The new four letter word is not what you think. The new word is FBAR.
Previously Americans who had a non US financial account or accounts with a minimal aggregate of $10,000 had to mail a form TD F 90-22.1 to the Treasury Department.
This form has been replaced by the (FinCEN) Form 114 that is due June 30, 2014 for bank accounts held in 2013. This form is not filed with a federal tax return and cannot be extended. A filing extension, granted by the IRS to file an income tax return, does not extend the time to file an FBAR. There is no provision to request an extension of time to file an FBAR.
Take this seriously. The fine if a person fails to properly file a complete and correct FBAR may be subject to a civil penalty of up to $10,000 per violation for nonwillful violations that are not due to reasonable cause. For willful violations, the penalty may be the greater of $100,000 or 50% of the balance in the account at the time of the violation, for each violation.
You can see ‘Who Must File an FBAR’ section at the IRS site linked below (1)
This new form also offers an option to “explain a late filing,” or to select “Other” to enter up to 750-characters within a text box where the filer can provide a further explanation of the late filing or indicate whether the filing is made in conjunction with an IRS compliance program.
There are some exceptions to the reporting requirement including IRA owners and beneficiaries and participants in and beneficiaries of tax-qualified retirement plans. You can also see these exemptions at the IRS site linked above.
Offshore Voluntary Disclosure Program
If you have failed to file previously this may be a good time to catch up as the IRS reopened the Offshore Voluntary Disclosure Program that offers people with unreported taxable income from offshore financial accounts or other foreign assets an opportunity to resolve their tax and information reporting obligations, including the FBAR.
Here is the Rub
The information required as before is really simple. All that is required is named address and ID number etc, plus account numbers balances and addresses. The form is simple. Filing may not be.
First this is done through the BSA e-Filing site and is entitled “Financial Crimes Enforcement Network” as if there is some crime in having a non US bank account. This in my opinion is pure intimidation… government antics at its third worst.
The government’s first worst antic is using the IRS to attack charities that include the word TEA. After all where would America be if the British had been so alert about tea parties in 1773.
The second worst is the IRS (which demands that taxpayers keep records for seven years) losing data about the tea party scandal “forever” because of a computer hard drive crash and backup tapes being recycled every six months.
The first frustration is that the form can only be filed online. I am not sure how good I feel about having only an electronic filing. What if they have another hard drive crash and lose the data?
Second, the instructions provided in the filing pages were in my case simply incorrect as I have a MacBook Pro computer using Firefox.
The BSA – e Filing home page (2) links you to instructions that begin by saying that a prerequisite to filing is to have the latest version of Adobe.
(click on image to enlarge)
I loaded this and was ready to go. This should be easy. Right? Guess again. Perhaps these were the same web developers who did the Obamacare website?
The next instructions says that Firefox 19.0.2 or higher works. I have Firefox 30. (That’s higher than 19 right?)
This did not work and I regularly looped back to this message.
The instructions on how to fix this were very difficult as well.
The Firefox>Select Tools outlined in the instructions does not exist in my Firefox version. My version simply does not offer an Options. This may work on your computer or not, but after spending hours reading and rereading the instructions, talking with my webmaster, reinstalling Firefox and changing defaults, I surrendered and called my tax preparer. He uses a PC and Internet Explorer. We were able to complete my FBAR in about ten minutes.
My guess is that this is a taste of what is to come… increased problems, more efiling through sites that do not work very well and governments that as Ways and Means chairman Rep. Dave Camp said of the IRS, “have not lost information, they have lost credibility”.
As incredible, frustrating and annoying as this is, do not miss filing this form on time. No one is a criminal by having overseas investments and accounts but not reporting the account can become a crime.
Learn the hows and whys of extra profits from overseas banking and investing.