Ines Zemelman, EA 20-Dec-16
On December 16, 2016 FinCEN officially announced the new annual due date for filing Reports of Foreign Bank and Financial Accounts (FBAR) for foreign financial accounts. This date change was mandated by the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, Public Law 114-41.
The due date will be April 15 to coincide with the Federal income tax filing season.
In the upcoming tax season of 2017 the due date for filing FBAR for calendar year 2016 is April 18, 2017, consistent with the Federal income tax due date.
Foreign Earned Income Exclusion for Partial Year US Expats
Pushing the due 2 ½ months forward may sounds like bad news, but the devil is in the details. The Act also mandates a six month extension of the filing deadline “to implement the statute with minimal burden to the public and FinCEN”.
|Filers failing to meet the FBAR annual due date of April 15 will be granted an automatic extension to October 15 each year. Accordingly, specific requests for this extension are not required.|
Logistical takeaways from the FinCEN announcement:
1. Individuals required to file FBAR will have an additional 3 ½ months to collect financial information and file FBAR (compared to the previous due date of June 30).
2. The ability to complete income tax and financial filing obligations concurrently is especially important to the taxpayers who need to file form 8938. Information presented on both financial reports, FinCEN 114 (FBAR) and 8938 (FATCA) should match.
a. Filing the two forms at the same time will prevent the need for amendment if information presented on FBAR filed earlier does not match the FATCA filed later.
3. Automated 6 months extension to file FBAR is unrelated to the extension of time to file federal tax return (Form 4868 or 2350).
a. Taxpayer may file tax return early without an extension and file FBAR later without request for extension.
4. If taxpayer filed FBAR early yet need additional time to file federal (or state) tax return, request for extension (Form 4868 or 2350) needs to be submitted.
5. Extension of time to file FBAR has been implemented for the first time since the inception of FBAR in 1970 as part of the "Bank Secrecy Act" or "BSA."
Bigger picture takeaways
What this means is that to a U.S. person with FBAR filing obligations, the automatically extended due date of October 15 is the real deadline.
Previously, without the option to request extension, the attitude of FinCEN towards FBAR filed after June 30 was more lenient. In some cases it was sufficient to provide the reason for late filing “information from foreign financial institution was not available by the due date” - and FinCEN automatically granted amnesty and waiver of penalties for late filing.
Now, when the terms of filing have become extremely taxpayer-friendly, and the actual due date is as late as October 15, even one day of late filing may trigger the Non-Willfull penalty of $10,000 for failure to file on time.