Due Dates For Filing FBAR, Corporation And Partnership Returns Changed From 2016

Due Dates For Filing FBAR, Corporation And Partnership Returns Changed From 2016

The filling due dates for certain filings to be done in 2017 onwards for tax years beginning after December 31, 2015 have been changed. Strangely the changes have come from in an unexpected way with the President signing H.R.3236 – Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 on July 31, 2015 – into law.

FBAR FORM 114 – The due date of FBAR – FinCEN Report Form 114 (Report of Foreign Bank and Financial Accounts) shall be April 15, to coincide with the due date for filing 1040 Individual Income Tax returns. For the first time, taxpayers would also be able to file for an extension – for period up to 6-month till October 15.  As a relief for first time innocent omission to file, in the case of any taxpayer required to file such Form for the first time, any penalty for failure to timely request for, or file, an extension, may be waived by the Secretary.

PARTNERSHIP RETURNS (Form 1065) – The due date for Partnerships would be March 15 instead of April 15 as in the case of S Corporations, with a six months extension till September 15^th. However, for Partnership filers who prepare returns on the basis of a fiscal year basis will be required to be file on or before the 15th day of the third month (instead of fourth month) following the close of the fiscal year, with an option six month extension.

C CORPORATION RETURNS (Form 1120) – The due date for C Corporations is also being changed to April 15 instead of March 15, with a 5 months extension till September 15. However, filers who prepare returns on the basis of a fiscal year basis will be required to be file on or before the 15th day of the fourth month (instead of third month) following the close of the fiscal year, with an option for five month extension until 2026. However, corporations which have a June 30 year end would get a seven-month extension until 2026.

OTHER RETURNS – The extension periods for filing Forms 1041, 5500, 990, 4720, 5227, 6069, 8870, 3520-A, 3520 have also been revised.

Other Significant Changes

Additional information on Form 1098 relating to mortgage interest

Mortgage information statements that are required to be sent to individuals who pay more than $600 in mortgage interest in a year will now be required to include the outstanding principal on the mortgage at the beginning of the calendar year, date of origination of the mortgage and the address of the property that secures the mortgage. These changes apply to returns and statements due after Dec. 31, 2016.

Inherited assets – Consistency in basis reporting between estate and beneficiaries

H.R.3236 also provides that anyone inheriting property from a decedent cannot treat the property as having a higher basis than the basis reported by the estate for estate tax purposes. It also creates a new Sec. 6035, which requires executors of estates that are required to file an estate tax return to furnish information returns to the IRS as well as the beneficiaries statements which will identify the value of each interest in property acquired from the estate as reported on the estate tax return. These amendments shall apply to property with respect to which an estate tax return is filed after the date of the enactment of this Act.

Here is the link to the H.R. 3236 –

https://www.congress.gov/bill/114th-congress/house-bill/3236/text#toc-HCFC1B5C758A944DE807AC0FC688A702A

30 JUNE 2015 IS DEADLINE FOR FILING OF 2014 BENCHMARK SURVEY OF U.S. DIRECT INVESTMENT ABROAD

30 JUNE 2015 IS DEADLINE FOR FILING OF 2014 BENCHMARK SURVEY OF U.S. DIRECT INVESTMENT ABROAD

(This is a mandatory compliance from U.S. Department of Commerce, Bureau of Economic Analysis (BEA) and NOT a tax compliance)

The Benchmark Survey of U.S. Direct Investment Abroad is conducted by U.S. Department of Commerce, Bureau of Economic Analysis to secure current economic data on the operation of U.S. Parent companies and their foreign affiliates. This is a mandatory survey conducted every 5 years.  For certain large companies there is annual filing requirement.

REPORTING REQUIREMENTS

If U.S. person had a foreign affiliate, that is, that had direct or indirect ownership or control of at least 10 percent of the voting stock of an incorporated foreign business enterprise, or an equivalent interest in an unincorporated foreign business enterprise, at any time during the U.S. person’s 2014 fiscal year, they need to file BE-10 report. For this purpose, US person includes any individual, branch, partnership, associated group, association, estate, trust, corporation, or other government or nongovernment organization.

There are different complex forms (BE 10A/ BE10B/ BE10C/ BE1D) which need to be filed by different US persons as may be applicable for them based on different criteria to be evaluated separately for each such U. S. Person.

