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“Missed an FBAR? The Rules Just Changed” with “Beyond the Ledger: Blitz Chats” · Bennett Thrasher Presents: Beyond The Ledger

• 0:04
  SPEAKER_01: Welcome to Blitz Chat, a quick hit series from Beyond the Ledger, where Bit and Thurstra experts break down timely updates, emerging issues, and industry changes you need to know.
• 0:15
  SPEAKER_01: All in just a few questions.
• 0:17
  SPEAKER_01: Today we're diving into the new FBAR reporting environment with Matt Pellegrom, who's here to break down what's changed, why it matters, and what you should be thinking about next.
• 0:28
  SPEAKER_01: Let's get into it.
• 0:29
  SPEAKER_00: Yeah.
• 0:30
  SPEAKER_01: All right.
• 0:30
  SPEAKER_01: So let's start from the very beginning.
• 0:33
  SPEAKER_01: Before we get into the recent change, what is an F-Bar and who is generally required to file one and why does it matter?
• 0:41
  SPEAKER_00: Yeah.
• 0:42
  SPEAKER_00: So in 1970, before I was long rows back.
• 0:46
  SPEAKER_01: Okay.
• 0:47
  SPEAKER_00: Uh Congress enacted the Bank Secrecy Act, which is effectively to stop money laundering, um, tax avoidance, et cetera.
• 0:57
  SPEAKER_00: And part of the BSA, the Bank Secrecy Act, was the new uh FBAR reporting regulations.
• 1:02
  SPEAKER_00: Okay.
• 1:03
  SPEAKER_00: Um fast forward to 2013, the BSA implemented an e-file procedure for FBARs, which requires all US persons with signature authority or financial interest in foreign financial accounts to report to the IRS or FENCEN their holdings in those accounts.
• 1:22
  SPEAKER_00: So if you're a U.S.
• 1:23
  SPEAKER_00: individual, a corporation, a partnership, a trust, uh pretty much anything, and you have this financial interest in foreign financial accounts, you have an FBAR reporting requirement.
• 1:33
  SPEAKER_01: Okay.
• 1:34
  SPEAKER_01: All right.
• 1:34
  SPEAKER_01: So let's dive into what changed.
• 1:36
  SPEAKER_01: The IRS recently eliminated the delinquent FBAR submission procedures.
• 1:41
  SPEAKER_01: What changed and why is this significant?
• 1:45
  SPEAKER_00: So it's it's a pretty big change for especially for people who are delinquent in filing their F-BARS.
• 1:52
  SPEAKER_00: This submission procedure has been around for quite some time and ultimately allowed US persons with delinquent F-bar filings to come into compliance without penalty, assuming certain uh requirements were met.
• 2:07
  SPEAKER_00: About a month ago, early July, uh, the IRS completely wiped it from their website without notice to anybody.
• 2:12
  SPEAKER_00: Okay.
• 2:13
  SPEAKER_00: Um there was very, very little uh written about it.
• 2:16
  SPEAKER_00: Why not?
• 2:16
  SPEAKER_00: Very little notice, which kind of threw threw a wrinkle into things, right?
• 2:20
  SPEAKER_00: Um we just we don't know what the thought process is outside of, you know, maybe the IRS saying, hey, these people have had enough time.
• 2:28
  SPEAKER_00: Yeah, these regs and rules have been around for over a decade now.
• 2:32
  SPEAKER_00: Um it's time to clean things up.
• 2:35
  SPEAKER_01: All right.
• 2:36
  SPEAKER_01: Okay, so let's dive into who could be impacted.
• 2:40
  SPEAKER_01: So who should be paying attention to this change and what situations could create an F bar filing requirement?
• 2:47
  SPEAKER_00: I think anybody or any company with foreign financial accounts, so bank accounts, certain pension accounts, certain trust accounts that are outside of the US should be paying attention to this.
• 2:59
  SPEAKER_00: Those especially who know that they have an F bar filing requirement and maybe have not filed, uh, this is very important for those individuals.
• 3:07
  SPEAKER_01: Got it.
• 3:08
  SPEAKER_01: Okay.
• 3:08
  SPEAKER_01: So let's dive into what happens if you miss an F-BAR.
• 3:12
  SPEAKER_01: So if someone discovers they should have filed an F-BAR in a prior year, what potential penalties or risks should they now be aware of?
• 3:21
  SPEAKER_00: Yeah, so there's two concepts here, uh non-willful and a willful failure to file.
• 3:27
  SPEAKER_00: So non-willful generally carries the$10,000 penalty, and willful is up to 50% of the account values plus potential criminal charges.
• 3:37
  SPEAKER_00: Now we don't see that very often.
• 3:39
  SPEAKER_00: Okay.
• 3:39
  SPEAKER_00: Um, but it's out there.
• 3:41
  SPEAKER_00: I think if someone discovers that they haven't filed their F-bar, uh get in contact with a tax professional and we can we can see what the best route is for immediately.
• 3:50
  SPEAKER_00: Immediately.
• 3:51
  SPEAKER_01: Okay.
• 3:52
  SPEAKER_01: So we'll talk about why does acting quickly matter?
• 3:56
  SPEAKER_01: Um, could choosing not to file after discovering a missed F bar actually increase a taxpayer's exposure?
• 4:03
  SPEAKER_00: It could.
• 4:04
  SPEAKER_00: So going back to the last question, when you now know that you have a missed F bar filing, you're willful in your failure to file.
• 4:11
  SPEAKER_00: So those penalties can increase if the IRS can prove that you've known about this filing and you just chose not to file.
• 4:18
  SPEAKER_01: All right, last one.
• 4:19
  SPEAKER_01: What should taxpayers do now?
• 4:21
  SPEAKER_01: So, what should individuals or businesses with potentially delinquent FBARs do before deciding how to move forward?
• 4:28
  SPEAKER_00: Reach out.
• 4:29
  SPEAKER_01: Okay.
• 4:29
  SPEAKER_01: All right, number one and only reach out.
• 4:32
  SPEAKER_01: Reach out.
• 4:33
  SPEAKER_00: Um, we've been doing this for years.
• 4:34
  SPEAKER_00: We've got a very proficient uh F bar practice.
• 4:37
  SPEAKER_00: We handle delinquents all the time.
• 4:39
  SPEAKER_00: So reach out and uh we can get you on track.
• 4:42
  SPEAKER_01: Well, thank you, Matt, for being back on.
• 4:44
  SPEAKER_01: And I enjoyed this blitz chat.
• 4:46
  SPEAKER_01: And hopefully there aren't a lot of serious cases out there.
• 4:49
  SPEAKER_01: But if there are, reach out.
• 4:51
  SPEAKER_01: Yep.
• 4:51
  SPEAKER_01: Thank you.
• 4:52
  SPEAKER_01: You're welcome.