2013 Foreign Bank Account Report (FBAR) Must be Electronically Filed by June 30, 2014, Using New FinCEN Form 114 (Form TD F 90-22.1 is Obsolete)

U.S. persons having interests in or signature authority over a foreign financial account must file an annual report with the U.S. government if the maximum value of all foreign accounts exceeds US$10,000 on any day during the calendar year.  A foreign exchange rate is used for conversion purposes.  Conversion rates as of December 31^st should be used and they are published here.

New for 2013 is that the old paper-filed Form TD F 90-22.1 has been replaced by new FinCEN Form 114 which must be electronically filed.  FinCEN stands for Financial Crimes and Enforcement Network.  The foreign bank and financial accounts report, or FBAR, must be filed by June 30, 2014 through the BSA E-Filing System here.  BSA stands for Bank Secrecy Act.  You may file your FBAR by using the services of a third-party upon granting the proper permission.  An attorney, CPA, or enrolled agent may act as an account holder’s representative.

No extension of time is permitted.  Significant penalties exist for late or non-filing.  Such penalties can range from $500 to the greater of $100,000 or 50% of the account balance.  In addition, criminal penalties can range from a fine of up to $500,000 plus 10 years in jail in some situations.  Clearly the US government is serious about forcing FBAR compliance.  You should consult legal counsel if you have serious concerns about any delinquency.

Owners of entities that are required to file an FBAR must also file an FBAR at the owner level if they have more than a 50% direct or indirect ownership interest.  So-called “disregarded entities” for income tax purposes are not disregarded for this purpose and must file the report.  Records of accounts required to be reported on the FBAR should be kept for five years from the due date of the report.

Be sure to also check the appropriate boxes at the bottom of Schedule B, Form 1040, and to include any account earnings in your U.S. income tax return.

For more information, consult the IRS’ online FBAR Reference Guide here.

Tax-Exempt Organization Tax Return Filing Deadline Approaching

Tax-Exempt Organizations using a calendar year are required to file 990-series returns by May 15. However, not all organizations are required to file the same form.  The 990-series includes Forms 990, 990-EZ, 990-N and 990-PF, and are not technically income tax returns but are rather informational returns.  However, private foundations are subject to excise taxes on investment income and all exempt organizations are subject to tax on unrelated business taxable income.  In addition to financial information, organizations must describe their organization’s mission and charitable activities. These forms must be filed annually, and organizations that fail to file for three consecutive years will have their federal tax-exempt status automatically revoked.

Depending on the size and type of your organization different forms are required.  Small tax-exempt organizations with average annual receipts of $50,000 or less may file Form 990-N, also known as an e-postcard.  The 990-N filing is only available online, and asks for some basic information regarding your organization.  Organizations that file Form 990-N are not required to file Form 990 or 990-Z.  However, the 990-N is not allowed an extension, and as such must be filed by May 15 if your organization operates on a calendar year.

Form 990-EZ is a shorter and simpler version of Form 990 that can be used by smaller organizations that have average annual receipts of less than $200,000 and less than $500,000 of assets.  Form 990 is required for all exempt organizations with average annual receipts of $200,000 or more and assets of $500,000 or more.  Private Foundations must file Form 990-PF regardless of the amount of receipts or assets.

The due date for filing Forms 990-EZ, Form 990 and Form 990-PF may be automatically extended 3 months by filing Form 8868.  However, a filing extension does not extend the payment due date if any taxes are owing.  If an additional filing extension is required, page two of Form 8868 may be submitted, but reasonable cause must be given as the second extension request is not automatic.