New FinCEN Form 114 replaces Report of Foreign Bank and Financial Account (FBAR), Form TD F 90-22.1.
For 2014, there are new FinCEN regulations that revise the rules applicable to taxpayers who must file FBAR and Form TD F 90-22.1 filings. This is important for taxpayers who submit Reports of Foreign Bank and Financial Accounts (FBARs) jointly with spouses, or wish to submit them via tax preparers. It is absolutely essential to file the FBAR, now FinCen 114, by June 30 or be at risk for steep penalties. With the introduction of FATCA, the IRS has more tools at its disposal to find out who is not properly filing their FBAR forms.
FinCEN Form 114
FinCEN released FinCEN Form 114(a), called, Record of Authorization to Electronically File FBARs. This form replaces the archaic form known at TD F 90-22.1.
The regulations state that a copy of this form would be maintained by the filer and the account owner. but not submitted to FinCEN. The form would be made available upon request by FinCEN or the Internal Revenue Service (IRS). FinCEN is also introducing new space on the form for filers that allows them to provide reasons for late filing and an easy place for information related to third-party preparers.
Important Dates for FBAR filing: Effective July 1, 2013, the FBAR must be filed electronically through an e-file system and must be received by on or before June 30th of the year immediately following the calendar year being reported.
Most importantly, this filing date will not be extended. It is absolutely essential to report foreign bank accounts by this date or be at risk of severe penalties. All references to FBAR Form TD F 90-22.1 will be replaced with a reference to FinCEN Form 114 on Schedule B, Line 7b of Form 1040 for tax year 2013.
When is FBAR (FinCen 114) Required?
An FBAR is required by a taxpayer if the aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year for which the tax return is being filed. If you have more than $50,000 in a financial account, a taxpayer will also need to file the FATCA form 8938 during tax year 2013 to further remain in compliance with new international tax laws in addition to the FBAR form.
Penalties for failing to file an FBAR are some of the most severe the IRS has to offer. In addition to potential monetary penalties, there is a great potential for criminal penalties as well. WIth FATCA coming into full effect in the next few years, the IRS will have more tools to see if Americans are holding money in offshore accounts and enforcement efforts will be increased. Taxpayers are advised if they filed FBAR Form TD F 90-22.1 to learn about the new FinCEN Form 114 right away to make sure they are properly disclosing offshore accounts to the IRS for tax purposes.