Do you have assets in foreign accounts? FBAR filing deadlines updated

January 4, 2017|Lonnie Hampton
New for the 2016 reporting year. The FBAR (FinCEN Form114) filing deadline has been changed from June 30 to April 15 to coincide with the Federal income tax filing deadline. Like the individual return, a six-month extension is available. Automatic extensions to October 15 are granted each year without needing a specific request. The unextended due date for FBAR filings for foreign financial accounts maintained during the calendar year 2016 is April 18, 2017.

You could personally have authority over a foreign financial account and not even know it. If so, you may be in violation of filing requirements and be subject to substantial penalties.

Corporate officers are most likely to be in this situation, but others (such as college professors and military personnel) may also be in danger of violation without realizing it. Any U.S. person with a financial interest, signature authority or other authority over any foreign financial account is required to file if the aggregate value exceeds $10,000 for all such accounts at any time during the calendar year.

What constitutes a financial account for this purpose?

Financial accounts generally include any of the following:

  • Bank accounts (including any savings, demand, checking, deposit or other account) maintained with a financial institution or other person engaged in the business of a financial institution
  • Securities accounts
  • Securities derivative accounts
  • Other financial instruments (such as insurance policies with a cash surrender value, annuities and shares in a mutual or similar type of fund)

If you are a U.S. person and you are the owner of record or have legal title in an account, you have a financial interest whether the account is maintained for your benefit or for the benefit of others. In addition, you are deemed to have a financial interest over an account if the owner of record or holder of legal title is any of the following:

  1. A person acting on your behalf as an agent, nominee, attorney or in some other capacity
  2. A corporation in which you own directly or indirectly more than 50% of the total value of shares of stock, or more than 50% of the voting power for all shares of stock
  3. A partnership in which you have an ownership interest of more than 50% of the profits or capital
  4. A trust in which you have either a present beneficial interest in more than 50% of the assets, or you receive more than 50% of the current income

You have signature authority if you can control the disposition of the money or other property in the account by delivering a document containing your signature, or if you can exercise power comparable to signature authority over the account by communicating with the bank.

FinCEN Form 114 is now due by April 15

The responsible person must file FinCEN Form 114, “Report of Foreign Bank and Financial Account,” (generally known as FBAR) with the Treasury Department. The due date was recently changed to April 15. An extension to October 15 is available. This form must be filed electronically; mail is no longer an option.

Civil penalties apply for failure to file, and they differ significantly for non-willful and willful violations. For non-willful violations, the penalty can be up to $10,000 for each account that should have been identified on the FBAR. If the IRS determines that there was a willful violation, it can assess a penalty of up to the greater of $100,000 or 50% of the balance in the account at the time of the violation.

We can help you determine if you have an FBAR filing obligation and whether you qualify for administrative relief. For assistance, please contact your account director or call Lonnie Hampton at 800-676-0829 or 920-455-4146.

Lonnie Hampton, CPA, leads our International Tax Team and assists clients with international tax issues he also provides advanced tax research, consulting, and tax planning for closely held corporations and individuals. In addition to corporate, individual and partnership tax return compliance, Lonnie assists manufacturing clients with R&D tax credit studies and represents taxpayers in IRS examinations.