As part of the new highway appropriations bill, the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, the deadline for filing Reports of Foreign Bank and Financial Accounts, or FBAR, has been changed to April 15.
The new deadline was moved up from June 30 to align with the filing date for individual tax returns, and carries stiff penalties for taxpayers.
Specifics of the new FBAR deadline
The provision of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 now requires taxpayers to file an FBAR return if the value of assets in foreign bank and financial accounts exceeds the $10,000 threshold for the previous tax year. This new rule was designed to prevent tax inversions in offshore banking and financial accounts, which includes any area outside the U.S., Puerto Rico, the Northern Mariana Islands and U.S. territories.
However, the penalties of the new rule are strict, as any violation deemed “willful” will result in a fine equal to $100,000, or 50 percent of the balance in the offshore account for each infraction. Taxpayers are subject to additional, and more severe, financial penalties for violations deemed fraudulent, or willfully falsified information. These penalties may also include a prison sentence of up to five years, but the prison term is increased to up to ten years for obstruction of justice.
All investigations into delinquent FBAR taxpayers will be conducted by the Financial Crimes Enforcement Network of the U.S. Treasury Department.
The new rule allows amnesty
One important perk of the new rule is that taxpayers have an automatic six-month filing extension with a statement of explanation for late returns. Aside for the extension though, taxpayers also have access to the Offshore Voluntary Disclosure Program. Since the IRS recently made acceptance into the OVDP more accessible, more taxpayers are encouraged to use it.
This OVDP is a special amnesty program that protects taxpayers from prosecution and absolves penalties for inaccurate information, willful or not. According to tax lawyer and Forbes contributor Robert Wood, upon acceptance into the program, the taxpayer is required to pay taxes with interest as well as a 20 percent penalty on the amount of taxes owed from a foreign account. The program is especially important now because the IRS has six years in the statute of limitations to track down delinquent taxpayers who failed to file their FBARs, or were late to file. However, it is important to note that the OVDP does not preclude the taxpayer from filing a tax return to report their assets in foreign accounts.
The new provision applies to businesses
Not only does the FBAR filing date change for individuals, but it is also applicable for partnerships, S Corporations and C Corporations. This is due to the Supreme Court ruling in Home Concrete v. United States, 132 S. Ct. 1836 (2012), which stated that any omission of income, net or gross, will trigger the six-year statute of limitations for the IRS to investigate the taxpayer’s account history.
What Business Owners Get Wrong Before Meeting a Litigation Attorney
What should you expect when meeting a litigation attorney about a business dispute? You should expect to describe the dispute in your own words, hand over the most important documents, flag any deadlines or immediate threats, and leave with a clearer picture of the problem, what information is still needed, and the likely next steps. […]
Arbitration vs. Litigation vs. Mediation: What New Jersey Businesses Should Know Before Signing a Contract
Arbitration resolves disputes privately before an arbitrator whose decision is usually final, while litigation resolves them in court with full rights of appeal. Whether a business ends up in arbitration or litigation is often decided when it signs the contract, long before any dispute arises. Key Takeaways When facing a contract dispute, carefully consider your […]
Can You Own Part of a New Jersey Business Without a Written Agreement?
Can you own part of a business in New Jersey without a written agreement? Yes, it is possible. Under New Jersey’s Uniform Partnership Act, a partnership can arise when two or more people carry on a business as co-owners for profit, whether or not they ever intended to form one. Ownership doesn’t necessarily depend on […]
Crisis-Proofing Your New Jersey Business: Building a Crisis Response Plan Before You Need One
For New Jersey businesses, crisis preparedness should be viewed as a legal and operational function, not simply an emergency-management exercise. A well-designed crisis response plan can help preserve evidence, protect confidential communications, meet reporting obligations, limit unnecessary exposure, and prevent an already difficult situation from becoming a larger legal problem. Key Takeaways A serious crisis […]
Monmouth County's Next Development Wave: What Developers and Investors Need to Know
Monmouth County is entering a significant new phase of development. For those looking to acquire property or undertake a new project, understanding the market opportunity is only the beginning. The more important question is whether a particular property can actually be developed as contemplated and what approvals, agreements, and other conditions will be required to […]
Are Your Conversations with AI Shielded from Discovery? Courts Are Split
Whether a client’s prompts to a generative AI tool and the documents it produces are protected from disclosure depends on the case type, who claims protection, and whether counsel was involved. In United States v. Heppner, a New York federal judge ruled that a criminal defendant’s communications with an AI platform were protected by neither […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
