Changes Are in Store for FBAR Filing Obligations in 2017
The FBAR (Report of Foreign Bank Accounts) disclosure obligation has existed since the 1970s. However, in the first few decades of the law’s existence, enforcement was spotty at best. During that time period, it seemed that secret offshore accounts were tolerated in certain cases. However, tolerance for secret accounts and this enforcement regime is long gone.
Since the Great Recession, Congress has had concerns about the tax gap. These concerns have resulted in changes to enforcement measures relating to the global financial system, which elevate transparency above all else. Starting in 2010 with the passage of FATCA (Foreign Account Tax Compliance Act), an array of international governmental agreements (IGAs) that authorize the reciprocal exchange of tax and account data have gone into effect. By utilizing this data, enforcement efforts regarding FBAR and FATCA disclosures have been substantially enhanced.
Thus, it is essential for taxpayers to understand all aspects of their tax payment and reporting obligations. The tax relief attorneys of the NewPoint Law Group can assist with satisfying these obligations. We can handle this year’s FBAR filing obligation and correct mistakes resulting in non-compliance in past tax years. We can also provide guidance regarding changes to next year’s FBAR obligations.
The 2016 FBAR Deadline Is June 30th
By now, many individuals with offshore accounts aggregating to greater than $10,000 understand the importance of meeting the FBAR deadline. In fact, many individuals may have become accustomed to the current due date that falls on June 30, 2016. One’s FBAR filing, completed on FINCen Form 114 and submitted electronically, must be received by this date for the filing to be considered timely. Failure to file by June 30th for this year’s deadline can result in the imposition of harsh penalties.
FBAR penalties are nearly shocking in their severity. Even a simple mistake can theoretically place a taxpayer on the hook for tens of thousands of dollars in penalties or more. The penalties for even an accidental or inadvertent failure to comply with FBAR can result in penalties of up to $10,000. If multiple years of non-compliance exist, this penalty can be imposed for each year. However, penalties become even more shocking when the IRS determines that willfulness was the reason for the nondisclosure. Willfulness can be alleged when the IRS believes that a voluntary or intentional disregard for the FBAR filing duty exists. Willful noncompliance can be punished by a penalty that is the larger of $100,000 or 50% of account balances. This penalty can also be assessed for each year where willful compliance failures exist.
Multiple Changes Will Affect 2017 FBAR Filings
A number of changes will affect at FBAR filings for future years. To start, the FBAR filing deadline will be aligned with the U.S. income tax filing deadline. This means that at FBAR will be due on the same day as taxes, April 15, 2017. While this change will theoretically simplify compliance, expediting the deadline by more than two months increases the odds that individuals who have become accustomed to filing by the end of June will miss the filing deadline. We, of course, feel it is important to make this information available now so that affected individuals can begin planning.
The expedited deadline is not the only change for FBAR in 2017. For the first time, an extension will be available for FBAR filings. The extension will be for up to six months and will move the final FBAR filing deadline to October 15, 2017. As for first-time filers, relief will be available to individuals who fail to file on time or who fail to file for an extension. These important changes to FBAR will impact several taxpayers. In light of some potential–and significant–fines discussed above, it is imperative to begin your compliance planning as soon as possible.
Work with a Sacramento Tax Attorney to Comply with Current or Past FBAR Obligations
If you’ve made mistakes in past tax years and failed to file an FBAR disclosure, the tax attorneys of the NewPoint Law Group can assist you with achieving compliance. Steps to correct past noncompliance may include engaging in Offshore Voluntary Disclosure (OVDP) or Streamlined Disclosure. We can also help you satisfy this year’s FBAR filing obligation, and begin to plan for next year’s expedited FBAR deadline. To schedule a consultation with our legal team, call 1-800-358-0305 or contact us online.