Why the Ongoing Problem with FBAR Compliance?

10 Pages Posted: 25 Oct 2016

See all articles by Charles P. Rettig

Charles P. Rettig

Hochman, Salkin, Rettig, Toscher & Perez, P.C.

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Date Written: October 20, 2016

Abstract

The IRS and the Department of Justice have been coordinating enforcement efforts — with mixed success — to encourage the disclosure of information regarding previously undeclared interests of U.S. persons in foreign financial accounts and assets. In 2015, to a large extent as a result of these efforts, Treasury’s Financial Crimes Enforcement Network (FinCen) received a record high 1,163,229 Report of Foreign Bank and Financial Accounts (FBARs), up more than eight percent from the prior year. Incredibly, FBAR filings have grown on average by 17 percent per year during the last five years, according to FinCen data.

Over 1 million filed FBARs sound impressive, until you look beyond the filings and attempt to determine the pool of those who may potentially have an FBAR reporting obligation of some sort. An estimated 8.7 million U.S. persons (excluding American military personnel) live in 160-plus countries outside the United States, a figure that exceeds the populations of 37 States! In 2015, the IRS received 1,529,591 tax returns from individuals located outside the United States.

Recent studies have suggested that a high degree of trust in government serves to increase voluntary compliance, without regard to the power of the governmental authority to actually enforce compliance. Power to enforce compliance seems to have no influence on voluntary compliance in the high trust conditions, but a lack of trust in government seems to actually lower voluntary compliance. Apparently, power of trusted government authorities is perceived as legitimate, while in low trust conditions, the same power is perceived as coercive and yields negative attitudes.

Keywords: FBAR, IRS, FBAR Compliance

Suggested Citation

Rettig, Charles P., Why the Ongoing Problem with FBAR Compliance? (October 20, 2016). Available at SSRN: https://ssrn.com/abstract=2856781 or http://dx.doi.org/10.2139/ssrn.2856781

Charles P. Rettig (Contact Author)

Hochman, Salkin, Rettig, Toscher & Perez, P.C. ( email )

9150 Wilshire Blvd., Suite 300
Beverly Hills, CA 90212
United States

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