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Offshore Banking Disclosures

If you have an offshore account that at any time in the last ten years surpassed an account
ILLINOIS SALES TAX
TAX AUDITS
TAX DEBT
OFFSHORE BANKING
DISCLOSURES
OFFER IN COMPROMISE
INSTALLMENT AGREEMENTS
DISCHARGING TAXES IN
BANKRUPTCY
TAX FRAUD
TAX COURT LITIGATION
TAX CRIMES
TAX LEVY

balance of $10,000, the IRS can come after you for huge penalties and the Criminal Investigation
Division can arrest and prosecute you UNLESS you make arrangements NOW to file your FBAR
(Report of Foreign Bank and Financial Accounts) forms and make arrangements to pay the tax
due, the penalty, and the interest. This is an extremely serious matter and tax attorney Andrew
Gordon can help you today in your effort to become compliant and avoid the extremely serious
penalties and loss of freedom that can result in these cases.

What follows is some very basic information about this situation. This is posted for informational
purposes only. By coming to see Andrew Gordon you can avoid the painful results that might
attach if you continue a non-compliant status.

Report of Foreign Bank and Financial

Accounts (FBAR)

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TRUST FUND RECOVERY PENALTY

Accounts (FBAR)

PAST DUE TAX RETURNS

If you have a financial interest in or signature authority over a foreign financial account, including

TAX APPEAL

a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account,

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exceeding certain thresholds, the Bank Secrecy Act may require you to report the account yearly

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to the Internal Revenue Service by filing a Report of Foreign Bank and Financial Accounts (FBAR).
See the Who Must File an FBAR section below for additional criteria.

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Chicago, IL 60603
Local: (312) 608-2772

Current FBAR Guidance

FBAR final regulations
On February 24, 2011, the Treasury Department published final FBAR regulations. These
regulations became effective March 28, 2011, and apply to FBARs required to be filed with respect
to foreign financial accounts maintained at any time during calendar year 2010, and for FBARs
required to be filed with respect to all subsequent calendar years. The FBAR form and instructions
were revised to reflect the amendments made by the final regulations.

Filing deferral for certain individuals with signature authority only, effective through
June 30, 2014

On May 31, 2011, the Financial Crimes Enforcement Network (FinCEN) issued FinCEN Notice
2011-1 (revised June 6, 2011), to provide an extension of time for certain individuals with
Please enter this code into the field below:

signature authority over, but no financial interest in, foreign financial accounts of their employer or
a closely related entity. The filing deadline to report signature authority over these accounts was
extended to June 30, 2012, for the following individuals:

Submit

An employee or officer of an entity under 31 CFR 1010.350(f)(2)(i)-(v) who has signature

or other authority over and no financial interest in a foreign financial account of a controlled
person of the entity; or
An employee or officer of a controlled person of an entity under 31 CFR 1010.350(f)(2)(i)(v) who has signature or other authority over and no financial interest in a foreign financial
account of the entity, the controlled person, or another controlled person of the entity.

For purposes of FinCEN Notice 2011-1, a controlled person is a United States or foreign entity
more than

50

percent

owned (directly or indirectly) by an

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entity under 31

CFR

1010.350(f)(2)(i)-(v).

On June 17, 2011, FinCEN issued Notice 2011-2 to provide an extension of time to file for certain
officers or employees of investment advisors registered with the Securities and Exchange
Commission who have signature authority over, but no financial interest in, foreign financial
accounts of their employer. The filing deadline for employees and officers to report signature
authority over these accounts was similarly extended to June 30, 2012.

Due to additional questions and concerns regarding the signature authority filing exceptions within
Notice 2011-1 and Notice 2011-2, FinCEN twice extended the revised filing deadlines imposed by
those two notices. On February 14, 2012, FinCEN issued FinCEN Notice 2012-1, extending the
deadline to file to June 30, 2013, for those persons identified in Notice 2011-1 and Notice 2011-2.
More recently, on December 26, 2012, FinCEN issued Notice 2012-2, further extending the due
date for filing to June 30, 2014.

Who Must File an FBAR

United States persons are required to file an FBAR if:

1. The United States person had a financial interest in or signature authority over at least one
financial account located outside of the United States; and
2. The aggregate value of all foreign financial accounts exceeded $10,000 at any time during
the calendar year to be reported.

