FATCA & FBAR Compliance
The enactment of the Foreign Account Tax Compliance Act of 2010 (FATCA) has introduced many additional reporting requirements to both Foreign Financial Institutions (FFIs) and US citizens and residents with financial assets held with FFIs outside of the USA. Moreover, the FATCA reporting requirements supplement the existing Foreign Bank Account Report (FBAR) that was long established under the provisions of the Bank Secrecy Act of 1970.
FATCA at a Glance
The Foreign Account Tax Compliance Act scrutinizes offshore compliance, aiming to fight tax avoidance and evasion. Effective 2014, FFIs are required to report the aggregate value of financial assets held by US persons or face 30% withholding on certain payments. FFIs are also required to register with the Internal Revenue Service and obtain a Global Intermediary Identification Number (GIIN). To further enforce compliance with FATCA, the federal government reached an agreement and signed comprehensive Intergovernmental Agreements (IGAs) with more than a 100 countries.
According to the FATCA provisions, US citizens, residents, and certain non-residents are required to file Form 8938 "Statement of Special Foreign Financial Assets" if the aggregate value of foreign financial assets exceeds a statutory threshold. Form 8938 is attached to the federal tax return of the taxpayer and supplements the FBAR.
Taxtake's Certified Public Accountants and IRS Enrolled Agents assist Foreign Financial Institutions and US taxpayers aiming to ensure compliance with the FATCA regulations. Our areas of focus include:
- Assistance with and implementation of the FATCA regulations
- Assistance with Qualified Intermediary, Withholding Foreign Partnership and Withholding Foreign Trust agreements
- Preparation and submission of reports, including Form 8809, 8957, and 8966
- Preparation of Form 8938 and all required income tax returns
The FinCEN Form 114 (Former TD F 90-22.1) or FBAR must be filed should you have had a financial interest in, or signature, or other authority over one or more bank, securities, or other financial account held with a financial institution located outside the United States. The reporting requirement is triggered once the aggregate amount of all foreign accounts exceeds $10,000 or the equivalent in a foreign currency, at any time during the year.
The FBAR is not required if the assets are held in a US military banking facility operated by a US financial institution, or if the aggregate value of all foreign accounts is less than $10,000 during the entire year. Effective July 1st, 2013 the FBAR form is filed solely by electronic means. Further, the FBAR due date has also changed.
As of January 1st, 2017, the FBAR must be filed on, or before the income tax return's due date. Thus, individual taxpayers must file the FBAR by April 15th. Expats and Americans residing abroad are allowed an automatic 2-month extension of time to file the income tax return and the FBAR form. Alternatively, a 6-months extension is also available if filed by the regular unextended due date.
A failure to timely file the FBAR results in a severe penalty. However, the penalty will not be asserted if the IRS determines that the failure to file was not willful and you have a reasonable cause for filing it late.
At taxtake, we assist the individual, and business taxpayers comply with the Foreign Bank Account Reporting regulations. Our streamlined FBAR compliance services focus on:
- Preparation and submission of FBAR forms for individuals and entities
- Assistance to delinquent filers, including submissions under the Offshore Voluntary Disclosure Programs (OVDP), prior-year FBARs and amendments
- Advisory on particular FBAR filing requirements falling outside the general FBAR guidance
Should you wish to register for our FATCA & FBAR services, you may do so at any time. Did not find what you were looking for? Ask your questions and get a free quote with more information about how we can assist you further. You may also contact us directly.