Nardone Limited’s tax attorneys assist taxpayers with U.S. tax reporting requirements, tax examinations, tax audits, appeals, and litigation relating to civil and criminal tax matters at the federal, state, and local levels. Further, the tax attorneys at Nardone Limited routinely advise taxpayers about U.S. tax reporting obligations regarding foreign financial accounts and the importance of reporting previously undisclosed foreign accounts as part of our criminal and civil tax controversy work. If a taxpayer has a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, exceeding certain threshold amounts, the taxpayer may be required to report the account annually by electronically filing a FinCen 114, Report of Foreign Bank and Financial Accounts (“FBAR”), as discussed further below.
FBAR Filing Requirements
A U.S. person is required to file a FBAR if: (i) the U.S. person had a financial interest in or signature authority over at least one financial account located outside the United States and (ii) the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year reported. A U.S. person must file the FBAR electronically through the FinCen’s BSA E-filing system. Failing to meet the FBAR filing requirements may result in serious consequences for taxpayers, as detailed in our previous article, FBAR penalties: The Significant Impact Taxpayers Can Face.
The previous annual FBAR filing requirement due date was June 30th. But, beginning with the 2016 tax year, the U.S. Government changed the deadline for filing FBARs to coincide with the individual federal income tax return deadline. Thus, the FBAR filing requirement is April 15th moving forward. The due date for filing FBARs for tax year 2016 was April 18, 2017; however, the IRS is granting automatic 6-month extensions to October 15th to provide taxpayers with ample time to file their FBARs. Taxpayers are not required to make a specific request for the 6-month extensions. Ultimately, it is very important that taxpayers with foreign accounts understand the FBAR filing requirements to ensure they are compliant with U.S. tax laws.
Opportunities to Report Previously Undisclosed Foreign Accounts and Assets
Many taxpayers are either not aware of the U.S. reporting requirements or simply choose to ignore the filing requirements relating to foreign accounts. We strongly encourage our clients to become compliant with any and all U.S. reporting requirements relating to their foreign financial accounts, even if they have not done so in the past. The Internal Revenue Service (“IRS”) offers various programs that allow taxpayers to disclose offshore accounts and resolve any tax and penalty obligations, as discussed further in Nardone Limited’s previous article, IRS Commissioner Urges Taxpayers to Take Advantage of IRS Voluntary Disclosure Programs, Citing $8 Billion in Collections. The Offshore Voluntary Disclosure Programs (“OVDP”) and the Streamlined Filing Compliance Procedures (“SFCP”) offer taxpayers who have undisclosed foreign accounts a way to become compliant with the U.S. tax laws. Nardone Limited routinely assists taxpayers with preparing and submitting OVDPs and SFCPs.
If you have a financial interest in, or have signature authority over a foreign account, we encourage you to contact Nardone Limited at (614) 223-0123 to ensure that you are compliant with any and all U.S. reporting requirements. Nardone Limited’s tax attorneys will review your case to determine what options and alternatives are available. Contact us today for a consultation to discuss your case.