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Reminder - June 30 Deadline Looms for New Electronic FBAR Filing.
(Parker Tax Publishing June 25, 2014)

As the upcoming June 30, 2014, deadline for taxpayers filing their Report of Foreign Bank and Financial Accounts (FBAR) grows closer, practitioners should be prepared for using a different filing process than in previous years.

Last year, the Financial Crimes Enforcement Network (FinCEN) announced that only electronic FBAR submissions will be accepted for the 2013 reporting year. Along with the announcement, FinCEN introduced electronic FinCEN Form 114, which supersedes the former hard copy TD F 90-22.1. FinCEN Form 114 must be filed electronically through the Bank Secrecy Act (BSA) E-Filing System. Printed versions of the new FBAR form will not be accepted.

Under the Bank Secrecy Act, the FBAR must be filed by a U.S. person if that person had a financial interest in or signature authority over at least one financial of bank account located outside the United States and the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the reportable calendar year. FBAR filings may be required even though a U.S. person holding a foreign financial account has no taxable income related to the account. A U.S. person includes: U.S. citizens; U.S. residents; entities, including, but not limited to corporations, partnerships, or limited liability companies, created or organized in the United States or under the laws of the United States; and trusts and estates formed under the laws of the United States.

Compliance Tip: While the deadline for most FBARs for a calendar year is the following June 30 (i.e., June 30, 2014, for calendar year 2013), the FBAR deadline was extended to June 30, 2015, by FinCEN Notice 2013-1 for certain individuals with signature authority over but no financial interest in one or more foreign financial accounts. FinCEN Notice 2013-1 was preceded by three earlier extensions that applied to similarly situated individuals.

CAUTION: Except for situations referred to in the previous paragraph, no extensions are granted for FBARs. An extension for the taxpayer's income tax return DOES NOT extend the due date for filing an FBAR. The late filing penalty for FBARs can reach $10,000 for non-willful violations, and increases to the greater of $100,000 or 50% of the account balance for willful violations.

FinCEN Form 114 is obtained by accessing the BSA E-Filing System. It is provided in Adobe PDF format with expandable fields and pre-populated drop-down menus for inputting account information. While a new section was added permitting input of third-party preparer information, there is still only one digital signature line on the form; no additional line exists to designate a third-party to file on behalf of another or for spouses to designate which spouse will file. To address this limitation, FinCEN Form 114a, Record of Authorization to Electronically File FBARs, has been created. This separate form provides the authorization of additional designations. However, it is not electrically filed with the FinCEN Form 114. Instead, a hard copy of FinCEN Form 114a is retained by the preparer and the account owner and made available to FinCEN or the IRS upon request.

To use the BSA E-Filing System, third-party preparers must register with the BSA in advance of filing the FBARs and ensure they meet the required system specifications. The BSA E-Filing System allows for the secure filing of discrete and batched forms. There are no user fees or other direct costs for using the BSA E-Filing System.

For a discussion of the FBAR reporting requirement, see Parker Tax ¶203,170. (Staff Editor Parker Tax Publishing)

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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