On September 30, 2013 FinCEN (the Federal Agency in charge of gathering data regarding foreign financial accounts) announced the new FinCEN Form 114, the new FBAR (Foreign Bank Account Report) form that replaced TD F 90-22.1, the old FBAR form. The new form FinCEN 114 must be filed online electronically. The new form looks a lot like the old form, with the addition of a check box to report that the amount in the account is unknown, and with detailed preparer information added at the bottom of the form.
Who must file the new form?
The filing requirements for FinCEN 114 are basically the same as the filing requirements for the former Form 90-22.1. You must file if:
- You are a United States person (citizen, resident or entity) who had a financial interest in or signature authority over at least one financial account located outside of the United States; and
- The aggregate value of your foreign accounts exceeded $10,000 at any time during the year.
When must it be filed?
FinCEN 114 is a calendar year report, and must be received by the government on or before June 30 of the year following the calendar year being reported. Effective for the 2013 report (due June 30, 2014) the report must be filed electronically online (either self-filed using the FinCEN website, or using an authorized tax return preparer with the appropriate software. There is no provision in the law for an extension of time to file the Form FinCEN 114.
What are the penalties for failure to file?
A person required to file the form, who fails to do so, may be subject to a civil penalty not to exceed $10,000 per violation for inadvertent violations that are not due to reasonable cause. For intentional violations, the penalty grows to the greater of $100,000 or 50% of the balance in the account.
What other forms may need to be filed?
Taxpayers who need to file Form FinCEN 114 likely will need to file Form 8938 (Statement of Specified Foreign Financial Assets) with their Federal income tax returns. The requirement to file Form 8938 is in addition to the requirement to file FinCEN 114. Form 8938 must be filed by single or married taxpayers filing separately if the balance of specified foreign assets is either more than $50,000 on the last day of the year or $75,000 at any time during the year. Married taxpayers filing jointly must file if the asset balance is more than $100,000 on the last day of the year, or more than $150,000 at any time during the year. The definition of foreign financial asset for Form 8938 is more expansive than for FBAR reporting
What’s the bottom line?
Given the penalties, taxpayers need to contact their income tax preparer to inquire whether they are required to file either of these forms. Please contact your Clark Schaefer Hackett tax professional to see if you may have a filing requirement.