Reminder: June 30 Deadline for Filing FBAR Form
May 19, 2015
Over the past several years, the U.S. government has increased its regulatory and enforcement efforts aimed at the disclosure of foreign bank and financial accounts. As a result, taxpayers must file a “Report of Foreign Bank and Financial Accounts” ("FBAR") by June 30.
The FBAR report must be filed electronically through the Bank Secrecy Act ("BSA") E-filing system on FinCen Form114, the successor to the previously-used TD F90-22.1.
We should emphasize that the FBAR is filed separately from tax returns and is not processed by the IRS. Accordingly, the FBAR form must be filed by June 30, even if your tax return is on extension.
Who Must File
You are required to report annually to the government if you have a financial interest in, or signature authority over, any “foreign financial account,” including a bank account, brokerage or securities account, insurance or annuity policy with cash value, mutual fund, trust or other type of financial account. “United States persons” are required to file an FBAR if –
- the United States person had a financial interest in or signature authority over at least one financial account located outside the United States; and
- the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year being reported.
For this purpose, “United States persons” include: U.S. citizens; U.S. residents; entities including but not limited to corporations, partnerships, or limited liability companies, created or organized in the U.S. or under the laws of the U.S.; and trusts or estates formed under U.S. law. While certain U.S. persons and foreign financial accounts are excepted from the reporting requirements, the federal tax treatment of an entity does not determine whether the entity has an FBAR filing requirement. Thus, for example, a disregarded entity for U.S. tax purposes must file an FBAR, if otherwise required to do so.
A “foreign financial account” is a financial account located outside the U.S. For example, an account maintained with a branch of a U.S. bank that is physically located outside the U.S. is a foreign financial account. Conversely, an account maintained with a branch of a foreign bank that is physically located in the U.S. is not treated as a foreign financial account.
As you would expect, there are also regulations as to what constitutes a “financial interest” in a foreign financial account. For example, a person who holds a foreign financial account may have a reporting requirement even though the account produces no taxable income. We urge you to consult with your tax professional if you are unclear over the application of the FBAR requirements to your holdings.
The June 30 Deadline
As in past years, there is no extension to the June 30 deadline for filing the FBAR form. If you do not have all of the available information, the government recommends that you file the return by June 30, and amend the report when additional or new information becomes available. Failure to file a complete and correct FBAR in a timely fashion may result in a civil penalty of up to $10,000 for nonwillful violations; willful violations of FBAR reporting may result in substantial penalties as well as potential criminal prosecution.
The website to file electronically is http://bsaefiling.fincen.treas.gov/. While individuals do not have to register to file an FBAR, institutions are required to register for a UserID and password prior to submitting an FBAR. Of course, third parties – such as EisnerAmper LLP – can be authorized to file FinCen Form 114 by filling in FinCen Form 114a (Record of Authorization to Electronically File FBAR). This form is not submitted with the filing but, instead, is maintained with the FBAR records by the filer and the account owner, and made available to FinCEN or IRS on request.
Don’t Overlook Your Tax Responsibilities
Whether or not you file the FBAR form, don’t overlook whether you also have a filing obligation with respect to IRS Form 8938 (“Statement of Specified Foreign Financial Assets”). This is an independent filing obligation, separate from the FBAR regime, and is included with your income tax return.
While we have reviewed basic FBAR definitions and requirements, the rules are complex and there are few exceptions with regards to filings. You may obtain assistance in completing the FBAR form from the government by telephone, in the U.S. (866-270-0733) or outside the U.S. (313-234-6146); or online through FBARquestions@IRS.gov or BSAEfilinghelp@fincen.gov.
More importantly, please do not hesitate to contact your tax professional for additional information or assistance on FBAR-related matters.