Michael Lodge - listen to my PodCast
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This morning they issued the indictment on Paul Manafort, which included foreign lobbying, money laundering, and foreign bank account issues - in brief. I have been writing blogs on this for a very long time, ever since it started through an act of Congress - hid in a transportation bill several years ago. Part of Manaforts charges, which is a crime, is based on his past activity from several years. This law is very specific, and those of you who have foreign bank accounts - or signers on a bank account that has $10,000 or more at any given time during the year can be charged with a crime if you to not report it to the Treasury Department of the United States. As well as on your tax returns.
It is important to keep informed about the reporting requirements of the Treasury Department and the IRS for foreign bank accounts. If you have foreign bank accounts $10,000 plus or are a signer on an account in a foreign country – by law you have to report it. Just remember if not reported it could be a criminal offense. Here is a press release from the IRS regarding this issue.
By law, many U.S. taxpayers with foreign accounts exceeding certain thresholds must file Form 114, Report of Foreign Bank and Financial Accounts, known as the “FBAR.” It is filed electronically with the Treasury Department’s Financial Crimes Enforcement Network (FinCen).
“Robust growth in FBAR filings in recent years shows we are getting the word out regarding the importance of offshore tax compliance,” said IRS Commissioner John Koskinen. “Taxpayers here and abroad should take their foreign account reporting obligations very seriously.”
In general, the filing requirement applies to anyone who had an interest in, or signature or other authority over foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2015. Because of this threshold, the IRS encourages taxpayers with foreign assets, even relatively small ones, to check if this filing requirement applies to them.
The form is only available through the BSA E-Filing System website.
In 2015, FinCen received a record high 1,163,229 FBARs, up more than 8 percent from the prior year. FBAR filings have grown on average by 17 percent per year during the last five years, according to FinCen data.
The IRS is implementing the Foreign Account Tax Compliance Act (FATCA), which mandates third-party reporting of foreign accounts to foster offshore tax compliance. FATCA created a new filing requirement: IRS Form 8938, Statement of Specified Foreign Financial Assets, which is filed with individual tax returns. The filing thresholds are much higher for this form than for the FBAR.
The International Taxpayers page on IRS.gov provides the best starting place to get answers to important questions. The website has a directory that includes overseas tax preparers. International taxpayers will find the online IRS Tax Map and the International Tax Topic Index to be valuable resources.
Make sure, if you do have foreign bank accounts, that you are telling your tax practitioner about the account so that you are in compliance with federal laws. Remember, you could serve time in jail if they charge you with FBAR crimes. Contact your tax practitioner if you feel you need to report bank accounts in your name - or if you have signing authority on the foreign bank account. If you have any questions on this write me at: firstname.lastname@example.org