A New Year's resolution can be a way to finally focus on and tackle a problem that has been nagging at you. If you are a U.S. citizen or resident with financial interests in offshore bank accounts or other overseas assets, make 2017 the year you talk to an attorney to get a handle on your U.S. government reporting obligations related to those assets.
The main form that must be filed annually to report most offshore-account situations is the FBAR - the Report of Foreign Bank and Financial Accounts, also known as FinCEN form 114, usually filed electronically. FinCEN is the Financial Crimes Enforcement Network, part of the U.S. Treasury Department.
Foreign accounts must also be reported on regular federal tax returns, possibly on Schedule B or Form 8938, depending on the circumstances.
The new yearly filing deadline
Historically, the deadline for filing form 114 was June 30. Buried in a long 2015 transportation and veterans' health bill was a big tax law change taking effect in 2017, in which the FBAR filing deadline will for the first time coincide with the date regular federal income tax reporting is due for the previous year.
For 2017, that date is April 18, but in most years, as everyone knows, tax day is April 15. The new due date will make foreign account reporting easier to remember.
FinCEN announced last month that it will grant those who miss the new April 15 due date for filing form 114 an automatic extension to October 15, even without a specific request for the extension on an individual basis.
Seek legal counsel to help prevent negative consequences
Generally, reporting is required when the aggregate value of foreign accounts exceeds $10,000 at any one point in time. The applicable law is extremely detailed and complex that governs these reporting requirements, so engaging legal counsel for guidance is important.
Failure to properly report overseas accounts to the government could bring potentially steep civil or criminal penalties. With the guidance and advice of a lawyer, you can make an informed decision about how to comply with federal reporting requirements to the IRS and other federal agencies.
There may even be safe-harbor programs or procedures in place you can use to soften any negative impact of having missed reporting deadlines in the past, such as the Offshore Voluntary Disclosure Program or the streamlined compliance program. It is wise to discuss your unique situation vis-à-vis foreign accounts with an attorney before taking action on your own to understand the pros and cons of various paths to compliance.