FBAR Foreign Life Insurance Policy Reporting

FBAR Foreign Life Insurance Policy Reporting: The FBAR Foreign Life Insurance Policy Reporting IRS rules are complex. Even though most owners of a foreign life insurance policy overseas do not consider their own insurance policy as a foreign account, the IRS does. (of course they do, right?) Technically, the policy will have an identifier, which is then reported as an account number on the FBAR (FinCEN Form 114). The Internal Revenue Service has taken an aggressive approach to foreign accounts compliance and unreported offshore income.. Therefore, if you are out of compliance, you may consider the IRS Streamlined Program, Delinquency Procedures, or traditional Voluntary Disclosure.

FBAR Foreign Life Insurance Policy Reporting 

The FBAR Foreign Life Insurance Policy Reporting rules revolve around surrender value. Not all life insurance policies are reported. Rather, only certain life insurance policies are reportable once they have what is referred to as a surrender value. If the foreign insurance policy does not have a surrender or “cash” value, it may not be reportable.

What is a Surrender Value for FBAR Foreign Life Insurance Policy Reporting?

The Surrender Value is the current “cash” value of the life insurance policy. For example, let’s say Daniel purchased a life insurance policy.

He paid $50,00 and then premiums each year, with the payout (in 30-years) to be $2,000,000.

Is the surrender value $2.000.000?

No.

That is the payout when the triggering event occurs. Instead, the surrender value is the value that the owner of the policy can “surrender” or turn in the policy to the insurance company, and receive a value in exchange for surrendering the policy and the rights associated with it.

CVAT (Cash-Value Accumulation Test)

Sometimes, the policy will provide a surrender value for you. Other times, the insurance company will not provide that information. If you are unsure what the surrender may be, you can refer to the IRS Cash Value Accumulation Test for guidance.

Beneficiaries & FBAR Foreign Life Insurance Policy Reporting

A common question involves whether beneficiaries of foreign life insurance policies must report the policy on their FBAR. The answer is generally, no. That is because the beneficiary does not have any ownership interest in the policy AND can be removed at any time by the owners.

ULIP

A ULIP is a Unit-Linked Insurance Policy. This is a common investment tool in foreign countries. In this scenario, the policy has an investment component, which is linked to the policy and premiums. Visit our main site to learn more about ULIPs.

We Specialize in Streamlined Filing Compliance Procedures

We specialize exclusively in international tax, and specifically IRS offshore disclosure, for assets, including Foreign Life Insurance Policies.

We have successfully represented clients in more than 1,000 streamlined and voluntary offshore disclosure submissions nationwide and in over 70-different countries. We have represented thousands of individuals and businesses with international tax problems.

We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe.

Less than 1% of Tax Attorneys Nationwide Are Certified Specialists

Our lead attorney is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.

Recent Case Highlights

  • We represented a client in an 8-figure disclosure that spanned 7 countries.
  • We represented a high-net-worth client to facilitate a complex expatriation with offshore disclosure.
  • We represented an overseas family with bringing multiple businesses & personal investments into U.S. tax and offshore compliance.
  • We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.
  • We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.
How to Hire Experienced Streamlined Counsel?

How to Hire Experienced Streamlined Counsel?

How to Hire Experienced Offshore Counsel?

Generally, experienced attorneys in this field will have the following credentials/experience:

  • Board Certified Tax Law Specialist credential
  • Master’s of Tax Law (LL.M.)
  • Dually Licensed as an EA (Enrolled Agent) or CPA
  • 20-years experience as a practicing attorney
  • Extensive litigation, high-stakes audit and trial experience

Interested in Learning More about our Firm?

No matter where in the world you reside, our international tax team can get you IRS offshore compliant.

We specialize in FBAR and FATCA. Contact our firm today for assistance with getting compliant.

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