U.S. Taxpayers with financial interest in unreported foreign financial accounts have been under scrutiny by the Internal Revenue Service. This is a reminder that the Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts ("FBAR") for the 2013 tax year is due on June 30, 2014. Taxpayers with interest in foreign financial accounts whose aggregate balance exceeds $10,000 are required under the Bank Secrecy Act to report such accounts to FinCEN on a yearly basis.
There are a couple of new changes for the 2013 reporting requirements. First, the name of the form has changed from TD 90-22.1 to FinCEN Form 114. FinCEN Form 114 supersedes TD F 90-22.1, the FBAR form used in 2013 and years prior. Second, although online filing was voluntary last year, all filers must now submit their reports online through the BSA Filing System website on or before June 30, 2014. Unlike the income tax returns, there are no extensions to the June 30, 2014 deadline for the FBAR filing.
Who must file?
Generally, U.S. persons are required to file an FBAR if this person has interest or signature authority over a foreign financial account and the aggregate value of all foreign accounts exceeds $10,000 at any time during 2013. Please review the FBAR filing instructions to determine whether your specific situation applies.
After one determines the existence of an FBAR filing requirement, gather all financial account statements. Please be aware of different sections of the form that pertain to financial accounts held separately and jointly. In addition, note that this reporting requirement extends to those with signature authority only, although this extension to June 30, 2015 announced on FinCEN Notice 2013-1 may be relevant.
The financial account balance that must be reported on the FBAR is the highest balance during 2013. If a Taxpayer has interest or signature authority over multiple accounts, the highest balance of each must be reported. Amended FBAR reports may be submitted to correct or supplement an original form.
Other Noteworthy Items to Remember
The FBAR report is not filed with a Taxpayers U.S. income tax return. This point may be obvious now that electronic filing through the BSA system is mandatory.
Even if the IRS grants a Taxpayer an extension to file his or her individual income tax return, the FBAR report is still due on June 30. Please also note that June 30 is the date the report must be received by the BSA. Again, the mandatory e-filing requirement rule has made this deadline easier to meet.