financial crimes enforcement network Archives

June 30 Deadline Approaches for Mandatory E-File FBAR Reporting

2014 presents particular challenges with respect to FBAR, the Report of Foreign Bank and Financial Accounts, for certain U.S. persons with interests in or signature authority over assets exceeding $10,000 held outside the U.S. in foreign accounts. The deadline for calendar year 2013 reporting obligations is June 30, 2014, and by then all taxpayers must e-file completed forms using the Bank Secrecy Act (BSA) E-Filing System. Failure to file the FBAR can result in criminal sanctions. In addition, failure to file the FBAR can result in civil penalties exceeding 100 percent of the foreign account balance, as recently determined by the Federal District Court in the May 28, 2014, decision inU.S. v. Carl R. Zwerner.

The BSA requires any U.S. person with 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, exceeding certain thresholds to report the “maximum value of the account” yearly to the Internal Revenue Service (IRS). This requirement may now only be satisfied by filing electronically a Financial Crimes Enforcement Network (FinCEN) Form 114, FBAR, which replaces Form 90.22-1. An overview of the FBAR filing requirements is provided by the IRS. But in summary, an FBAR must be filed by any U.S. person who either owns or has signature authority over a foreign account that, at any point during the year, was valued at or greater than $10,000. For FBAR purposes, a foreign account includes any account that is held outside the United States, including those at foreign branches of U.S. banks. For more details regarding the specifics of which accounts must be reported, two prior On the Subject newsletters about FBAR reporting can be found here and here.

FinCEN is attempting to make the new e-filing user friendly. The mandatory e-filing requirement information, capability to register and to upload completed FBARs, and new Form 114 for those individuals and businesses that must file an FBAR is accessible through the BSA e-file website.

The BSA e-file website allows a taxpayer to either file the Form 114 directly as an “Individual” by uploading a completed file or, alternatively, to fill out Form 114a permitting another party, designated by the BSA system as an “Institution,” to file the Form 114 on his or her behalf. For example, the new Form 114a may be used by an employer company to file the FBAR as an Institution on behalf of any of its executives who are required to file an FBAR because of non-exempt signatory authority over the employer’s foreign bank accounts. (Note that FBAR filing by certain individuals with signatory authority but no ownership interest in a foreign account may be deferred until June 30, 2015, pursuant to FinCEN Notice 2013-1.) For its own FBAR, the employer company may register as an Institution and designate a “Supervisory User,” who has authority to file on behalf of the company and who, [...]

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FBAR Filing Deadline for Extensions for Certain Individuals With Signature Authority

by Karen A. Simonsen, Todd A. Solomon and Patrick D. Ryan

The Financial Crimes Enforcement Network (FinCEN), a division of the U.S. Treasury Department, and the Internal Revenue Service (IRS), recently issued three notices, FinCEN Notices 2011-1 and 2011-2 and IRS Notice 2011-54. Each notice granted an extension of the filing deadline for the Report of Foreign Bank and Financial Accounts (FBAR), IRS Form TD-F 90-22.1 to different groups of individuals with signature or other authority over certain foreign financial accounts for various filing years. Refer to our previous On the Subject for a discussion of whether an individual has signature or other authority over a foreign financial account.While the extensions provide welcome relief, some June 30, 2011 filing obligations still remain.

FinCEN Notice 2011-1

On May 31, 2011, FinCEN issued Notice 2011-1 (subsequently clarified on June 6, 2011), which grants a one-year extension of the filing deadline for the FBAR for the 2010 tax year, from June 30, 2011 to June 30, 2012, to some individuals with signature or other authority over certain foreign financial accounts.

The one-year extension relief provided in FinCEN Notice 2011-1 is limited to certain employees and officers of a publicly traded company or U.S. Securities and Exchange Commission (SEC) registrant who have signature or other authority over, but no financial interest in, a foreign financial account. The relief does not apply to an employee or officer of an entity that is not a publicly traded company or of a non-SEC registrant that has signature or other authority, but no financial interest in, a foreign financial account.

IRS Notice 2011-54

On June 16, 2011, the IRS issued IRS Notice 2011-54, granting additional relief to persons with signature or other authority over, but no financial interest in, a foreign financial account held during calendar year 2009 or earlier calendar years. Previously, the IRS extended the FBAR filing deadline to June 30, 2011 for persons with signature or other authority over, but no financial interest in, a foreign financial account for 2009 and earlier calendar years. The IRS issued IRS Notice 2011-54 in reaction to concerns that individuals with signature authority over, but no financial interest in, a foreign financial account were encountering difficulty compiling the data necessary to complete the FBAR for 2009 and earlier calendar years.

IRS Notice 2011-54 extends the FBAR filing deadline from June 30, 2011 until November 1, 2011 for all persons with signature authority over, but no financial interest in, a foreign financial account in 2009 or earlier calendar years. The deadline for the 2010 calendar year remains June 30, 2011.

FinCEN Notice 2011-2

On June 17, 2011, FinCEN issued FinCEN Notice 2011-2, which grants a one-year extension of [...]

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