Watch our for FBAR
A new very nasty four letter word is FBAR which stands for Foreign Bank Account Report. In a recent court case that is outlined at the Center for Agricultural Law and Taxation (CALT), a taxpayer lost a case with the IRS regarding an assessment of penalties under the FBAR program that were determined during a regular audit of the taxpayer’s tax return.
The reason to be concerned about this is the extremely large penalties that may apply for not reporting these foreign bank accounts or even having a signature authority over the bank account. In many cases, the penalty assessed can be greater than the funds in the account and this penalty can be assessed each year the account is open and not reported.
We are aware of many cases where taxpayers have paid a million dollars or more in penalties on these cases. Farmers who have elected to invest in a farming operation in Brazil and the Ukraine, etc. must pay special care not to get hit with these penalties.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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