Taxation Law Section
We are planning two joint CLEs with the immigration and employment sections. On December 8, 2015 the Taxation Law Section will have a Joint Holiday Party with the Immigration Law Section and the Employment Law Section at the Bar Association Building from 5:00-7:00pm.
Updates on FBAR Penalties and Filing Deadline
This article focuses on important updates on the FBAR (“Report of Foreign Bank and Financial Accounts”) from the last several months. As a quick review, United States Persons are required to file an FBAR if (1) they had a financial interest or signature authority over at least one financial account outside the US and (2) the aggregate value of the all foreign financial accounts exceeded $10,000 at any time during the calendar year. A FBAR is separate filing requirement from a taxpayer’s income tax return.
On May 13, 2015 the IRS Commissioners of Large Business and International (“LB&I”), Small Business/ Self Employed (“SBSE”) and Tax Exempt and Government Entities (“TEGE”) released a Memorandum entitled “Interim Guidance on FBAR Penalties.” This Memorandum outlines procedures to ensure consistency and effectiveness in the application of FBAR penalties.
For willful violations, the burden remains on the IRS. In cases of willful violations over multiple years, most cases will limit the penalties to 50% of the highest aggregate balance of foreign accounts during the years at issue. However, based upon the facts and circumstances, examiners may recommend penalties that are higher or lower than 50% but not to exceed 100% of the highest combined account values.
For nonwillful violations, examiners have discretion on their penalty recommendations. The lowest penalty would be a single $10,000 penalty for one year. It could increase to a $10,000 penalty per year of violations. It can even increase to a $10,000 penalty per account per year. The nonwillful penalty cap is set at 50%.
FBAR Filing Deadline
Currently the FBAR must be e-filed by June 30 with foreign account information from the prior calendar year. On July 31, 2015 the Surface Transportation bill (H.R. 3236) was passed into law. Section 2006 provides for the modification of due dates by regulations for the FBAR and various informational forms. Beginning with tax year 2016, the FBAR filing deadline shall be April 15. The law also provides for a 6 month extension. Also for first time FBAR filers, the failure to file penalty may be waived by the Secretary of Treasury.
If you have suggestions for speakers or topics for any of our section meetings or CLE seminars, please contact either John S. Pontius, Jr. or Mark W. Schweighofer.
John S. Pontius, Jr.
Mark W. Schweighofer
None Currently Scheduled
None currently scheduled