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Is Filing Your First FBAR Admitting To A Crime?

Is filing your first FBAR admitting to a crime? Perhaps you learned only recently that you had to file annual FBARs for foreign accounts. Now that you do, should you file? Surely the answer is yes. After all, you can’t ignore the rules without risking civil penalties and even criminal charges. However, if you file currently and not for the past, aren’t you asking for trouble? Many people worry about filing their first FBAR, Treasury Form TD F 90-22.1.

If you make a voluntary disclosure to the IRS you will file delinquent or amended FBARs as part of the program. Thereafter, every June 30, you must file again as long as you have foreign accounts holding a total of $10,000 or more. But what if you are not in the IRS program?

Starting to file FBARs can appear to be a quiet disclosure, something the IRS discourages. See FAQ 15. Some taxpayers consider:

  • Starting to file FBARs prospectively but not addressing the past;
  • Filing three years of past due FBARs, perhaps one per envelope so as not to draw undue attention;
  • Filing six years of past due FBARs, one per envelope; or
  • Filing three or six years of FBARs with a letter explaining that you didn’t know of the filing requirement, are now complying, and asking that no penalties be imposed.

One big variable is whether your failure was solely concerning FBARs or whether you also didn’t report income. If your income on your tax returns was accurate, you have much more flexibility and much less risk.

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