Boris Benic and Associates LLP - Certified Public Accountants and Consultants - Garden City, Long Island, New York

Boris Benic and Associates LLP - Certified Public Accountants and Consultants - Garden City, Long Island, New York

   
Resources - Tax Center - Boris Benic and Associates LLP - Certified Public Accountants and Consultants - Garden City, Long Island, New York
     
 

Deadline Coming up to Report Foreign Account Holdings

 
 

The deadline is approaching for certain taxpayers to report accounts they hold in foreign banks and other financial institutions. You also may be required to report foreign accounts over which you have signature authority, such as an account that you maintain on behalf of a relative or employer -- or if you have power of attorney over an elderly parent's foreign account, even if you never exercise that authority.

By June 30, 2014, citizens and residents of the United States, as well as domestic partnerships, corporations, estates and trusts, must generally file a Report of Foreign Bank and Financial Accounts (FBAR) form electronically with FinCEN if:

1. They have a direct or indirect financial interest in -- or signature authority over -- one or more accounts in a foreign country. This includes bank accounts, brokerage accounts, mutual funds, trusts or other types of foreign financial accounts; and

2. The total value of the foreign accounts exceeds $10,000 at any time during the calendar year.

Taxpayers also may be subject to FBAR compliance if they file an information return related to: certain foreign corporations (Form 5471); foreign partnerships (Form 8865); foreign disregarded entities (Form 8858); or transactions with foreign trusts and receipt of certain foreign gifts (Form 3520).

Some individuals are exempt.

Exceptions to the Reporting Requirement

There are FBAR filing exceptions for the following United States persons or foreign financial accounts:

  • Certain foreign financial accounts jointly owned by spouses;

  • United States persons included in a consolidated FBAR;

  • Correspondent/nostro accounts;

  • Foreign financial accounts owned by a governmental entity;

  • Foreign financial accounts owned by an international financial institution;

  • IRA owners and beneficiaries;

  • Participants in and beneficiaries of tax-qualified retirement plans; and

  • Certain individuals with signature authority over -- but no financial interest in -- a foreign financial account.

To determine eligibility for an exception, consult with your tax adviser.

Increased Scrutiny, Stiffer Penalties for Noncompliance

Take the FBAR requirement seriously. Several legislative changes, as well as a clarification of the IRS's interpretation of the "willful standard," have led to increased enforcement and stiffer penalties for noncompliance of foreign account reporting requirements.

The IRS states that the form "is a tool to help the United States government identify persons who may be using foreign financial accounts to circumvent United States law. Investigators use FBARs to help identify or trace funds used for illicit purposes or to identify unreported income maintained or generated abroad."

Failing to file an FBAR can result in the following penalties:

·    A civil penalty of as much as $10,000 if the failure was not willful. This penalty may be waived if income from the account was properly reported on the income tax return and there was reasonable cause for not reporting it.

·    A civil penalty equal to the greater of 50 percent of the account or $100,000, if the failure to report was willful.

·    Criminal penalties and time in prison.

Consult with your tax adviser if you have an interest in -- or authority over -- a foreign account. Your tax adviser can ensure you meet the FBAR reporting requirements and remain in compliance with the law.

 

Contact Us

For more information, please contact Robert Puerto, CPA, at 516-248-7361, or click here to email Robert. He would be happy to address any questions you may have.

 

Source: Bizactions

 
 

Boris Benic and Associates LLP - Certified Public Accountants and Consultants - Garden City, Long Island, New York

 

Boris Benic and Associates LLP - Certified Public Accountants and Consultants - Garden City, Long Island, New York

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New Electronic FBAR Form

In the past, taxpayers with foreign accounts whose total value exceeded $10,000 at any time during the year were required to file IRS Form TD F 90-22.1,Report of Foreign Bank and Financial Accounts (FBAR), by June 30. That form is now obsolete.

After June 30, 2013, qualifying taxpayers must file electronically with the Treasury Department a Financial Crimes Enforcement Network (FinCEN) Form 114, an FBAR form. This isn't a tax form, but it replaces IRS Form TD F 90-22.1.

Act fast: A filing extension, granted by the IRS to file an income tax return, doesnot extend the time to file an FBAR. There is no provision to request an extension of time to file an FBAR.