The Financial Crimes Enforcement Network (FinCEN) has issued its Final Notice requiring the electronic filing of most Bank Secrecy Act (BSA) reports by July 1, 2012. The mandated reports filed by financial institutions include:
- Suspicious Activity Reports (SARs) filed by financial institutions
- Currency Transaction Reports (CRTs)
- Registration of Money Services Business
- Designation of Exempt Pension Reports
A financial Institution that files mandated reports in paper format will be deemed noncompliant by FinCEN and subject to potential financial penalties. After March 31, 2013 FinCEN may reject any paper filed mandated report and return it to the filing institution.
In tandem with the above rules applicable to financial institutions, IRS, which has been delegated administration over foreign financial account reporting on TD F 90.22-1 (commonly called the FBAR), released Publication 4261 which, concerning compliance with the FB AR reporting requirement, states the following:
How to comply with the law (BSA) …
- Answer the FBAR-related question on federal tax information returns. For example: Check the box on Form 1040, Schedule B, Part III
- Complete the electronic version of Form TD F 90.22-1
- E-file the completed form using the FinCEN electronic filing system available at www.fincen.gov
- The FB AR must be e-filed by June 30 of the year following the calendar year being reported.
Thus, the FBAR for 2013 must be e-filed by June 30, 2014.
Some things to keep in mind:
- The FBAR, although administered by IRS, is not a tax form created by the IRS pursuant to the Internal Revenue Code. It is a Bank Secrecy Act Form.
- Whether one is obligated to file a FBAR can require complex legal analysis of domestic and foreign law and may involve skills and training more in the domain of an attorney than accountant.
- Substantial civil and criminal penalties can be imposed for not timely filing a FBAR. Thus, those with delinquent FBAR obligations should consult with an attorney, under protection of the attorney-client privilege, and not discuss how to proceed with their accountant who has no privilege.
- It is not clear at this point whether delinquent FBARs can be e-filed; in any event, FBARs and federal income tax returns filed through the Offshore Voluntary Disclosure Program presently must be filed in paper format. The FBARs are filed using the current version of TD F 90.22-1.
© 2013 by Robert S. Steinberg, Esquire
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