FBAR update: Change is on the horizon
The Internal Revenue Service (IRS) has some pretty strict rules. Some of the more severe revolve around foreign accounts and reporting requirements, such as the FBAR.
The Report of Foreign Bank and Financial Accounts (FBAR) is a tax document that outlines details of foreign financial accounts. These accounts include both those that the filer has actual authority over, such as bank accounts or other assets, and those that the filer has potential authority over. In some cases, signature authority can include foreign accounts that a person is named as a durable power of attorney. Meaning the person would come into power over these accounts if the actual owner becomes incapacitated.
Those who fail to file this document with the IRS can face harsh penalties, including hefty fees and potential imprisonment.
Of course, the IRS does not make it easy. The current filing deadline for this document is June 30. Critics argued that having two different deadlines for income tax filing (which is April 15) and the FBAR made things confusing for potential filers.
To make matters worse, there are two additional differences between the filing deadline of the FBAR and income tax returns. The FBAR documents must be received by the IRS on June 30. Unlike the income tax return, a postage mark on or before the June 30 deadline will not suffice. Secondly, extensions are generally not available for the FBAR.
This is about to change. Beginning in 2017, the deadline for the FBAR will coincide with the due date for income tax returns. Not only will both be due on April 15, but both can qualify for an extension