United States taxpayers with foreign accounts should know the Internal Revenue Service (IRS) generally expects taxpayers to report foreign assets. There are rules dictating which assets the government requires the taxpayer to report and, in most cases, expects the reporting of assets that are above a certain threshold. When it comes to filing the Report of Foreign Bank and Financial Accounts (FBAR), for example, this means the government generally expects the taxpayer to report any foreign account that exceeds $10,000 at any point during the tax year in question.
The Financial Crimes Enforcement Network (FinCEN) recently released a Notice stating it was extending the deadline for taxpayers to file their FBAR. Two important takeaways from this announcement include:
- Extension date. The FBAR for 2019 was set at April 15, 2020. This Notice extends the deadline to April 15, 2021.
- Limitations. The Notice does not apply to all taxpayers with an FBAR filing obligation. There is some confusion as to the impact this notice will have on employees of registered investment advisors who have signature authority, but no financial interest, in applicable foreign accounts. These individuals may not qualify for the extension.
This is not the first time FinCEN has issued such an extension. The government has granted similar extensions over the last eight years. The move shows the government recognizes the difficulty that can come with meeting these reporting requirements. Although the extension is helpful, it can result in confusion due to its limited nature.
This is just one of many filing requirements those with foreign accounts may need to navigate to ensure compliance. As such, it is helpful to seek legal counsel to better ensure requirements are met.