The FBAR and the IRS
The IRS is reminding taxpayers that federal law requires U.S. citizens and resident aliens with a foreign bank account to report any worldwide income, including income from foreign trusts and foreign bank and securities accounts. In an IRS Newswire released today, the Service advised that most affected taxpayers need to complete and attach Schedule B to their tax return. Part III of Schedule B asks about the existence of a foreign bank accounts such as bank and securities accounts, and usually requires U.S. citizens to report the country in which each foreign bank account is located. The Foreign Bank Account Report, or FBAR, is used to make that disclosure.
Taxpayers with an interest in, or signature or other authority over, a foreign bank account whose aggregate value exceeded $10,000 at any time during 2014 must file with the Treasury Department a Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR). It is due to the Treasury Department by June 30, 2015, must be filed electronically and is only available online through the BSA E-Filing System website.
In addition, certain taxpayers may also have to complete and attach to their return Form 8938, Statement of Foreign Financial Assets. Generally, U.S. citizens, resident aliens and certain nonresident aliens must report specified foreign financial assets on this form if the aggregate value of those assets exceeds certain thresholds.
If you have a foreign trust, foreign bank account or securities account and haven’t filed appropriate FBAR disclosures with the IRS in past years, you may be eligible for the Offshore Voluntary Disclosure Program. OVDP, as it’s commonly called, is an IRS program in which taxpayers can avoid criminal sanctions by following a specific set of disclosure rules, amending prior year tax returns and paying applicable taxes, interest and penalties.
If you own a foreign trust, foreign bank account or securities account and haven’t filed appropriate FBAR disclosures and want to learn more about OVDP, contact an experienced New York City tax attorney at Mackay, Caswell & Callahan, P.C. today. With over 30 years’ of tax experience and offices throughout New York State, we can offer experienced tax help.