DUE DATE

For 2014, a fully completed BE-10A forms along with the applicable form(s) is due no later than June 30, 2015 (extended due date for many filers)

EXTENSION

Extension request must be filed by the due date. 

PENALTIES

Whoever fails to report shall be subject to a civil penalty of not less than $2,500 and not more than $25,000.  Whoever willfully fails to report shall be fined upto $10,000.  Any officer, director, employee or agent of any corporation who knowingly participates in such violations, upon conviction, may be punished by fine, imprisonment or both. 

Please let us know if any of this applies to you/ your business and you want us to assist in the filing of above mandatory compliance.  As the due date of 30 June 2015 has now fast approaching, please contact us at the earliest.  Again, please be aware that it is a mandatory compliance.

We look forward to hearing from you soon. As always, contact us if you have any questions.

Last Minute reminder – Deadline for FBAR filing for 2014 is June 30, 2015

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.

IMPORTANT H1B ALERT : NEW WORK LOCATION REQUIRES AN AMENDED H1B PETITION

May 21, 2015 – USCIS guidance announcement 

USCIS has today announced that whenever there is a new location for an employee outside the Metropolitan Statistical Area (MSA), merely filing a new LCA is not enough – An amended H1B petition has also to be filed. An employer must file an amended H-1B petition if their H-1B employee changed, or is going to change, his or her place of employment to a worksite location outside of the metropolitan statistical area (MSA) or an “area of intended employment”, even if a new LCA is already certified and posted at the new location. Once the employer files the amended petition, the H-1B employee can immediately begin to work at the new location without waiting for a final decision on the amended petition for that  H-1B employee to start work at the new location. This is based on a recent decision of USCIS Administrative Appeal Office (AAO) who has issued a precedent decision in the Matter of Simeio Solutions, LLC.

What happens to existing cases before the announcement on May 21, 2015 – Employers must file amended petition before August 19, 2015?

USCIS has also announced that if any of the H-1B employees were changing worksite locations at the time of the Simeio Solutions decision, the employers have 90 days from the date of this announcement (May 21, 2015) to file amended petitions for H-1B employees who changed their place of employment to an MSA or area of intended employment requiring coverage by a new or different LCA than that submitted with the original H-1B petition. Therefore, if an employer has not filed an amended petition for an H-1B worker who moved worksite locations before May 21, 2015, they have until August 19, 2015 to file an amended petition. Also, if any of the H-1B workers changed their worksite location before the Simeio Solutions decision, USCIS will not take adverse action against the employer or the employee if the employer, in good faith, relied on prior non-binding agency correspondence and did not file an amended petition due to a change in an MSA or area of intended employment by May 21, 2015. However, the employer must now file an amended petition for these H-1B employees by August 19, 2015. If the employer does not file an amended petition for these employees by August 19, 2015, they will be out of compliance with USCIS regulation and policy and thus subject to adverse action.  Similarly, the H-1B employees would not be maintaining their nonimmigrant status and would also be subject to adverse action.

If somehow, the amended H-1B petition is denied, but the original petition is still valid the H-1B employee may return to the worksite covered by the original petition as long as the H-1B employee is able to maintain valid nonimmigrant status at the original worksite. Moreover, if the previously-filed amended H-1B petition is still pending, the employer may still file another amended petition to allow your H-1B employee to change worksite locations immediately upon employer’s latest filing.

This would not apply if the new work location is within the same metropolitan statistical area (MSA) or an “area of intended employment” covered by the existing approved H-1B petition. If the H-1B employee is moving to a new job location within the same MSA or area of intended employment a new LCA is not required. Therefore, the employer does not need to file an amended H-1B petition. However, the employer must still post the original LCA in the new work location within the same MSA or area of intended employment.

Short term placement : Under certain circumstances, an employer may place an H-1B employee at a new job location for up to 30 days, and in some cases 60 days (where the employee is still based at the original location), without obtaining a new LCA.

