This year’s FBAR (Report of Foreign Bank Account) deadline has not quite yet arrived, but this year will mark the last year where the FBAR is due on June 30th. For many expats living in foreign nations like Brazil, China, Saudi Arabia, and other countries the June FBAR filing deadline may have developed into something of a tradition. If so, this is a good sign. FBAR penalties are harsh and the IRS and U.S. government have devoted a significant amount of resources towards identifying and prosecuting individuals who fail to comply with FBAR and other offshore tax disclosure duties. Therefore, if you’ve not already filed an FBAR for this year or if you have failed to file in past years, it is important that you work with a tax professional to correct these errors.
However, it is never too early to start planning for next year. Ted Kleinman of U.S. Tax Help is a CPA who helps individuals and expatriates comply with their international tax obligations. If you haven’t filed this year’s FBAR, he can help you catch-up. Furthermore, he can explain the changes that are coming to FBAR so that you’re prepared for next year and don’t miss the filing deadline. To schedule a free consultation with Ted regarding international tax help for U.S. citizens, call U.S. Tax Help at (541) 923-0903 or contact us online. If you live in Canada or in the United Kingdom, Ted is ready to help.
Remember: No Extensions Are Permitted for this Year’s FBAR Filing
Before delving into some of the changes that will affect FBAR filings for next year, it is important to once again emphasize that there is no extension available for this year’s FBAR. If you hold or have signature authority over foreign accounts that aggregate to more than $10,000 and fail to file by June 30, 2016, your FBAR disclosure will be considered late. Depending on the circumstances, you may face penalties.
Penalties for even accidental noncompliance with FBAR can be harsh. Consider that even an innocent mistake where you did not intend to violate FBAR can be punished with a fine of up to $10,000 for each year of noncompliance. This could include situations where you did not know that you had an obligation to file or where you simply forgot to file before the deadline. However, penalties for non-filing become even harsher when the IRS believes that willfulness is involved. Willfulness typically involves an intentional or voluntary disregard of a known legal duty. Willful failure to file FBAR can be punished by a penalty that is the greater of $100,000 or 50% of the account balance. While OVDP can mitigate this penalty, one may still be required to pay an offshore penalty.
2017 FBAR Filing Deadline Will Align with the Tax Deadline and Extensions will be Available
While this year’s June 30, 2016, the filing deadline is set in stone, this is changing for the FBAR filing deadline in 2017. In order to better align the FBAR obligation with the taxpayer’s other tax filing in pain and obligations, the new FBAR deadline will coincide with Tax Day. That means that 2017’s FBAR filing deadline will fall on April 15, 2017.
The problem with this new up deadline is that taxpayers and expats have become accustomed to the end of June filing are put in the position or accidental non-compliance is more likely. By the time the individual begins to think about the FBAR, the deadline may be quickly approaching or already passed and he or she may not have adequate time to prepare the new filing.
However, this potential problem is somewhat mitigated by another change affecting one’s FBAR filing in 2017. That is, next year for the first time, extensions to FBAR will be available. The extension is similar to that one can request for their tax return in that the six-month extension is available that would push the due date for an FBAR filing to October 15th, 2017. Furthermore, in 2017, first-time filers who fail to request a timely extension or who fail to file, are eligible for relief or penalties may be waived.
Work with an Experienced CPA to Handle Your FBAR Duties
Once again, the June 30, 2016, FBAR deadline is quickly approaching. However, taxpayers should keep in the back of their mind that the filing deadline in 2017 will coincide with tax day. CPA Ted Kleinman and US Tax Help can assist you in meeting this year’s and future FBAR obligations. Ted can also help you correct filing mistakes from previous years. To schedule a free consultation to discuss your U.S. taxes, call US Tax Help at (541) 923-0903 today or submit your information online for a “no cost” review.