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June 30: Foreign account reporting deadline

A savings or investment account located at a bank outside of the United States will trigger an additional tax reporting requirement. Make sure to efile Form 114, Report of Foreign Bank and Financial Accounts (FBAR) before the deadline on June 30.

No extension exists for the filing requirement. Failure to disclose an offshore account can result in serious civil and criminal penalties. Lapses from past years can however be corrected through one of several programs, such as a streamlined filing or the Offshore Voluntary Disclosure Program (OVDP).

Who needs to file?

Here is a reminder if you are unsure. You need to file, if you answer yes to each of these questions:

  • Are you a U.S. person (this includes citizens and residents)?
  • Do you have a financial account or signature authority of a loved one’s financial account?
  • Is that financial account located in a foreign country?
  • Did the account or accounts have an aggregate of $10,000 or more at any time during 2015?

These requirements are broad, but the reporting form is available here.

Increasing filings

The IRS has focused a good amount of its enforcement efforts on offshore accounts over the last decade. 

Word has spread and last year U.S. taxpayers filed more than one million of these forms. It was an 8 percent increase on the prior year.

The Foreign Account Tax Compliance Act also put in place new mechanisms for third-party reporting on offshore accounts. FATCA also added an additional form (IRS Form 8938) filed with an individual tax return for those with substantial foreign account holdings.

When you have questions about an account, touch base with an experienced tax attorney to get compliance answers.

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