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KSM Blog | Katz, Sapper & Miller CPA

New Deadline to Complete FBAR Filing for the 2016 Calendar Year

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Any U.S. person that 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 – may be required to report those accounts and balances to the Department of Treasury’s Financial Crimes Enforcement Network (FinCen). The new deadline to complete report of Foreign Bank and Financial Accounts (FBAR) filing for calendar year 2016 is April 18, 2017.  

Who Needs to File

A U.S. person means any person that is a resident of the United States or subject to the jurisdiction of the United States. The term “person” is used in the broad legal sense and includes any individual, corporation, partnership, estate, trust, branch, or other organization. 

Only U.S. persons that have a financial interest in, or signature authority over, foreign financial account(s) that have more than $10,000 maximum value at any point during the year must file. This is an aggregate determination – if the aggregate value of all foreign financial accounts is over $10,000 (even though there is no individual account over that threshold amount) an FBAR must be filed listing all foreign accounts. 

Additionally, if there is a U.S. person that owns more than 50 percent of an entity that has a foreign account, the U.S. person and the entity (if such entity is a U.S. entity) must each report the foreign account information if the aggregate $10,000 threshold amount is exceeded. 

What to File

U.S. persons must report foreign accounts that meet the filing threshold in which they have a financial interest or signature authority, even if there is no taxable income associated with the account. Generally, financial interest means that the U.S. person is the owner of record or legal title of the account, regardless of whether the account is maintained for their benefit. This can also include a person acting as an agent, nominee, attorney, or person acting on behalf of someone else with respect to the account. Signature authority is the authority of any individual (alone or with another individual) to control the disposition of the assets held in the foreign financial account by direct communication with the bank or financial institution that maintains the account. 

The account(s) and their associated information must be reported on a Form 114 – “Report of Foreign Bank and Financial Accounts” (formerly known as a TD.F 90-22.1). 

Where to File

All FBAR forms must be filed electronically with FinCen through the BSA E-Filing System or your KSM advisor can help facilitate this filing. 

When to File

All FBAR filings related to calendar year 2016 are due by April 18, 2017.  There is a six-month extension available if needed. 

Penalties

The penalties for failure to file an FBAR are severe. There can be civil penalties of $10,000 for each non-willful violation. Additionally, if it is found that the violation is willful, the penalty can be the greater of $100,000 or 50 percent of the amount in the foreign account for each violation (with each year that an FBAR was not filed viewed as a separate violation). Criminal penalties are also a possibility, including up to five years of imprisonment with increased monetary penalties.  

About the Author
Ryan Miller is a partner in Katz, Sapper & Miller’s Tax Services Group. Ryan provides consulting services on a variety of technical tax matters, with an emphasis on international tax. He also oversees tax compliance and handles tax controversies. 

 

About the Author
Katherine Malarsky is a director in Katz, Sapper & Miller's Tax Services Group. Katherine provides consulting services on technical tax matters. She has experience in cost allocation methodologies, export incentive calculations, and international earnings and profits. Connect with her on LinkedIn.

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