While the filing deadline for a report of a foreign bank account (FBAR) has traditionally been June 30, the Financial Crimes Enforcement Network (FinCEN) announced an extension of this filing date to Oct. 15. There is no requirement for a specific request for the extension by the taxpayer. Apparently, this extension will also be permanent. The form for filing such reports is a FinCEN 114.
Such an extension is welcome for Michigan taxpayers with foreign accounts. As we have many times emphasized in prior blog posts, reporting concerning foreign bank accounts along with foreign revenue by both businesses and individuals can be confusing. It is especially easy to overlook specific deadlines. Hopefully, providing this extension will give taxpayers more time to prepare returns thoroughly and accurately.
Such an extension notwithstanding, the requirement for reporting information regarding these foreign accounts still is in place. Under the Bank Secrecy Act, P.L. 91-508, such reporting is required of taxpayers “having a financial interest in, or signature or other authority over, a bank, securities, or other financial account in a foreign country” in excess of $10,000 at any time during the year.
It is important to keep in mind that noncompliance with reporting requirements can result in harsh consequences. Penalties can include bank levies, seized assets (possibly as much as 50 percent of the value of the account), wage garnishments, and prison time. However, there may be defenses that allow for you to reduce or even avoid such penalties in the event noncompliance occurs. When in doubt regarding foreign bank accounts and investments, an experienced tax attorney can provide guidance regarding your circumstances.