FBAR Filing Service Provided By Philip Falco, Attorney, CPA

The Report of Foreign Bank and Financial Accounts is a critical component to United States compliance. FBARs must be filed electronically and it is not filed with your United States tax return.  We take the hassle out of registering and the guess work out of filing; Philip Falco, Attorney, CPA is a registered FBAR BSA electronic filer.  We provide this valuable service at a reasonable price.

Feel free to call us for a free quote (303) 626-7000 or email phil@coloradolegal.com.  If you have unfiled FBAR’s we provide representation to enter the Streamlined Domestic Disclosure Program and Offshore Voluntary Disclosure Program.  Our services are provided worldwide.  .

Our service includes:

  1. We will electronically file your FBAR (E-File).
  2. We will timely file your FBAR.
  3. We provide different levels of service ranging from pure submission to account review and determination.  You chose the level of service.
  4. We provide consultation as to what is the maximum balance.
  5. We can amend prior FBAR’s.

An FBAR FinCEN 114 (formerly TD-F 90-22.1, also referred to as Treasury Form 114, and FBAR Online) is a very important filing with the United States Treasury. Here’s why:

  1. FBAR e-filing deadline is April 14, 2015, an extension is allowed to October 15, 2016.  This was a significant change from June 30, 2015, period, no extensions allowed.
  2. FBAR penalties are as harsh as penalties come.
  3. FBAR’s must be completed correctly.  For example, the cash surrender value of a foreign whole life insurance policy must be reported on the FBAR.

FBAR Components:

  1. Type of filer: Individual, Partnership, Corporation, Consolidated, Fiduciary.
  2. Social Security Number, TIN, or foreign identification.
  3. Birth date.
  4. Address.
  5. Number of accounts.
  6. Account Maximum Value.
  7. Name and address of financial institution.
  8. Distinguish accounts owned separately, jointly, signature authority, and consolidated report.
  9. Distinguish type of account.
  10. Distinguish accounts where filer has signature authority but no financial interest in the account.

Read our post on What is a Willful Failure to Disclose an Offshore Account?

Feel free to contact us for free quite and for more information.

We can request administrative rulings on very complex issues.  Click here to view a pdf of the electronic form signature and authorization page.

What is a “Willful” Failure to Disclose Offshore Bank Account

This is the central question as to whether a taxpayer enters Offshore Voluntary Disclosure or Streamline.  It also fixes potential penalties under 31 U.S.C. §5321.

31 U.S.C. 5314 is the statute that requires reporting of foreign bank accounts.  Pursuant to the statute, reporting is required by the following:

  1. a United States Citizen,
  2. a resident of the United States or
  3. a person in, and doing business in the United States.

Incidentally, the term “person” has broad meaning, which includes corporations.

Pursuant to 31 U.S.C. §5321, the amount of penalty shall not exceed $10,000 unless the case is “willful“.  In cases of willfulness, the maximum penalty increases to the greater of  $100,000 or 50 percent of the account balance.  It is also noteworthy that, pursuant to subsection (d), a criminal penalty may be stacked on top of this civil penalty.

A lot is riding on the meaning of “willful” so let’s turn our focus to it.  If you would like to read what is required of the Secretary of Treasure to prove an FBAR case, click here to read the 7 elements.

Legal standard and Burden of Proof

To affix the civil penalty under 31 U.S.C. §5321 the Secretary of Treasury must establish willfulness by the preponderance of the evidence.  This is a lower standard than beyond a reasonable doubt.  The Burden of Proof is on the United States Government.

Meaning of “Willful”

31 U.S.C. §5321 does not define “willful”.  In United States of America v. McBride, 908 F. Supp. 1186 (D.Utah 2012), The United State District Court analyzed the meaning of “willful” as it is used in 31 U.S.C. §5321.  The Court gave heavy weight to the fact that taxpayer signed the tax return.

Signature alone is sufficient proof of a taxpayer’s knowledge of the instructions contained in the tax return form and in other contexts, the Court stated.  This is an inference of “willful” conduct by mere signature alone. The Court went on to analyze the proposition that signature by itself does not prove knowledge, but knowledge may be inferred from the signature and the signature is prima facie evidence that the signer knows the contents of the return.

In either case, taxpayer’s signature shifts the burden of proof to taxpayer to prove non-willfulness.  The Court held that knowledge of the law, including knowledge of the FBAR, requirements, is imputed to taxpayer, which is sufficient to inform taxpayer of the requirement to file Form TD F 90-22.1.  The Court held that signature alone imputed knowledge to taxpayer of the FBAR requirement.

It is noteworthy that the Court analyzed taxpayer’s credibility in detail.  Taxpayer alleged that he did not know he had a legal duty to file FBAR’s, which is common and understandable assertion.  Rather than just dismiss this argument on the basis of his signature on tax return, the Court found taxpayer not credible because of prior testimonial inconsistencies.

Implicitly, there is a defense that taxpayer did not know of FBAR requirements despite signature on a tax return.  After all a signature is prima facie evidence of willfulness, not the end-all and be-all of willfulness.

In the end, “willfulness” is determined by the facts and circumstances of each case that must be analyzed in the context of that particular time period in question.

 

Breaking News: IRS Changes to the Offshore Voluntary Disclosure Program (OVDP)

IRS Reduces OVDP Penalty to 5% in non-willful offshore compliance cases.

For eligible U.S. taxpayers residing in the United States, the only penalty will be a miscellaneous offshore penalty equal to 5 percent of the foreign financial assets that gave rise to the tax compliance issue.

Other positive changes for taxpayers living in the United States:

  • Eliminating a requirement that the taxpayer have $1,500 or less of unpaid tax per year;
  • Eliminating the required risk questionnaire;
  • Requiring the taxpayer to certify that previous failures to comply were due to non-willful conduct.

The IRS increases its effort to make OVDP accessible to everyone.  This is a step in the right direction.  The goal is to get taxpayers in compliance.

Non-willful conduct is conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law.

Other good news: If you made an OVDP submission prior to July 1, 2014 you may elect to have your case considered under Streamline so long as a closing agreement has not been executed.

We specialize in Offshore Account Compliance. We represent taxpayers entering the 2012 Offshore Voluntary Disclosure Initiative Program (OVDP)

See our page on OVDP / OVDI

Please contact Philip Falco, CPA, Juris Doctor – Honors to discuss these new measures and how they apply to you (303) 626-7000.