FBAR Maximum Account Value
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FBAR Maximum Account Value
FBAR Maximum Account Value: When a person has offshore accounts, they may have an FBAR reporting requirement with the IRS. FBAR is an acronym for FinCEN Form 114. FBAR refers to the Foreign Bank And Financial Account Form requirement — it is not limited to bank accounts.
Unlike other IRS forms, the FBAR is not an IRS form, but rather a FinCEN Form (Financial Crimes Enforcement Network). After determining which accounts are included on the FBAR (bank accounts, investment accounts, foreign pension, mutual funds, life insurance, etc.) the next step is calculating the FBAR Maximum Balance.
Please, be careful of the fear-momgering you read online.
You do not get in trouble for some innocent mistakes on a timely and “pretty much” accurately filed form, using the best information you have available after conducting your due dligence.
How to Calculate FBAR Maximum Account Value Balance
As provided by FinCEN:
“Step 1. Determine the maximum value of each account (in the currency of that account) during the calendar year being reported. The maximum value of an account is a reasonable approximation of the greatest value of currency or nonmonetary assets in the account during the calendar year.
Periodic account statements may be relied on to determine the maximum value of the account, provided that the statements fairly reflect the maximum account value during the calendar year. For Item 15, if the filer had a financial interest in more than one account, each account must be valued separately. For an account denominated in U.S. Dollars, the maximum value of the account is the largest U.S. Dollar value of the account during the report year.
Step 2. In the case of non-United States currency, convert the maximum account value for each account into United States dollars. Convert foreign currency by using the Treasury’s Financial Management Service rate (http://www.fiscal.treasury.gov/fsreports/rpt/treasRptRateExch/treasRptRateExch_home.htm ) for the last day of the calendar year.
If no Treasury Financial Management Service rate is available, use another verifiable exchange rate and provide the source of that rate. In valuing currency of a country that uses multiple exchange rates, use the rate that would apply if the currency in the account were converted into United States dollars on the last day of the calendar year.
If the maximum account value of a single account or aggregate of the maximum account values of multiple accounts exceeds $10,000, an FBAR must be filed. An FBAR is not required to be filed if the person did not have $10,000 of maximum value or aggregate maximum value in foreign financial accounts at any time during the calendar year.
For United States persons with a financial interest in or signature authority over fewer than 25 accounts that are unable to determine if the aggregate maximum account values of the accounts exceeded $10,000 at any time during the calendar year, complete the appropriate Part II, III, IV, or V section for each of these accounts and check the “amount unknown” box, item 15a.”
Missed the FBAR Reporting Due Date?
When a person misses the FBAR deadline for reporting, then the FBAR is considered delinquent.
A taxpayer cannot just go back and file a late FBAR. Rather, they are required to submit to one of the Voluntary Disclosure/Tax Amnesty Programs.
Otherwise, it may be considered a quiet disclosure, which may result in significant fines and penalties including tax fraud, willfulness penalties, and an IRS special agent investigation.
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Our FBAR Lawyer team specializes exclusively in international tax, and specifically IRS offshore disclosure.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.
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