Non-worksite locations: Also, if H-1B employee is only going to a non-worksite location, the employer does not need to file an amended H-1B petition. A location is considered to be “non-worksite” if the H-1B employees are going to a location to participate in employee developmental activity, such as management conferences and staff seminars, where the H-1B employees spend little time at any one location; or the job is “peripatetic in nature,” such as situations where their primary job is at one location but they occasionally travel for short periods to other locations “on a casual, short-term basis, which can be recurring but not excessive (i.e., not exceeding five consecutive workdays for any one visit by a peripatetic worker, or 10 consecutive workdays for any one visit by a worker who spends most work time at one location and travels occasionally to other locations).”

 

Here is the link to USCIS announcement : http://www.uscis.gov/news/alerts/uscis-guidance-when-file-amended-h-1b-petition-after-simeio-solutions-decision

THE BIG NEWS – USCIS allows certain H4 dependent spouses to work from May 26, 2015

U.S. Citizenship and Immigration Services (USCIS) has announced that effective May 26, 2015, they will allow certain H-4 dependent spouses of H-1B nonimmigrants to obtain EAD – Employment authorization. This announcement comes as part of President’s recent Executive action on immigration reform.

Eligible H-4 dependent spouses will be those, whose spouses are H-1B nonimmigrants and are the principal beneficiaries of an approved Form I-140, Immigrant Petition for Alien Worker; or have been granted H-1B status under sections 106(a) and (b) of the American Competitiveness in the Twenty-first Century Act of 2000. The Act permits H-1B nonimmigrants seeking lawful permanent residence to work and remain in the United States beyond the six-year limit on their H-1B status.

Eligible H-4 dependent spouses must file Form I-765, Application for Employment Authorization, with supporting evidence and the required $380 fee in order to obtain employment authorization and receive a Form I-766, Employment Authorization Document (EAD).

USCIS will begin accepting applications on May 26, 2015. Once USCIS approves the Form I-765 and the H-4 dependent spouse receives an EAD, he or she may begin working in the United States.

For USCIS announcement click below http://www.uscis.gov/news/dhs-extends-eligibility-employment-authorization-certain-h-4-dependent-spouses-h-1b-nonimmigrants-seeking-employment-based-lawful-permanent-residence About us:     SmoothImmigration.COM SmoothImmigration, which is part of Bhatia & Co, specializes in addressing the many complexities in Immigration process, to help businesses and individual navigate through the various stages of processes. Bhatia & Co is a diversified Full service Immigration, financial and business services firm concentrating on providing services to domestic and international organizations.    Our Team of highly skilled and diversified range of professionals provide service in all areas of Immigration, We also render full range of services in areas of tax planning and tax preparation, audit and assurance, compliance, corporate service, accounting, outsourcing, business consulting, financial and retirement planning and litigation support service to a diverse range of businesses and individuals.     Our US entity, Bhatia & Co, Inc incorporated in California in 2000 is headquatered in the heart of Silicon Valley, and has professional offices located in several locations in US, India with an associate office in Canada. We are immigration consultants bonded with the California secretary of state US OFFICE :  Santa Clara, California: SMOOTHIMMIGRATION (Business & Immigration Consultants) 5201 Great America Parkway, Suite 256, , Santa Clara, CA 95054 (408) 845 9411 (Phone) (408) 351 0700 (Fax) immigration@bhatiaco.com http://www.smoothimmigration.com (Website) Pleasanton, California : (New office) 5776, Stoneridge Mall Road, Ste 285 Pleasanton, CA-94588 925-260-1245 (Phone) BHATIA & CO,INC (CPAs) www.bhatiaco.com

For 2015, IRS announces Inflation adjusted limits for various tax benefits, deductions, adjustments, exemptions, etc

For tax year 2015, the Internal Revenue Service has announced annual inflation adjustments for more than 40 tax provisions, including the tax rate schedules, and other tax changes. Revenue Procedure 2014-61 provides details about these annual adjustments.

