The Financial Crimes Enforcement Network (FinCEN) – a department in the Treasury – is ending the year with something of a gift for taxpayers with international financial holdings. In the past, the June 30 deadline to file a disclosure did not coordinate with other well-known tax deadlines and taxpayers were not allowed extensions.
Now the due date for FinCEN for 114, Report of Foreign Bank and Financial Accounts (FBAR) has been brought in line with the standard tax filing due date of April 15 (actually April 18 in 2017). The gift is an automatic six-month extension.
Who needs to file?
In our March 18 blog, we describe in more detail who must file. The general rule is if the aggregate balance of all foreign financial accounts exceeds $10,000 in one year, you need to file. This is a low bar, so if you have foreign holdings talk to a tax attorney, because you probably need to file a FBAR.
Penalties for noncompliance are strict and start at $10,000 for non-willful failure to file. They go up to $100,000 or 50 percent of the balance for each missing FBAR when willful. Certain programs exist to limit exposure such as the Offshore Voluntary Disclosure Program and Streamlined Filing Compliance Procedures, but they must be entered with care.
What about those with signature authority?
If you have signature authority over an foreign financial account, but no financial interest in it, you have even longer. The filing deadline has been pushed to April 15, 2018.
The extension is related to proposed rules that expand the exceptions and clarify the requirement for those with signature authority. The extended deadline also applies to employees or officers who have signature authority in the course of their duties working for investment firms.
If you are just learning of the FBAR reporting requirements, speak with a tax attorney to discuss the best route to return to compliance.