United States Citizens and/or taxpayers who has authority over assets, including a bank account, brokerage account, mutual funds, trust, or other type of financial accounts located outside of United States aggregating to $10,000 during the calendar year must file the FBAR report with the Financial Crimes Enforcement Network (FinCEN) a bureau of the Treasury Department. It must report every year for the previous calendar year as mandate by the Bank Secrecy Act.
It is very relevant to mark your calendar of the new date.
The deadline to file the 2016 FBAR is April 18, 2017.
Who is a taxpayer under FBAR?
The following are considered a taxpayer or tax resident liable for FBAR:
- U.S. Citizens
- U.S. Tax Residents
- An individual who has been “substantially present” 31 days or more during the current year.
- An individual who has been residing in the United States for a period that exceeds 120 days in the 3 last calendars; or
- An individual who has resided in the United States for a period that exceeds 183 days in a year.
- Entities, trusts, and estates created or organized in the United States or under the law of United States.
How and when to file the Foreign Bank Accounts Report for 2016?
The FBAR report must be filed electronically; the deadline to file 2016 FBAR report with the Financial Crimes Enforcement Network is April 18th, 2017. Fortunately unlike years before, the FBAR deadline is now extendable till October 17th, 2017.
What are the penalties for failing to file FBAR?
Failing to file FBAR incurs in more severe penalties than the tax penalties.
- For each non-willful violation, meaning the taxpayer provides a reasonable reason for the violation could carry a civil penalty of $10,000.
- For a willful violation the penalty would be the greater of $100,000 or 50 percent of the balance in the account for each violation.
- Criminal penalties are even more frightening, including a fine of $250,000 and 5 years of imprisonment. If the violation occurs while violating another tax law the penalties are increased to $500,000 in fines and/or 10 years of imprisonment.
Keep in mind that for every year that you had failed to file will incur in a separate violation. If the taxpayer files a delinquent FBAR and reports the unreported account, it will not incur in a penalty. If you are in penalty we recommend you to voluntarily disclose before the IRS notifies you of any violation.
The Foreign Account Tax Compliance Act (FATCA) requires that foreign financial Institutions and certain other nonfinancial foreign entities report on the foreign assets held by their U.S. account holders or be subject to withholding on withholdable payments; also, there are other several liabilities and deadlines involved with foreign-owned U.S. corporations and foreign corporations engaged in a trade or business in United States, in which U.S. taxpayers are responsible for.
If you need to file a Foreign Bank Account Report, or are not sure whether you need to file, give us a call, and get more details to avoid fines or penalties. The new deadline is closer. The IRS had moved the filing date to the general tax day which is April 18, 2017. We’ll find out what are your requirements, and assist you preparing the forms and file them for you. At Rosillo & Associates, we take care of your tax needs for long term financial success.