The tax items for tax year 2015 of greatest interest to most taxpayers include the following dollar amounts –

• The tax rate of 39.6 percent affects singles whose income exceeds $413,200 ($464,850 for married taxpayers filing a joint return), up from $406,750 and $457,600, respectively. The other marginal rates – 10, 15, 25, 28, 33 and 35 percent – and the related income tax thresholds are described in the revenue procedure.
• The standard deduction rises to $6,300 for singles and married persons filing separate returns and $12,600 for married couples filing jointly, up from $6,200 and $12,400, respectively, for tax year 2014. The standard deduction for heads of household rises to $9,250, up from $9,100.
• The limitation for itemized deductions to be claimed on tax year 2015 returns of individuals begins with incomes of $258,250 or more ($309,900 for married couples filing jointly).
• The personal exemption for tax year 2015 rises to $4,000, up from the 2014 exemption of $3,950. However, the exemption is subject to a phase-out that begins with adjusted gross incomes of $258,250 ($309,900 for married couples filing jointly). It phases out completely at $380,750 ($432,400 for married couples filing jointly.)
• The Alternative Minimum Tax exemption amount for tax year 2015 is $53,600 ($83,400, for married couples filing jointly). The 2014 exemption amount was $52,800 ($82,100 for married couples filing jointly).
• The 2015 maximum Earned Income Credit amount is $6,242 for taxpayers filing jointly who have 3 or more qualifying children, up from a total of $6,143 for tax year 2014. The revenue procedure has a table providing maximum credit amounts for other categories, income thresholds and phaseouts.
• Estates of decedents who die during 2015 have a basic exclusion amount of $5,430,000, up from a total of $5,340,000 for estates of decedents who died in 2014.
• For 2015, the exclusion from tax on a gift to a spouse who is not a U.S. citizen is $147,000, up from $145,000 for 2014.
• For 2015, the foreign earned income exclusion breaks the six-figure mark, rising to $100,800, up from $99,200 for 2014.
• The annual exclusion for gifts remains at $14,000 for 2015.
• The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending arrangements (FSA) rises to $2,550, up $50 dollars from the amount for 2014.
• Under the small business health care tax credit,  the maximum credit is phased out based on the employer’s number of full-time equivalent employees in excess of 10 and the employer’s average annual wages in excess of $25,800 for tax year 2015, up from $25,400 for 2014.

Please let us know if you have any questions or need to do Tax planning for the coming year.

Regards,
Neeraj Bhatia

RBI announces that Govt of India has signed IGA under US FATCA

Reserve Bank of India (RBI) has announced that Government of India India and US have reached an agreement in substance on the terms of an Inter-Governmental Agreement (IGA) to implement US-FATCA and India is now treated as having an IGA in effect from April 11, 2014. However, IGA would be signed only after the approval of Cabinet.

Indian Financial Institutions would have time upto December 31, 2014 to register with US authorities and obtain a Global Intermediary Identification Number (GIIN).

FATCA targets tax non-compliance by U.S. taxpayers with foreign accounts. FATCA focuses on reporting by U.S. taxpayers about certain foreign financial accounts and offshore assets, as well as by foreign financial institutions (FFIs) about financial accounts held by U.S. taxpayers or foreign entities in which U.S. taxpayers hold a substantial ownership interest.  

Unless exempt, FFIs that do not both register and agree to report face a 30% withholding tax on certain U.S.-source payments made to them. Under FATCA, to avoid being withheld upon, foreign financial institutions (FFIs) may register with the IRS and agree to report to the IRS certain information about their U.S. accounts, including accounts of certain foreign entities with substantial U.S. owners. FFIs that enter into an agreement with the IRS to report on their account holders may be required to withhold 30% on certain payments to foreign payees if such payees do not comply with FATCA.

Click to access FA27062014CA.pdf

http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=8970&Mode=0

 

IRS considering OVDP 2012 modifications to ease penalties for non-willful violators

IRS finally realizes the need to modify OVDP 2012 to accomodate non-willful violations of overseas account/ income reporting obligations. JOHN A. KOSKINEN, Commissioner of IRS, while speaking at a conference stated that IRS is considering making program modifications to provide an opportunity for non-willful violators to come into compliance that doesn’t involve the type of penalties that are appropriate for U.S.-resident taxpayers who were willfully hiding their investments overseas. IRS also plans to accommodate U.S.-resident taxpayers with unreported offshore accounts whose prior non-compliance clearly did not constitute willful tax evasion but who, to date, have not had a clear way of coming into compliance that doesn’t involve the threat of substantial penalties. Text of address of IRS Commissioner, John Koskinen:

Click to access Commissioner%20Koskinen’s%20Remarks%20at%20US%20CIB%20and%20OECD%20Int%20Tax%20Conf%20June%202014.pdf

FBAR DEADLINE FOR 2012 & OFFSHORE VOLUNTARY DISCLOSURE PROGRAM (OVDP)

Deadline for FBAR filing for 2012 is June 30, 2013

The due date for filing of the FOREIGN BANK & FINANCIAL ACCOUNT REPORTING (FBAR) Form TDF 90-22.1 is June 30, 2013. FBAR Form may be required to be filed if a US 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.

