Your Morehead City and New Bern North Carolina Tax Attorney
Report of 2013 Foreign Bank and Financial Accounts (FBAR) Deadline June 30th
Did you know that if you have a financial interest in or signature authority over a foreign financial account, the Bank Secrecy Act may require you to report the account yearly to the Internal Revenue Service? The IRS requires that United States persons file an FBAR (FinCEN Form 114) if that person has a financial interest in or signature authority over any financial account(s) outside of the United States and the aggregate maximum value of the account(s) exceeds $10,000 at any time during the calendar year. This regulation can apply to individuals, business entities, trusts, or even estates. Furthermore, attorneys-in-fact or beneficiaries can even fall under the law.
Even though the IRS is managing the FBAR program, this annual reporting requirement does not require payment of any tax, rather it is simply informing the IRS that you currently have foreign accounts. However, the failure for not reporting the existence of foreign bank account, brokerage account, mutual fund, trust, or other type of foreign financial accounts can be quite costly. The penalty can require payment of up to 50% of the value of the account for the year in question or $100,000, whichever is greater. A recent case in the State of Florida required an 87 year old man, Carl Zwerner, to pay penalties in excess of $2,000,000 for failure to report a Swiss Bank Account for three successive tax years, which carried a balance of less than $1,600,000.
The FBAR filing rules can be quite complicated with so much to lose for the simple failure of filing one piece of paper. Unfortunately, the FBAR filing deadline is June 30, 2014 with no extension allowed. Fortunately there are a few days until the deadline has passed for the 2013 required filing. Furthermore, the IRS does offer a voluntary disclosure program with reduced penalties for those that have failed to file FBAR’s for prior years.
For further guidance on the required FBAR filings, please visit the following link for the FBAR Reference Guide.
If you have any questions regarding the FBAR filing requirement or any other tax issue, please contact Andrew G. Foster at Harvell and Collins, P.A.