In 2014, the process to file a Foreign Bank Account Report (FBAR) will has changed. Several years ago, an electronic filing system was created by the Department of Treasury to accept FBAR filings, which was scheduled to become mandatory on June 30, 2012. However, an extension was granted until July 1, 2013 to allow both preparers and software developers enough time to prepare for the new requirement. The timing means that most individuals and businesses required to file an FBAR will be impacted in 2014.
The TD F 90-22.1 will no longer be used for current or prior year submissions. The new electronic form will be the FinCEN Form 114, and is only available online through this new e-filing system.
New E-Filing Process
Individuals and businesses are able to sign up directly on the website and submit their own filings. However, a filer may work with a third party provider and have them submit all FBAR filings if they prefer. If a third party provider is used, then the filer must grant permission by completing and submitting a FinCEN Form 114a to the Department of Treasury. Although most filers won’t be impacted until the June 30, 2014 deadline, it’s important to note that any FBARs currently being filed, including late filings from other years, are now required to be submitted through the new e-filing system. The mandatory e-filing date has been extended to June 30, 2015 for individuals who have signature authority over but no financial interest in a foreign account.
Remember that an FBAR is only required if the aggregate value of all foreign accounts exceeds $10,000 USD at any point during a calendar year. The fines for non-compliance start at $10,000 per violation and are greatly increased for willful violations up to $100,000 or 50% of the balance in the account…per violation.
The new reporting process is designed to make it less time-consuming to properly report foreign financial accounts to the Department of Treasury. For this reason, it’s important that you ensure your FBAR preparer is aware of this change and is properly registered. Don’t forget, you will need to submit a special form to grant access for your preparer to submit on your behalf. For additional information, please contact Kathy Schultz, CPA, at 302-225-0600, or click here to email Kathy.