Data must be filed electronically
American taxpayers have to report their non-U.S. bank accounts to U.S. authorities by June 30, using an online filing system.
In previous years filing a Foreign Bank Account Report (FBAR) form with the Treasury Department was sufficient to meet the reporting obligation.
However, since July 1, 2013, U.S. taxpayers have to file a new form with the Financial Crimes Enforcement Network. The form is only available through the Bank Secrecy Act E-Filing System website and thus it has to be filed electronically, U.S. law firm Davis Law & Associates said in a client advisory.
The requirement applies to U.S. citizens, green card holders, U.S. residents, and entities such as corporations, partnerships or limited liability companies organized in the United States or under the laws of the United States. It also concerns trusts and estates formed under U.S. law.
Anyone who has an interest in or signatory authority over a foreign financial account has to file the FBAR if the balance of the account exceeded $10,000 at any time during the calendar year 2013.
In addition to bank accounts, the FBAR requirements extend to brokerage accounts, insurance policies with a cash value, shares in a mutual fund, commodities futures and options accounts, annuities with a cash value and other foreign accounts.
The filing requirement is often overlooked by U.S. taxpayers who live abroad and have foreign bank accounts or pension plans, the law firm said. But the penalties for failing to report foreign accounts are high, ranging from US$500 to US$10,000, depending on the severity of the case.
Wilful failure penalties, in connection with tax evasion, are even larger and can be the greater of $100,000 or 50 percent of the amount in the account at the time of the violation. Each year that is not filed counts as a separate violation with a statute of limitations of six years for FBAR penalties.
In contrast to the federal income tax return, the FBAR is a separate information return. There are no provisions that allow an extension of time to file the FBAR and the information has to be filed even if the account contains no taxable income.
FBAR filers also have to maintain certain records for five years from the due date of the FBAR, including the name in which the account is maintained, the account number or designation, name and address of the financial institution that maintains the account, the account type and the maximum balance of each account during the reporting period.