FBAR Obligations, Violations & Penalties

FBAR stands for “Foreign Bank Account Report,” and refers to FinCen Form 114, Report of Foreign Bank and Financial Accounts.

FBAR added new obligations for some Netherlands taxpayers who have ownership or control (for example signature authority) of foreign accounts with an aggregate value of over $10,000 in the calendar year: typically, taxpayers in that situation might have an FBAR filing required.

If you’re uncertain about how the disclosure requirements apply, we can help you identify your options and make a decision on the best course of action going forward.

After a foreign bank reports the non-compliant taxpayer’s account information to the foreign taxing authority, the information is then provided to the Netherlands Dept Treasury. For those countries without intergovernmental agreements (IGAs), the account holder’s information will be sent directly to the Netherlands Dept of Treasury. Or the Netherlands Tax Authority may have discovered the non-compliance based on stated or implied sources of foreign income on filed tax returns or information forms. Regardless of how the Netherlands Tax Authority obtains the information, what could follow is an investigation by an Netherlands Tax Authority examiner of the potential FBAR violation(s).

FBAR violations lead to civil and/or criminal penalties. The monetary penalty may not exceed $10,000 per violation; however, where the violation is willful, the penalty is the greater of $100,000 or 50% of the balance in the account on the date of the violation.

The Delinquent FBAR Submission Procedures are one of the programs available under the Offshore Voluntary Disclosure Program (OVDP) for taxpayers with unreported foreign financial accounts to come into compliance.

FATCA Reporting

FATCA added new obligations for Netherlands taxpayers holding offshore accounts to report those holdings to the Netherlands Tax Authority through intergovernmental agreements (IGAs) with more than 100 countries. FATCA typically requires Netherlands taxpayers who meet the FATCA threshold (at least $50,000) to report information on their assets on form 8938.

Unsure if you have Netherlands Tax Authority reporting requirements? Mullins Law can help you identify your options and make a decision on the best course of action going forward.

FATCA Withholding

The world of FATCA withholding breaks down into two major categories, foreign financial institutions (FFIs) and non-financial foreign entities (NFFEs). There are a set of hard and fast rules that are applicable to these groupings – although, in the case of an individual business, it is always best to consult with an international tax attorney to ensure correct filing.

Different types of NFFEs and FFIs have varied obligations with respect to the FATCA withholding tax so it’s important to contact an attorney for accurate guidance.