For taxpayers who have foreign financial accounts the deadline for filing the Report of Foreign Bank and Financial Accounts (FBAR) will soon be changing. At the end of July, President Obama signed into law the Surface Transportation and Veteran’s Health Care Choice Improvement Act of 2015. While it sounds like this law is more about healthcare than tax filing deadlines, there are a number of tax changes driven by the new law. In years past, qualifying corporate or individual taxpayers had until June 30th of the following year to submit their FBAR filings. The filing reports to the IRS any foreign financial account that had a balance of $10,000 or greater at any time during the year. The new law has ushered in several changes to the filing process including an earlier deadline, new extension option and limited penalty relief. To help clients, prospects and others understand how they will be impacted; JLK Rosenberger has provided a summary of the key changes below.
FBAR Filing Changes
The new law has brought about several changes in the FBAR filing process, these include:
- New Filing Deadline – The FBAR filing deadline has been changed beginning with the 2016 filings from June 30th to April 15th for US residents and to June 15th for non-US residents. The change was made in part to bring consistency to taxpayer filing deadlines and match the FBAR due date to those commonly known for federal and state income tax returns. This means that the 2015 tax year is the last year in which FBARs will be allowed to be filed on June 30th.
- Extension – The new law also provides both US and non-US resident taxpayers the opportunity to obtain a six month extension to October 15th. This is a welcome change from the existing rules where taxpayers are not eligible to receive an extension. Although the same rules that apply to federal income tax extensions apply, the change does provide taxpayers with some relief in the filing process.
- First Time Filer Penalty Relief – There is also some welcome penalty relief that will go into effect with the new law. Any taxpayer that commits a failure to timely request for, or file, an extension, will have their penalty waived assuming they complete and submit the FBAR filing no later than the October 15th extension deadline. This relief is especially helpful for taxpayers new to the FBAR filing or who have not been required to file for a number of years due to their financial situation.
These changes are scheduled to go into effect for the 2016 tax year. This means for 2015 there will be no impact on the June 30th deadline. However, for the 2016 tax year, companies and individuals alike need to be preparing early to ensure their FBAR filings are ready by the new deadline.
The changes to the FBAR filing process are designed to not only bring parody with traditional filing deadlines, but also provide some relief to taxpayers new to filing the FBAR. If you would like additional information on the changes or to discuss your filing responsibility, JLK Rosenberger wants to help! For additional information please contact us at 818-334-8623, or click here to email us. We look forward to hearing from you soon.