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AICPA Advises FinCEN On US FBAR Rule Changes

by Scott Hamilton,, Washington

19 October 2016

The American Institute of Certified Public Accountants (AICPA) has submitted comments to the US Treasury Department, the Internal Revenue Service (IRS), and the Financial Crimes Enforcement Network (FinCEN) regarding proposed changes to the filing requirements for Reports of Foreign Bank and Financial Accounts (FBAR).

US persons are required to file FBARs by June 30 of each year to Treasury if they have a financial interest in or signature authority over certain financial accounts, including bank and securities accounts, in a foreign country, if the aggregate value of these financial accounts exceeds USD10,000 at any time during a calendar year.

FinCEN's Notice of Proposed Rulemaking (NPRM), issued on March 1 this year, would revise its FBAR regulations, mainly by requiring all US persons obligated to file an FBAR to report detailed account information on all foreign financial accounts for which they are required to file. Previously, for financial professionals, there was a limit to the information if a filer had 25 or more foreign financial accounts to be reported.

However, the proposed FBAR regulations would also be amended by eliminating the requirement for officers and employees of financial institutions to report on institutional accounts for which they have signature authority, but no financial interest, due solely to their employment, so long as their employer has an FBAR filing obligation.

The NPRM would also conform the FBAR due date filing deadlines to those set under the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 – beginning in 2017, an FBAR is required by April 15, with an extension provided to October 15 (the same deadlines as an individual's federal income tax return).

In reply, the AICPA's recommendations include that any taxpayer who submits a timely extension request for their calendar year federal income tax return should automatically receive a corresponding extension to October 15 to file their FBAR; and that FinCEN should make available on its website a simple-to-complete electronic extension request for use by taxpayers who do not request a filing extension of their federal income tax return.

In addition, it suggests that the final regulations include a provision to grant an automatic extension until June 15 to FBAR filers located overseas, or who maintain their books and records overseas.

FinCEN, the AICPA recommends, should also modify the rules to permit taxpayers with signature authority but no financial interest in accounts, whose filing requirements have been deferred since 2011, to not be required to file the deferred FBARs, provided they would have qualified for the expanded filing exemption proposed by FinCEN; and to allow filers with 25 or more accounts to provide the information as an attachment to their FBAR return.

TAGS: individuals | compliance | tax | investment | tax compliance | banking | Internal Revenue Service (IRS) | ministry of finance | tax authority | professionals | United States | regulation | individual income tax

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