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International Tax Update: FBAR and Section 965

March 27, 2020

Foreign Bank and Financial Accounts (FBAR)

As set by the U.S. Dept. of Treasury’s Financial Crimes Enforcement Network (FinCEN), the due date for filing FinCEN 114 Reports of Foreign Bank and Financial Accounts (FBAR) for foreign financial accounts is April 15, the same as the typical federal income tax filing deadline. While the federal income tax deadline has been extended to July 15, 2020, this year, the deadline for FBAR reporting has not been officially extended. However, if filers are unable to meet the FBAR annual due date of April 15, they will receive an automatic extension to October 15. Extension requests are not required.

Penalty Reminders

If taxpayers are not vigilant about reporting either the Report of Foreign Bank and Financial Accounts (FinCEN Report 114, frequently referred to as the “FBAR form”) or the Foreign Financial Asset Reporting Form (Form 8938), they may face unfortunate consequences. The civil penalties for a non-willful violation can range up to $10,000 (adjusted for inflation) and penalties for a willful violation can range up to the greater of $100,000 (adjusted for inflation) or 50% of the account balance at the time of the violation. In extreme cases, taxpayers may also risk criminal charges.

Know Your Responsibilities

First, it is important to review your international bank accounts and other financial assets to understand exactly what you own that you are responsible for reporting. Second, make sure you understand the reporting requirements with respect to those assets. There are various dollar amount thresholds for filing the different forms, based on the type of foreign account you have as well as your filing status.

In addition, if you are a corporate officer with signature authority over a foreign bank account, you may also have an FBAR reporting requirement, even if you do not have direct control or ownership of the asset.

Section 965 Repatriation Tax

The IRS has now clarified that transition tax installment payments, tied to repatriation tax under Section 965, are covered under the IRS 90-day payment extension. As a result, third installment payments due April 15, 2020, for those electing to pay their Section 965 repatriation tax liability over an 8-year spread, are now due July 15, 2020.

How We Can Help

The International Tax team at Clark Schaefer Hackett can help businesses and individuals understand the filing requirements and prepare the necessary disclosure forms. Contact us to learn more or to discuss your specific case. We have dedicated professionals in place to help you stay compliant.

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a Clark Schaefer Hackett professional. Clark Schaefer Hackett will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.

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