Friday, June 15, 2012

Tomorrow ( June 16 ) is the Blues Festival in Saint Georges! It's for a great charity, CSO, inc, which is preparing to support the region in disaster relief and recovery efforts! It is being put on for us by Blue Horizon Promotions

It is from noon till 8pm at the old Commodore McDonough School... which is the location that CSO is recycling to be the multi-purpose disaster relief resource.

It will be a family atmosphere event, so bring 'em!

We will also be putting on a Bluegrass festival on July 14.

Wednesday, April 04, 2012

How FBAR Affects Business with Foreign Bank Ties

In 1970 the U.S. government passed the Bank Secrecy Act, aimed at discovering financial accounts and transactions that U.S. taxpayers held in foreign banks. Specifically, to ensure proper taxes were being paid on any income. The original goal of the Foreign Bank Accounting Reporting (FBAR) was to aid the Department of the Treasury in combating money laundering involving international criminal networks. It wasn’t until 2008, however, that the government defined more specifically who was subject to FBAR requirements.

FBAR enforcement authority lies with the Financial Crimes Enforcement Network, which authorized the Internal Revenue Service to enforce FBAR on its behalf. Therefore, it’s important to note that while you file FBAR with the Department of Treasury and it is enforced by the IRS, your filing of FBAR alone will not result in taxes owed. Although failing to include your foreign bank account on your tax return will result in penalties as the form data is shared. Your filing will also be shared among government agencies.

If you have more than $10,000 in foreign bank accounts you are required to file an FBAR form, Form TD F 90-22.1. You must file this form every June 30 or you will be subject to fines and potential jail time. So if you’re a business owner and have never filed a FBAR form and have more than $10,000 in foreign bank accounts, you best consider filing this year.

In 2011, the IRS offered an Offshore Voluntary Disclosure Initiative (OVDI) program which basically granted amnesty to anyone who had never filed or needed to file an amended FBAR form. It is not clear if they will offer the program again in the future. However, it is clear that failing to file the FBAR form will result in fines and even jail time. Your business’ CPA can tell you if you need to file an FBAR form. There are a few things to keep in mind however:

• U.S. taxpayers that have more than $10,000 in a foreign bank account at any one time throughout the year must file an FBAR form.

• You must file annually and the FBAR form must be received by the Department of Treasury no later than June 30. Not mailed by June 30, received by June 30.

• Electronic filing is not available and you cannot request an extension.

• FBAR applies to businesses as well, but not to individual officers with signature authority over a business account (they would still need to file if their personal account met the requirements).

Typically, the IRS will not prosecute someone who voluntarily comes forward and admits they failed to file, even if it’s outside the voluntary disclosure period. So if you missed the June 30 deadline and/or the OVDI program deadline, you should still file your FBAR form before the IRS figures out you should have. Your CPA can provide you with guidance specific to your situation and provide a detailed picture as to what fines you may face.

If you are required to file the FBAR form and you fail to do so voluntarily, you will be subject to fines and even jail time. The fines start at $100,000 or half the value of the account, whichever is more, per year. That’s a pretty steep penalty for not filing. And while there has been a concerted effort by many to reduce the penalties or burden of filing FBAR, you’re still better off voluntarily filing than waiting for the IRS to catch you.

The form itself is fairly straight-forward. Part I is all about the filer: your EIN, address, business name and so forth. Part II collects all the data on the foreign bank accounts that are owned solely. This includes the maximum value of the account, its type (i.e. bank, securities or other) and where the funds are held. Part III of the FBAR form is similar to Part II, but is for foreign bank accounts that are jointly owned. The same information is required in Part III as in Part II, but you must also provide the name and, if known, identification number of the person or entity with which the account is jointly held. Part IV is if you have foreign accounts in which you have signature authority over, but no financial interest. Part V is for those eligible to file a consolidated FBAR. Your CPA can assist in determining which parts of the FBAR form you need to fill out.

If you haven’t filed an FBAR form and are required to do so, contact your CPA immediately and schedule a meeting with them. It is important that you file the FBAR form voluntarily, or else you will be subject to hefty fines and even jail time. Save yourself a future headache, by filing now. For more information on Filing FBAR forms, visit the Internal Revenue Service or call toll free 1-800-829-4933 for businesses or 1-800-829-1040 for individuals.

By Grant Webb with Bisk Education. For more than 40 years Bisk has been training accountants and financial professionals to pass the Uniform CPA Exam so that business owners whose accounts require FBAR form processing have a dedicated and licensed professional to facilitate these processes.