By Bethany Bouw
With globalization reaching new heights, many individuals and entities are faced with questions about reporting their foreign bank accounts. This is a serious matter from both a penalty standpoint and a multi-country perspective. In an effort to locate those attempting to hide taxable income, many countries have agreed to share information regarding accounts held by foreign owners. Failure to file informational reports related to your foreign bank accounts can lead to hefty penalties and stress.
Seven Things to remember:
- The FBAR reporting threshold is $10,000 USD in aggregate at any point in the year. Often people forget to combine their foreign bank accounts to determine if they have crossed the threshold for FBAR reporting. For example, on June 30th your first account has a maximum balance of $5,000 USD. Meanwhile, your second account has a maximum balance of $6,000. Even though both accounts are individually below $10,000 USD, together they are above the threshold and trigger a filing requirement.
- Due date & extension changes. The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, changed the annual due date for filing the FBAR from June 30th to April 15th (considering weekends and legal holidays – i.e. Emancipation Day). The Act provides for a 6-month extension of the filing due date from April 15th to October 15th (again considering weekends and legal holidays). The Financial Crimes Enforcement Network (FinCEN) has granted taxpayers failing to file the FBAR by April 15th an automatic extension to October 15th.
- Have the BSA Identifier in order to amend. If you need to amend your FBAR, make sure you have your BSA Identifier from the original filing available. This allows them to match up the original and the amended filing. If your original filing BSA Identifier is unknown, use 14 zeros (00000000000000) in the field for the prior filing BSA Identifier.
- The FBAR must be e-filed. The FBAR is no longer allowed to be paper filed and must be electronically filed. Your tax preparer’s software is likely capable of e-filing the FBAR on your behalf. If you are a self-filer, you can complete and e-file your FBAR on a special PDF via the BSA E-filing System.
- Delinquent FBAR procedures may be available. If you have no unreported and unpaid additional tax, there is a means to become compliant with your FBAR and to avoid penalties. Contact a tax accountant who has dealt with delinquent FBAR procedures. Filing delinquent FBARS without following the procedures may not provide protection.
- Affects signature authority only accounts. You must also file an FBAR if you have signature authority only over foreign bank accounts that meet the reporting threshold for the year. This is true even if you do not own any foreign bank accounts personally.
- Pay attention to control. If you can control the foreign bank account(s) even without ownership or written communication and the accounts exceed the reporting threshold, you must file the FBAR.
Ryan & Wetmore has assisted clients with their foreign bank account reports over the years. We would be happy to assist you if you have concerns about filing your FBARs.
The International Tax Team at Ryan & Wetmore is well-versed in foreign informational filings. For questions or concerns regarding your international accounts and assets, click here to email our foreign tax team. Please be aware that tax issues are complicated and may vary based on the details of your situation. For this reason, an initial phone call is generally required to obtain the facts and address the questions.
Bethany Bouw CPA, is a manager at Ryan & Wetmore and has been with the firm for over eight years. She has experience with offshore voluntary compliance and assisting taxpayers with foreign asset and entity reporting requirements.
Traci Getz CPA, is a partner with Ryan & Wetmore, P.C. Traci has over fifteen years of experience providing accounting, tax, and consulting services to small and medium-sized business owners. She works with clients to understand their accounting and tax issues while specializing in international tax, healthcare, and construction.
Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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