United States person means U.S. citizens; U.S. residents; entities, including but not limited to,
corporations, partnerships, or limited liability companies, created or organized in the United States
or under the laws of the United States; and trusts or estates formed under the laws of the United
States.
Exceptions to the Reporting Requirement
Exceptions to the FBAR reporting requirements can be found in the FBAR instructions. There are
filing exceptions for the following United States persons or foreign financial accounts:

1. Certain foreign financial accounts jointly owned by spouses;

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2. United States persons included in a consolidated FBAR;

3. Correspondent/nostro accounts;
4. Foreign financial accounts owned by a governmental entity;
5. Foreign financial accounts owned by an international financial institution;
6. IRA owners and beneficiaries;
7. Participants in and beneficiaries of tax-qualified retirement plans;
8. Certain individuals with signature authority over but no financial interest in a foreign
financial account;
9. Trust beneficiaries (but only if a U.S. person reports the account on an FBAR filed on behalf
of the trust); and
10. Foreign financial accounts maintained on a United States military banking facility.

Review the FBAR instructions for more information on the reporting requirement and on the
exceptions to the reporting requirement.
Reporting and Filing Information
A person who holds a foreign financial account may have a reporting obligation even though the
account produces no taxable income. The reporting obligation is met by answering questions on a
tax return about foreign accounts (for example, the questions about foreign accounts on Form
1040 Schedule B) and by filing an FBAR.

The FBAR is a calendar year report, which must be filed with the Department of Treasury on or
before June 30 of the year following the calendar year reported. Generally, extensions of time to
file an FBAR are not granted. The FBAR is not filed with a federal tax return. Any filing extensions
of time granted by the IRS to file a tax return does not extend the time to file an FBAR.

A person required to file an FBAR who fails to properly file a complete and correct FBAR may be
subject to a civil penalty not to exceed $10,000 per violation for violations that are not due to
reasonable cause. For additional guidance when circumstances such as natural disasters prevent
the timely filing of an FBAR, see FinCEN guidance, FIN-2013-G002 (June 24, 2013).
Effective July 1, 2013 Electronic filing of FBARs is mandatory
E-filing is a quick and secure way for individuals to file FBARs. Filers will receive an
acknowledgement of each submission. For more information about electronic filing, read the
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FinCEN

news

release

Help

with

electronic

filing

technical

questions

is

available

at BSAEfilinghelp@fincen.gov or through the BSA E-Filing Help Desk at 866-346-9478.

There are now procedures to allow the filing of an FBAR by a third party (such as a paid preparer or
a spouse) on behalf of the person who has the obligation to file an FBAR. For information
pertaining to authorizations for third parties to electronically file and sign FBARs on behalf of an
obligated filer, see FinCEN FAQ, Understanding What BSA E-Filing is and What It Offers (June
2013).

U.S. Taxpayers Holding Foreign Financial Assets May Also Need to File
Form 8938
Taxpayers with specified foreign financial assets that exceed certain thresholds must report those
assets to the IRS on Form 8938, Statement of Specified Foreign Financial Assets, which is filed
with an income tax return. The new Form 8938 filing requirement is in addition to the FBAR filing
requirement. A chart providing a comparison of Form 8938 and FBAR requirements may be
accessed on the IRS Foreign Account Tax Compliance Act Web page.

Offshore Voluntary Disclosure Program

On Jan 9, 2012, the IRS reopened the Offshore Voluntary Disclosure Program following continued
interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programs.
This program offers people with unreported taxable income from offshore financial accounts or
other foreign assets another opportunity to resolve their tax and information reporting obligations,
including the FBAR. Although the program does not have a closing date, the IRS may end the
program at a later time.

The Offshore Voluntary Disclosure Program is extremely technical and requires a trained tax lawyer
to navigate its dangerous waters.

If you have read the foregoing and realize youre not in

compliance with the Disclosure Requirements, please call Andrew Gordon right now and come in
for an appointment. Andrew will create a plan for you, help you file (or amend) previous returns,
and help you get compliant and avoid the pain of these laws.

Andrew Gordon can be reached at 312-608-2772. Andrew has offices in Northfield and
Chicago and is happy to meet you either place.
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This web site is designed for general information only. The information presented at this site should not be construed to be formal legal advice nor the formation of a
lawyer/client relationship. [Disclaimer]
Copyright 2015 High Qualified Chicago's Tax Lawyer Gordon Law Group

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