FBAR Deadline Moved to April 15 for 2017 Filings

The Reports of Financial Bank and Financial Accounts (FBAR) will be due April 15, starting for returns due in 2017, for taxable year 2016. The new due date is more than two months earlier than the previous June 30th due date, but will align with the due date for individual income tax returns. The new law, however, allows certain taxpayers the potential for an extension to the filing deadline, up to October 15. Under the previous rule, all FBARs were due on June 30th, without the possibility of extension. Americans living abroad receive the same automatic extension as received for income tax returns to June 15 for filing the FBAR.

Annual FBAR filings are required of an American taxpayers that own or have signature authority over foreign financial accounts, if the aggregate amount of all foreign accounts is greater than $10,000. Penalties for willful or fraudulent violations of this law can come as a substantial fine or even up to five years of prison time. Although these provisions, enforced by the Financial Crimes Enforcement Network (FinCEN), generally have not changed, one new addition has been added. Specifically, the Secretary now has the power to waive the penalty for failure to file or request an extensions for first time offenders.

The FBAR changes are a result of a small provision within the highway appropriations bill, the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, signed into law on July 31, 2015.

© 2015 Houghton Vandenack Williams
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Who Must File a Report of Foreign Bank and Financial Accounts (FBAR)?

An International Law FAQ with Mary E. Vandenack.

Anyone who has a signatory on an account in a foreign country should take a look at whether they are subject to the rules concerning the foreign bank financial account reporting rules. A lot of people are caught by surprise because they have moved out of the U.S. but retain their U.S. citizenship and find out that they are subject to these laws. So if you have a signature on a bank account of any type, perhaps you are trustee for a parent’s trust in another country, you are likely to be subject to the U.S. laws.

© 2014 Parsonage Vandenack Williams LLC

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Federal Jury Imposes 150% Penalty Against 87 Year Old for Unreported Swiss Account

A federal jury has found that an 87 year old Florida man is liable for a civil penalty of 150% of the value of his Swiss bank account due to his failure to file a Report of Foreign Bank and Financial Account (FBAR) as required by law. The jury found that the man was required to file a FBAR for each of 2004, 2005 and 2006, failed to do so and is liable for a penalty of 50% of the account balance for each year a FBAR was not filed.

 During the period of non-compliance, the foreign account balance ranged from $1.48 million – $1.55 million. The total penalty imposed by the jury was $2.24 million. Arguments are scheduled for June 6, 2014 regarding whether the penalties violate the constitutional prohibition against excessive fines.

 The case is U.S. v. Zwerner.

© 2014 Parsonage Vandenack Williams LLC

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IRS Indicates Agent Under Power of Attorney Is Subject to FBAR Reporting Requirements

In its most recent version of its “FBAR Reference Guide”, the IRS indicates that an individual will be deemed to have “signature authority” over a foreign financial account if the individual is named as agent under a power of attorney which includes the power to exercise signature authority of a foreign account owned by the principal. The IRS indicates this is true regardless of whether the power has actually been exercised.

Following the updated guidance, it is imperative for agents under powers of attorney to inquire as to whether the principal has signature authority over a foreign financial account subject to FBAR reporting. Failure by the agent to report the agent’s signature authority over the principal’s account can result in imposition of the extreme civil and criminal penalties that may be imposed due to the failure to comply with the FBAR requirements.

 The FBAR reference guide is available at: http://www.irs.gov/pub/irs-utl/IRS_FBAR_Reference_Guide.pdf. The power of attorney example is found at page 5.

© 2014 Parsonage Vandenack Williams LLC

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