The FinCen Form 114 (Former TD F 90-22.1) or FBAR must be filed should you have had a financial interest in, or signature, or other authority over one or more bank, securities, or other financial account held with a financial institution located outside the United States. The reporting requirement is triggered once the aggregate amount of all foreign accounts exceeds $10,000 or the equivalent in a foreign currency, at any time during the year.
The FBAR is not required if the assets are held in a US military banking facility operated by a US financial institution, or if the aggregate value of all foreign accounts is less than $10,000 during the entire year. Effective July 1st, 2013 the FBAR form is filed solely by electronic means and must be received by the IRS not later than April 15th of the following year. Currently, there is no extension of time to file the FBAR form, and late filing may result in a penalty. However, a penalty will not be asserted if the IRS determines that the failure to timely file an FBAR was not willful and was due to reasonable cause.
At EasyTax, we assist individual, and business taxpayers comply with the Foreign Bank Account Reporting regulations. Our streamlined FBAR compliance services focus on:
- Tax advice on FBAR filing requirements
- Preparation and submission of FBAR forms for individuals and US entities
- Assistance to delinquent filers, including Offshore Voluntary Disclosure Program (OVDP), prior-year FBARs and amendment filings
The Foreign Account Tax Compliance Act (FATCA) is part of the US Government’s Hiring Incentives to Restore Employment Act (HIRE). FATCA was enacted in 2010 and targets tax non-compliance by US taxpayers with foreign accounts. The US Internal Revenue Services (IRS) states that FATCA focuses on reporting:
1.By U.S. taxpayers about certain foreign financial accounts and offshore assets.
2.By foreign financial institutions about financial accounts held by U.S. taxpayers or foreign entities in which U.S. taxpayers hold a substantial ownership interest.
US Individuals : With respect to compliance and reporting FATCA requires U.S. persons owning foreign accounts or other specified financial assets must report them through a new Form 8938. If the total value in these accounts or of these assets is at or below $50,000 at the end of the tax year, there is no reporting requirement for the year, unless the total value was more than $75,000 at any time during the tax year. The act also provides a higher threshold for US citizens living outside of the US. The Threshold levels are also different for married and single tax payers.
Account holders would be subject to a $10,000 failure to file penalty, an additional penalty of up to $50,000 for continued failure to file after IRS, notification, and a 40 percent penalty on an understatement of tax attributable to non-disclosed assets. Foreign Financial Institutions (FFIs) : FFIs for compliance are required to report directly to the IRS, information about financial accounts held by U.S. taxpayers (even if they hold only non-U.S. assets), or held by foreign entities in which U.S. taxpayers hold a substantial ownership interest. An FFI may agree to report certain information about its account holders by registering to be FATCA compliant with the IRS.