The U.S. government continues to pursue aggressively individuals and businesses for the failure to report foreign accounts and other non-U.S. assets. In particular, and with limited exceptions, all U.S. individuals and entities that own, control and/or have signature authority over foreign bank accounts must disclose annually to the U.S. Department of Treasury the existence of such accounts on Foreign Bank Account Reports (“FBARs”). Under prior law, for foreign bank accounts held during a particular calendar year, the related FBAR submission was due on or before June 30 of the subsequent calendar year.
Recent federal legislation has amended permanently the FBAR filing deadline, so that FBAR submissions coincide generally with the filing deadline for federal individual income tax returns. Specifically, for foreign bank accounts held during the 2016 calendar year, the U.S. person must file an FBAR electronically with the Department of Treasury no later than April 18, 2017 (which coincides with the filing deadline for 2016 federal individual income tax returns), subject to an automatic six (6) month extension to October 16, 2017.
At this time, the U.S. person need not complete any forms (nor take any other action) to claim the automatic six (6) month FBAR extension – correspondingly, the Department of Treasury will not impose penalties, provided that the 2016 FBAR is submitted on or before October 16, 2017. The FBAR extension procedure may be changed at any time by the Department of Treasury.
FBAR examinations by the federal government have resulted in criminal prosecutions and ruinous civil penalties. It is therefore imperative that all U.S. taxpayers and their advisors understand the reporting obligations imposed by the federal government, the penalties for non-compliance, and the alternative methods to correct past compliance errors.