know another friend who has a similar situation where he deposited some funds in 2009 to pay off a loan but it sat in his account for just a week or so before it was removed. There is no intention of gaining interest…only signature authority and such cases are exempt. $25 K for a week or so won’t gain more than Rs 500 (maybe less) or so interest. If IRS wants they can have his $10 in interest.

My CPA told me that having amounts like $25K or so previous to the current calendar year is irrelevant and just additional paperwork. The IRS is looking for people who have huge amounts of money sitting and accumulating interest. They are not going to chase and trouble individuals who have no intent to do money laundering or not gaining any significant interest.

This is an imaginative post by some user.   I am sure his CPA won’t stand behind this statement and will never give this statement on paper.   FBAR may sound like a complex legal requirement but basics are fairly simple.   If you are a US person (regardless of your visa status), you have a foreign account with balance of $10K or more at any given time during last year than you need to file FBAR.   If your CPA or financial advisor is telling your otherwise than you should get it in writing or email.   Even if you have this kind of advise in writing it may not protect you from penalties but it may help in avoiding the criminal penalties.


I found another post that says that IRS had suspended FBAR during the year 2010. You can read it online at trackitt.com

The Internal Revenue Service has temporarily suspended the requirement to file a Report of Foreign Bank and Financial Accounts for the 2009 and earlier calendar years, for people who are not U.S. citizens, residents or domestic entities.

Announcement 2010-16 temporarily suspends the requirement to file Form TD F 90-22.1, also known as the FBAR, as the IRS tries to clear up the definition of “United States person.” In addition, the IRS issued Notice 2010-23, which provides FBAR filing relief for some persons with signature authority and who own commingled funds.

In October 2008, the IRS published a revised FBAR form, together with accompanying instructions, changing the definition of “United States person.” The IRS received numerous questions and comments from the public concerning the changed definition. In response, and to reduce the burden on the public, the IRS issued Announcement 2009-51, 2009-25 I.R.B. 1105, which directed people to refer to the definition of “United States person” in the July 2000 version of the FBAR instructions to determine if they had a filing obligation.

Once again, this is an online post.  Do not relay on such communications unless you have personally written to IRS and got similar advise in mail by the IRS.  Even if you receive such communication in mail by IRS, you will still be required to file FBAR but you may not have to penalty for that specific period of time.

FBAR law is much simpler than most people think.  Issue is that many US person with accounts in foreign countries have not filed FBAR for years and now they are willing to file the FBAR but do not want to file because penalties for previous years are huge.  There is an amnesty program that can help in cleaning up the mess but you are still required to pay some penalties.

We strongly recommend our readers “NOT TO DEPEND” upon online blogs and other media.   Please speak with your CPA or get a written advise from IRS.   Our bias allows us to find blog post in our favor but we may ignore the official blogs of CPA and IRS website for real advise.  Don’t be a victim of mis-information. This won’t protect you from penalties.

Want more on FBAR ? Stay tuned for TV interview with Sanjiv Gupta on FBAR ?

FBAR | Forign Bank Account Reporting: June 30th 2012

FBAR | Forign Bank Account Reporting Deadline June 30th 2012

If you live in San Francisco Bay Area, you must have heard Sanjiv Gupta CPA talk about FBAR filing.   Sanjiv has been explaining FBAR on TV and Radio for last couple years.  We have talked about FBAR on our blog a lot as well.  None the less, there are many questions still floating around and folks are sill finding confusion about FBAR.

One of the most common question our client ask us is:

Do I need to file FBAR on April 17th along with my tax return?

No – FBAR deadline is June 30th and you need to send it to different address (than your tax return)

I filed FBAR this year but didn’t file for last sevral years. What should I do ?

Well, it depends if you were required to file the FBAR or not.   You should start by consulting with your CPA or Attorney to make sure if you were required to file the FBAR or not.   Once you the answer, you can work on strategy to deal with the situtation.

Can I file past due FBAR ?

Offcourse you can but please do note there are penalties for late filing.

Is there a way to avoid penalties?

May be – you will need a good reason.  You will be required to explain why you didn’t file FBAR in the first place ?

I live in San Jose, Santa Clara, Cupertino, Palo Alto area and didn’t know that I have to file FBAR ?

More than likely this statement won’t work.   You need to work with your accountant or attorney to clearly explain why you didn’t file FBAR.  You may not know about FBAR but you still need to articulate you argument. 


According to IRS website, Here are the penalities for not filling the FBAR :

Failure to file FBAR Penalties

There are very heavy penalties for failure to file FBAR.  The following chart highlights the civil and criminal penalties that may be asserted for not complying with the FBAR reporting and recordkeeping requirements.


Civil Penalties

Criminal Penalties


Negligent Violation Up to $500 N/A 31 U.S.C.
§ 5321(a)(6)(A)
31 C.F.R. 103.57(h)
Non-Willful Violation Up to $10,000 for each negligent violation N/A 31 U.S.C. § 5321(a)(5)(B)
Pattern of Negligent Activity In addition to penalty under § 5321(a)(6)(A)
with respect to any such violation, not more than $50,000
N/A 31 U.S.C. 5321(a)(6)(B)
Willful – Failure to File FBAR or retain records of account Up to the greater of $100,000, or 50 percent of the amount in the account at the time of the violation. Up to $250,000 or 5 years or both 31 U.S.C. § 5321(a)(5)(C)
31 U.S.C. § 5322(a)
and 31 C.F.R. § 103.59(b) for criminal.
The penalty applies to all U.S. persons.
Willful – Failure to File FBAR or retain records of account while violating certain other laws Up to the greater of $100,000, or 50 percent of the amount in the account at the time of the violation. Up to $500,000 or 10 years or both 31 U.S.C. § 5322(b) and 31 C.F.R. § 103.59(c) for criminal
The penalty applies to all U.S. persons.
Knowingly and Willfully Filing False FBAR Up to the greater of $100,000, or 50 percent of the amount in the account at the time of the violation. $10,000 or 5 years or both 18 U.S.C. § 1001,
31 C.F.R. § 103.59(d) for criminal. The penalty applies to all U.S. persons.
Civil and Criminal Penalties may be imposed together. 31 U.S.C. § 5321(d).

 Want to Learn more about FBAR | Forign Bank Account Reporting

Hear are some links to other FBAR discussion on Sanjivcpa.com

Do office of Sanjiv Gupta CPA files FBAR | Forign Bank Account Reporting ?

Yes | We help both businesses and individual with FBAR filing.  You can call our office at 510-825-7563 to make an appoinment. 

Do you only offer FBAR for Fremont Residents ?

We have clients from across the globe filing FBAR using our services.   However, most of our customers filing FBAR are of Indian original and usually located in Fremont, Hayward, Santa Clara, Sunnyvale, Palo Alto, Cupertino, San Jose.  We serve clients from San Francisco Bay Area.

Are you open on weekends ?

Yes, we are open atleast on Saturday.

I am not sure if I need to file FBAR, Can you help ?

It is good idea to take an appointment to understand if you should file he FBAR or not.  As you know, consequences of not filing (if required) can be painfull.  Sanjiv Gupta CPA can sit down and learn more about your situtation and advise if you should or you should not file FBAR ?

I live in San Francisco Bay Area but can not come to your office ?

We offer appointment by phone and video conferencing.  Give us a call and we will try to find a solution for you.