FBAR form and instructions had been revised in 2012 to reflect the amendments made by the final regulations. The requirement as per IRS 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.

New 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 taxpyers are required to file Form 8938 but do not file a complete and correct Form 8938 by the due date (including extensions), they may be subject to a penalty of $10,000.

OFFSHORE VOLUNTARY DISCLOSURE PROGRAM 2012 (OVDP/OVDI) STILL OPEN

The IRS is also currently offering people with undisclosed income from offshore accounts an opportunity to participate in a new, voluntary disclosure initiative in order to get current on their FBAR filings and tax returns. The program is similar to the 2011 Offshore Voluntary Disclosure Initiative (OVDI) in many ways, but with a few key differences. Unlike OVDI 2011, there is no set deadline for people to apply – at least as of now. The overall penalty structure for the new program is the same for 2011, except for taxpayers in the highest penalty category.

For the new program, 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. That is up from 25 percent in the 2011 program. Some taxpayers will be eligible for 5 or 12.5 percent penalties; these remain the same in the new program as in 2011.

Taxpayers participating in the new initiative must file all original and amended tax returns and include payment for taxes, interest and accuracy-related penalties.

If anyone would like to avail of the benefit of Amnesty under 2012 Offshore Voluntary Disclosure Program (OVDP/ OVDI) and would like our assistance for the purpose, they could call us to make an appointment.

 ____________________________________________________________________

NEERAJ BHATIA, AICWA(India), FCA(India), CPA(USA), LL.M.(International tax)
Chartered Accountant (India) and Certified Public Accountant (USA)

Finally, IRS offers ‘common sense’ relief for non-compliant Nonresident US Citizens regarding FBARs/ tax filing obligations

Some ‘common sense’ finally prevails on IRS. IRS is announcing a series of ‘common-sense steps’ (as the IRS commissioner Doug Shulman puts it) to help U.S. citizens abroad get current with their tax obligations and resolve pension issues.

IRS is announcing a new procedure for current non-residents including, but not limited to dual citizens who have not filed U.S. income tax and FBAR returns to file their delinquent returns.  This procedure will go into effect on Sept. 1, 2012. While more details will be forthcoming, taxpayers utilizing the new procedure will be required to file delinquent tax returns, with appropriate related information returns, for the past 3 years and to file delinquent FBARs for the past 6 years.

The IRS will determine the level of compliance risk presented by these submissions based on certain information provided on the returns filed, and based on certain additional information that will be required as part of the submission.  Low risk will be predicated on simple returns with little or no U.S. tax due.  High risk factors will include level of income and assets of taxpayers, sophisticated tax planning or avoidance, or if there is material economic activity in the US by the taxpayer, besides others that IRS may announce before the effective date of the new procedure.  Absent high risk factors, if the submitted returns and application show less than $1,500 in tax due in each of the years, they will be treated as low risk.  For those taxpayers presenting low compliance risk, the review will be expedited and the IRS will not assert penalties or pursue follow-up actions.

This should provide a huge relief for such ‘low compliance risk’ taxpayers, in sharp contrast to the OVDI/ OVDP which presents a scary and threatening scenario by stating that no amount of unreported income is considered de minimis for purposes of determining whether there has been tax non-compliance with respect to an account or asset and whether the account or asset should be included in the base for the 25/ 27.5 percent penalty.

Unlike OVDI/ OVDP, however, this new procedure does not provide protection from criminal prosecution if the IRS and Department of Justice determine that the taxpayer’s particular circumstances warrant such prosecution.

http://www.irs.gov/businesses/small/international/article/0,,id=256772,00.html

– NEERAJ BHATIA

   CPA (US), FCA(India), AICWA (India), LL.M (Intlernational Tax-US)