The FBAR filing requirements have changed, again.
The report of foreign bank and financial accounts (FBAR) is a form that is required for anyone that has a financial interest or signature authority over certain foreign accounts. Disclosure of this information is required within these reports under the Bank Secrecy Act. The report is made on an annual basis to the Department of Treasury through a filing with the Financial Crimes Enforcement Network (FinCen).
Completing these forms, like most Internal Revenue Service (IRS) documents, is no easy task. Unfortunately, in addition to the difficulties that are often expected when dealing with the IRS, the FBAR has the added challenge of a peculiar filing deadline. Unlike the common April deadline, filing of the FBAR is generally required by June 30. This can result in an unintentional violation. In an attempt to ease this difficulty and help further increase compliance, Congress has passed a law changing the filing date.
FBAR and Congress: A new filing date is set
The change was enacted July 31, 2015 and is found in the Surface Transportation and Veterans Health Care choice Improvement Act of 2016 under Section 2006, Tax Return Due Dates (b)(11). The relevant portion states:
The due date of FinCEN Report 114 (relating to Report of Foreign Bank and Financial Accounts) shall be April 15 with a maximum extension for a 6-month period ending on October 15 and with provision for an extension under rules similar to the rules in Treas. Reg. section 1.6081-5. For 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.
It is important to note that the change to FBAR filing deadlines does not become effective until 2017. Filings for the 2015 tax year remain due by June 30, 2016.
FBAR and filing requirements: Impact of changes
A recent article in WealthManagement.com explores this change, noting that in addition to the adjusted filing date, relief will also be available to first time filers who miss the deadline for requesting an extension. Relief may also be available for other first timers who fail to request an extension. In some situations, the penalties for these failures may also be waived.
FBAR and evolving tax law: Importance of legal counsel
This change provides an example of the evolving nature of tax law. As a result, it is wise for those who are filing FBAR or other tax documents to seek the counsel of an experienced tax attorney.