Understanding FBAR & FATCA Compliance

FBAR and FATCA are crucial regulatory requirements for U.S. taxpayers with foreign financial accounts or assets.

• FBAR (Foreign Bank Account Report) requires individuals and entities to disclose foreign accounts exceeding $10,000 at any time during the year.
• FATCA (Foreign Account Tax Compliance Act) requires reporting of foreign financial assets using IRS Form 8938 for qualifying taxpayers.

Both laws aim to prevent tax evasion and ensure transparent financial reporting. Ignoring these requirements can result in penalties ranging from thousands to hundreds of thousands of dollars, depending on the violation.

Who Needs FBAR & FATCA Services?

Individuals: U.S. citizens and residents holding foreign bank accounts, investments, or retirement accounts exceeding the reporting thresholds.

Businesses: Corporations, partnerships, and LLCs with foreign bank accounts, subsidiaries, or operations abroad.

Example:
A U.S. entrepreneur with a foreign bank account of $50,000 and offshore investments must file FBAR and FATCA forms. Missing deadlines can trigger IRS penalties exceeding $10,000 per violation.

Common FBAR & FATCA Challenges

Many taxpayers struggle with:

1. Complex Reporting Requirements: Multiple accounts across countries, each with unique balances.
2. Currency Conversion & Documentation: Accurately reporting account values in USD using proper conversion.
3. Timely Filing: FBAR due April 15th with automatic extensions; FATCA due with annual tax returns.
4. Penalties for Non-Compliance: Civil penalties, potential criminal penalties, or audits.

Our team simplifies compliance by managing calculations, documentation, and filing deadlines so clients avoid errors and fines.

How Tax O Consulting Helps

1. Account Assessment – Identify all foreign accounts and assets requiring reporting.
2. Accurate Reporting – Prepare FBAR (FinCEN Form 114) and FATCA (Form 8938) filings with precision.
3. IRS Compliance Review – Ensure filings meet all IRS and FinCEN regulations.
4. Year-Round Advisory – Guidance for new foreign accounts, investments, or changes in thresholds.

Examples & Case Studies

Scenario 1 – Individual:
A Delaware resident holding foreign savings accounts and an overseas brokerage account. Tax O Consulting identified all accounts, performed currency conversions, and filed both FBAR and FATCA forms on time, avoiding penalties.

Scenario 2 – Business:
A small LLC operating internationally had foreign bank accounts exceeding $100,000. We coordinated filings, reconciled balances, and ensured IRS and FinCEN compliance for multiple subsidiaries.

Best Practices for FBAR & FATCA Compliance

1. Maintain a comprehensive record of all foreign accounts and balances.
2. Monitor thresholds carefully to determine filing obligations.
3. File electronically for FBAR using FinCEN BSA E-Filing System.
4. Include all required supporting documentation for FATCA forms.
5. Schedule annual compliance reviews to avoid last-minute surprises.

Following these practices significantly reduces risk of penalties and ensures smooth compliance.

Penalties for Non-Compliance

• FBAR Civil Penalties: Up to $12,921 per violation for non-willful violations; higher for willful violations.
• FATCA Penalties: Failure to file Form 8938 can lead to $10,000 initial penalties and $10,000 additional penalties for continued non-compliance.
• Criminal Penalties: Severe cases of fraud may trigger criminal charges.

Our experts help you avoid these penalties with meticulous review and proper filing.

Integrating FBAR & FATCA with Tax Returns

FBAR and FATCA reporting often intersects with tax return filing:

• Report foreign accounts and assets alongside annual tax returns.
• Claim foreign tax credits if applicable.
• Ensure consistency between IRS forms and FBAR filings.

Year-Round Advisory Services

Tax O Consulting provides continuous guidance:

• Updates on new IRS rules regarding foreign assets.
• Recommendations for structuring international transactions efficiently.
• Alerts for new accounts exceeding reporting thresholds.

This proactive approach ensures you remain compliant every year, not just at filing time.

Why Choose Tax O Consulting?

• Local Expertise in Dover, Delaware
• Certified Tax Professionals trained in FBAR & FATCA compliance
• Tailored Solutions for individuals and businesses
• Accurate and Timely Filing to avoid penalties
• Year-Round Advisory for global financial activities

Clients report peace of mind knowing their foreign accounts are fully compliant with IRS regulations.

Frequently Asked Questions

1. What is the difference between FBAR and FATCA?
   FBAR focuses on reporting foreign bank accounts using FinCEN Form 114, while FATCA (Form 8938) reports foreign financial assets. Both have distinct thresholds and filing requirements.
2. Do I need to file FBAR if my foreign account is under $10,000?
   No, FBAR is required only if the combined total of foreign accounts exceeds $10,000 at any point in the year.
3. Can a business ignore FATCA if it only has a few foreign accounts?
   No. Businesses meeting reporting thresholds must comply to avoid penalties, regardless of the number of accounts.