FOREIGN BANK & FINANCIAL ACCOUNT REPORTING (FBAR) Form 114 may be required to be filed if you have 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.
Form 114 replaces TD F 90-22.1, the FBAR form used in the past. It is due to the Treasury Department by Tuesday, June 30, must be filed electronically. This due date cannot be extended and tax extensions do not extend the FBAR filing due date.
The requirement as per FBAR instructions and guidelines is that if at any time during the year, the aggregate of balances in overseas accounts was more $10000, then reporting has to be done by filing this form. This filing is independent of the Filing of Federal and/ or State Income Tax returns. You may be required to provide information even when you have signature or other authority but no Financial interest in the account.
There is no extension for FBAR form.
Important Reporting Requirements by U.S. Taxpayers Holding Foreign Financial Assets (Form 8938) w.e.f. from 2011 onwards
In addition to the FBAR filing, Taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS on Form 8938, Statement of Specified Foreign Financial Assets. The new Form 8938 filing requirement does not replace or otherwise affect a taxpayers requirement to file FBAR. This Form is part of the Tax return and accordingly must be filed by the due date of Individual tax return in Form 1040.
If you are required to file Form 8938 but do not file a complete and correct Form 8938 by the due date (including extensions), you may be subject to a penalty of $10,000.
OFFSHORE VOLUNTARY DISCLOSURE PROGRAM 2012 (OVDP) AND NEW STREAMLINED OFFSHORE PROCEDURES
The IRS is also currently offering people with undisclosed income from offshore accounts an opportunity to participate in Offshore Voluntary Disclosure Program 2012 (OVDP) in order to get current on their FBAR filings and tax returns.
For the program 2012, the penalty framework requires individuals to pay a penalty of 27.5 percent of the highest aggregate balance in foreign bank accounts/entities or value of foreign assets during the eight full tax years prior to the disclosure.
Taxpayers participating in the new initiative must file all original and amended tax returns and include payment for taxes, interest and accuracy-related penalties.
However, new Streamlined Procedure introduced from July 2014, is a relief for the person who wants to disclose offshore income and foreign assets not disclosed earlier. The penalty is reduced to 5% of the highest aggregate yearend balance of assets of the years falling in the procedure for the U.S. individual taxpayers residing in the United States and 0% for U.S. individual taxpayers residing outside the United Statessubject to fulfilling of some other conditions.
If you would like us to file the FBAR for 2014 or for any of the earlier years, for you please provide us with the following detail for each of your overseas account:
– Name and address of the Bank or financial institution
– Account number and type of account
– Maximum balance at any time in the last calendar year and year end balances
– Whether account held Jointly with another individual
When you have signature or other authority but no Financial interest in the account, you have to provide the above information and in addition provide the following details:
– Name and address of the primary Account holder
– Taxpayer ID of the account holder, if any
– If account holder is an organization, filer’s relationship/ Title with the organization.
If you would like to avail of the benefit of Amnesty under 2012 Offshore Voluntary Disclosure Program (OVDP) or Streamlined Offshore Procedures and would like our assistance for the purpose, please call us to make an appointment. We would be happy to assist you in these matters. We would be billing separately for these services.