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FBAR N


Additional reporting your non US financial assets by Sam Ashley


ow that you are through the April tax return filing


season and you have either filed your income tax returns or have extended the returns (remember if you are a US citizen who is resident overseas on April 15 you get an automatic extension though to June 15) you still need to remem- ber to file your reports of foreign bank accounts more commonly known as an FBAR by the end of June. Note that the extension to June 15 is purely an extension of time to file and not an extension of time to pay.


The FBAR is required if the aggre-


gate balance of your non US financial accounts (bank, securities, securities derivatives or other financial instru- ments accounts) exceeds $10,000 at any point in the year. The aggregate balance is cal-


culated by taking the maximum balance from each of your non US bank accounts and converting that amount to US dollars at the Decem- ber 31, 2015 exchange rate as pub- lished by the US Treasury. It is worth noting that this not


only requires reporting of you non US bank accounts but also a num- ber of other accounts including


16 The American


accounts over which you have sig- nature authority,


foreign stock or


securities accounts, UK ISA accounts, your SIPP, foreign mutual funds, non US life insurance or annuity contract with a cash-value. The penalties for failure to report accounts can be up to 50% of the value of the account in each year it is not reported. The FBAR can only be filed


online, paper copies are no longer accepted, using form FinCEN 114. The form can be completed and sub- mitted to the United States Treasury via their website, www.bsaefiling. fincen.treas.gov. As we have mentioned the Fin- CEN 114 is due to be filed by June 30, 2016. Unlike the income tax return there is no way of extending the due date for the 2015 reports. This will change next year when the filing process will come into line with your US income tax returns and be due by April 15 or the extended due date of your returns. There are significant


penalties


for failing to submit your FBAR. The penalties do vary depending on whether the US Treasury believes you have been willful or non willful in your failure to file the forms. A willful failure to file could result in a penalty that would be the


greater of $100,000 or 50% of the amount in the account at the time of the violation.


A non willful failure to file could


result in a penalty of $10,000 for each violation. It is important to note that the penalties are charged both per account and per year. Therefore a taxpayer with several accounts could very quickly be subject to very large penalties As many taxpayers know the


FBAR is broadly similar to the 8938 filing requirements that is included with you income tax return. It is how- ever important to note that the filing of either the FBAR or 8938 does not replace or in any way changes your filing requirement to file the other form. However the filing thresholds for each are somewhat different.


Reportable assets Unlike the FBAR, the form 8938


(Statement of Specified Foreign Financial Assets) is submitted to the IRS along with your 2015 income tax return. This is required if your for- eign assets exceed the threshold set out in the table on page 17. Please note the thresholds for US residents differ considerably to those for US taxpayer resident overseas.


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