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Survey Highlights the Difficulties Many Taxpayers With Foreign Accounts Face When Completing the FBAR

Survey Highlights the Difficulties Many Taxpayers With Foreign Accounts Face When Completing the FBAR

United States taxpayers who have an ownership interest in or signature authority over a foreign financial account with a balance of at least $10,000 at any time during the tax year are required to file an electronic Financial Crimes Enforcement Network (“FinCEN”) 114, Report of Foreign Bank and Financial Accounts (“FBAR”) by June 30th. According to a recent survey conducted by the Association of Americans Resident Overseas (“AARO”), only 88 percent of the taxpayers who responded complied with their FBAR reporting requirements. About 11 percent of those who did file a completed FBAR admitted to doing so after the June 30th deadline, and another 15 percent did not file the form electronically.   In addition, nearly one-quarter utilized the services of a tax professional to file their FBAR.

 

The AARO survey analyzed the responses of 247 American taxpayers residing in at least 32 different nations. Over 35 percent of the overall survey respondents stated the process for electronically filing the FBAR is too complicated. Other respondents apparently voiced their concerns over transmitting sensitive financial information such as that required on the FinCEN 114 form over the Internet. More than half of U.S. taxpayers surveyed stated they were afraid of making mistakes due to what they perceived to be threatening language on the required form.

 

 

Over one-third of the individuals surveyed reported encountering technical difficulties related to electronically filing the FinCEN 114 form. Many AARO survey respondents also stated filing the FBAR online took much longer than expected. According to the taxpayers, successfully acquiring the maximum balance of each offshore financial account and converting it into American dollars can be tough because foreign banking institutions typically operate differently than those in the U.S. Because of this, AARO recommends raising the FBAR reporting threshold and excluding foreign accounts opened in the country where a U.S. taxpayer resides.

 

Although the AARO survey pool was small, the results highlighted the difficulty many American taxpayers face when attempting to successfully comply with their international income tax requirements. Unfortunately, a U.S. taxpayer who fails to file a completed FBAR by June 30th can face a fine of $10,000 or up to one-half of the highest balance of the overseas financial account.  In some cases, a taxpayer who does not file the FBAR may also face criminal prosecution.

 

If you have questions about your international tax obligations, you should speak with an experienced tax attorney.  Certified tax law specialist William Hartsock has more than 30 years of experience advising clients in Southern California about how to maintain compliance with current IRS rules. To discuss your tax situation with a hardworking international tax lawyer, give Mr. Hartsock a call at (858) 481-4844 or contact him through his website today.

 

Additional Resources:

AARO Survey on e-filing of FinCEN Form 114 (the Foreign Bank Account Report) conducted from June to October, 2014

 

 

Photo Credit: SDRandCo, MorgueFile

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