Americans in charge of financial accounts overseas will have to report on those accounts to the Treasury Department a little earlier than expected next year. However, the flip side to that is that extensions are likely, making tax compliance a little easier.
When President Barack Obama signed the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 into law, it moved up the reporting deadline for Foreign Bank Account Report Form 114 to April 15, 2016, Accounting Today reported. The form is more commonly referred to as FBAR.
“The deadline for filing FBAR form 114 has been moved to April 15.”
Deadline moved up three months
After Dec. 31, the form will be due on April 15. The previous deadline had been June 30 with no possibility of an extension. The Wall Street Journal reported that, even though the language isn’t explicit, it implies that those filing would get an automatic extension to June 15. Certain others could be eligible for an extension to Oct. 15, the Journal reported.
The IRS stated those who are required to file an FBAR are U.S. persons who have a financial interest in or signature authority over a financial account located outside the U.S. and the value of all foreign accounts exceeds $10,000 at any time during the calendar year reported.
The IRS defines U.S. persons as “U.S. citizens; U.S. residents; entities, including but not limited to, corporations, partnerships, or limited liability companies, created or organized in the United States or under the laws of the United States; and trusts or estates formed under the laws of the United States.”
Filing made a little easier
The Wall Street Journal reported that U.S. citizens living overseas get automatic extensions on filing their personal income taxes to June 15. Sometimes they can be extended further because of the difficulties they face having to file taxes in the countries where they live as well as with the IRS.
“FBAR is now closer to being treated like an ordinary tax form.”
The source reported that FBAR is now closer to being treated like an ordinary tax form and that it could eventually be combined with the Foreign Account Tax Compliance Act form 8938, which several overseas organizations and the Taxpayer Advocate endorse.
The IRS states that those filing a FBAR may also have to file a FATCA form 8938 depending on the balance in the account. FBAR’s minimum balance is $10,000. FATCA’s minimum balance for individual accounts is $50,000 and $250,000 for accounts with a majority controlling ownership by a U.S. citizen.
However, some are still critical of FBAR. The Wall Street Journal reported that account holders have been nervous about identity theft because of the kind of information they’re being asked to submit. Some individuals in charge of an employer’s account would have to submit such employer information on their personal forms, and, in theory, fines could far exceed account balances.
Accounting Today wrote that FBAR became well known in 2008 after the U.S. Department of Justice pressured UBS into revealing the identities of thousands of U.S. citizens with Swiss accounts.
The source also reported that failure to file a FBAR could bring about a penalty of up to $10,000 for violations resulting from negligence or up to $100,000 for willful violations. Filers must also do so electronically with the Bank Secrecy Act form, the source reported.
