Report of Foreign Bank and Financial Accounts (FBAR) Deadline June 30, 2016

Posted on 06.02.16

Report of Foreign Bank and Financial Accounts (FBAR) Deadline June 30, 2016

In 2014, Credit Suisse pled guilty to criminal misconduct for tax evasion and agreed to settle by paying $2.6 billion in penalties to the various U.S. based governmental bodies.  This headline highlights the U.S. Government crackdown on U.S taxpayers who have a financial interest in a foreign financial account.  Coincidentally, this news is timely as the Report of Foreign Bank and Financial Accounts Compliance (“FBAR”) deadline of June 30th is looming (no extensions available).

In brief, the purpose of the FBAR is to track and record foreign financial accounts so that U.S. taxpayers are appropriately taxed all sources of income.  The FBAR is a financial form required to be filed by all United States persons, residents, and entities (such as trusts and corporations) that have:

  • Financial interest in or signature authority over at least one financial account located outside the United States AND;
  • Those financial foreign accounts have an aggregate value that exceeds $10,000 at any time during the calendar year.

If a taxpayer meets the requirements stated above, it is important to comply with regulations by filing the Financial Crimes Enforcement Network (FinCEN) Form 114 online through the BSA E-filing System website.  The taxpayer can also use the FinCEN Form 114a if a third party, such as Keiter, will electronically file the FBAR on the taxpayer’s behalf.

If a taxpayer fails to properly file an FBAR, they are subject to either a non-willful or willful civil penalty. A non-willful violation may be subject to a civil penalty up to $10,000 for each negligent violation. For willful violations, the civil penalty assessed is the greater of $100,000 or 50% of the balance in the account at the time of the violation.  In addition to civil penalties, criminal penalties may be assessed as well.  The penalties are assessed for each year and each separate violation. For example, if you have 10 accounts that have not been reported for 5 years, there could be 50 separate penalties assessed.

 

Questions? Please contact our International Tax Services partners:

Gary Wallace

804.565.6025

GWallace@Keitercpa.com

Jen Flinchum

804.273.6258

JFlinchum@Keitercpa.com

Posted by: Gary G. Wallace, CPA

Gary provides tax services to public and private entities and their owners in a variety of industry segments, including manufacturing, retail, real estate, and financial services.  Gary has significant knowledge and experience in individual taxation, business taxation, including C and S corporations and partnerships.  He advises clients on all aspects of tax matters, including tax accounting methods, multi-state tax matters, mergers and acquisitions, income tax accounting and representation with tax authorities. He is the leader of the Firm's Tax Practice and a leader in the Firm’s Manufacturing, Retail and Distribution industry team.