The Extended Deadline for 2022 FATCA and FBAR Compliance is Approaching—Do You Need to File By October 15?Offshore Account Update
Posted in on August 31, 2022
U.S. taxpayers who own qualifying offshore bank accounts and other foreign financial assets need to report these assets to the IRS annually. Technically, the deadline to report these “specified foreign financial assets” is April 15. However, all taxpayers receive an automatic extension to October 15.
With October 15, 2022, just around the corner, taxpayers who think they may need to file should make a decision promptly. As discussed below, failure to maintain FATCA and FBAR compliance can lead to steep penalties, and correcting a filing deficiency is far more risky, complicated and time-consuming than filing an FBAR and/or IRS Form 8938 by the extended deadline.
Do I Need to File IRS Form 8938 or an FBAR (or Both) By October 15?
Determining whether you need to file IRS Form 8938 (to comply with FATCA) or an FBAR isn’t necessarily a straightforward process. The FBAR filing requirement applies to offshore accounts, while the IRS Form 8938 filing requirement applies to “specified foreign financial assets”—as that term is defined by FATCA. Additionally, there are thresholds for both filing requirements, and taxpayers can meet these thresholds if either: (i) the value of their foreign financial assets exceeds a certain amount at any point during the tax year; or (ii) the value of their foreign financial assets exceeds a different (lower) amount at the end of the tax year.
While the IRS provides a list of “specified foreign financial assets,” it also notes that its examples “do not comprise an exclusive list of assets required to be reported.” Likewise, while the IRS makes the FATCA and FBAR thresholds publicly available to promote compliance, the IRS ultimately leaves it to taxpayers to determine their own filing obligations.
Is There a Penalty for Filing IRS Form 8938 or an FBAR on October 15 Instead of April 15?
No, with the automatic extension that applies to both IRS Form 8938 and the FBAR, there is no penalty for filing on October 15. Filing by October 15 fully satisfies taxpayers’ reporting obligations.
What Happens if I Miss the October 15 Deadline for FATCA and FBAR Compliance?
If you miss the October 15 deadline, however, you can face steep penalties. Penalties vary based on various factors, including the reason for your delinquency. While most FATCA and FBAR enforcement proceedings are civil in nature, taxpayers can face criminal prosecution in some cases.
What if I Didn’t File IRS Form 8938 or an FBAR in 2021?
If you failed to file IRS Form 8938 or an FBAR in 2021, you cannot correct your failure by submitting a standard filing on or before October 15, 2022. Instead, you will need to consult with an international tax attorney to assess your options for submitting a streamlined filing or voluntary disclosure.
Request a Consultation with International Tax Attorney Kevin E. Thorn
If you need more information about FATCA or FBAR compliance, we invite you to schedule a consultation at Thorn Law Group. To request an appointment with international tax attorney and Managing Partner Kevin E. Thorn, please call 703-752-3752, email firstname.lastname@example.org or contact us confidentially online today.Share This Post