In a recently released IRS and Financial Crimes Enforcement Network (FinCEN) notice, reference Notice 2011-1, the IRS has extended the reporting deadline for the Foreign Bank and Financial Accounts (FBAR) for a group of qualifying individuals from June 30, 2011 to June 30, 2012.
These individuals include account signatories and other individuals with authority but no financial interests to a foreign account.
The individuals must be employees of a covered entity that owned 50% and above of the stakes in the foreign account in question.
According to the IRS, the extension was in line with the new adjustments made to the FBAR rules to increase the amount of disclosures for foreign accounts.
The amendments to the Bank Secrecy Act (in regards to the FBAR rules) were made on Feb.
24, 2011, and these rules are contained in a "Final Rule" publication on the IRS website.
The FBAR is a disclosure form that is filed by all individuals who own or have a controlling authority, such as a signatory mandate, to a foreign account.
The form is filed once a year by the 30th of June (for the preceding tax year).
The FBAR form is used by the IRS to track foreign income taxation.
Foreign accounts for the purpose of the FBAR include bank accounts, brokerage accounts, mutual funds, trust accounts, inheritance accounts, annuity accounts, and all other financial accounts.
The accounts must be held outside the boundaries of the U.
S.
In other words, accounts held by foreign institutions that are physically located in the U.
S.
do not qualify and filing is not required, while accounts held by U.
S.
institutions located outside the U.
S.
are required to file the FBAR.
For a foreign account to qualify for the FBAR disclosure, it must have had a balance of $10,000.
00 at any point during any given tax year.
The IRS has increased its audits on foreign incomes in the recent past in a bid to narrow the tax gap in light of the current government deficit.
It is said that the largest portion of the tax gap is in foreign incomes, as the IRS is limited in its ability to uncover these accounts and collect foreign income taxes on them.
In an effort to increase tax collection from foreign incomes, the IRS has increased awareness for the need to file the FBAR form and has also made amendments to the disclosure procedure to increase disclosure levels.
The IRS also introduced the Offshore Voluntary Disclosure Initiative (OVDI) both in 2008 and 2010 as amnesty programs for individuals who had not filed the FBAR form in the past yet make the decision to be tax compliant.
These individuals include account signatories and other individuals with authority but no financial interests to a foreign account.
The individuals must be employees of a covered entity that owned 50% and above of the stakes in the foreign account in question.
According to the IRS, the extension was in line with the new adjustments made to the FBAR rules to increase the amount of disclosures for foreign accounts.
The amendments to the Bank Secrecy Act (in regards to the FBAR rules) were made on Feb.
24, 2011, and these rules are contained in a "Final Rule" publication on the IRS website.
The FBAR is a disclosure form that is filed by all individuals who own or have a controlling authority, such as a signatory mandate, to a foreign account.
The form is filed once a year by the 30th of June (for the preceding tax year).
The FBAR form is used by the IRS to track foreign income taxation.
Foreign accounts for the purpose of the FBAR include bank accounts, brokerage accounts, mutual funds, trust accounts, inheritance accounts, annuity accounts, and all other financial accounts.
The accounts must be held outside the boundaries of the U.
S.
In other words, accounts held by foreign institutions that are physically located in the U.
S.
do not qualify and filing is not required, while accounts held by U.
S.
institutions located outside the U.
S.
are required to file the FBAR.
For a foreign account to qualify for the FBAR disclosure, it must have had a balance of $10,000.
00 at any point during any given tax year.
The IRS has increased its audits on foreign incomes in the recent past in a bid to narrow the tax gap in light of the current government deficit.
It is said that the largest portion of the tax gap is in foreign incomes, as the IRS is limited in its ability to uncover these accounts and collect foreign income taxes on them.
In an effort to increase tax collection from foreign incomes, the IRS has increased awareness for the need to file the FBAR form and has also made amendments to the disclosure procedure to increase disclosure levels.
The IRS also introduced the Offshore Voluntary Disclosure Initiative (OVDI) both in 2008 and 2010 as amnesty programs for individuals who had not filed the FBAR form in the past yet make the decision to be tax compliant.