The IRS Has Extended Your Filing Deadline for Overseas Accounts — But You Must Act Now
The good news is that the IRS has granted U.S. citizens and residents an automatic extension to file Reports of Foreign Bank and Financial Accounts (FBARs).
But just because the IRS has already granted you an FBAR extension if you haven’t already filed one, you are still on the hook. You now only have a few days to meet the deadline, and by not complying, the IRS has become less tolerant for late filers (more on that below).
The IRS instituted the automatic extension after moving the original filing deadline ahead this year by three months to April 15. It did this largely to bring the filing deadline in sync with that of the annual tax filings season for U.S. federal income taxes.
Specific to an extension for FBARs, the IRS says it has sought to implement the filing statute with a “minimal burden to the public” and has granted “filers failing to meet the FBAR annual due date of April 15 an automatic extension to October 15 each year. Accordingly, specific requests for this extension are not required.”
The IRS says all “U.S. persons” with individual or combined financial holdings outside of the U.S. and its territories totalling $10,000 or more at any time during the year must file an FBAR.
A “U.S. person” includes:
-U.S. citizens and residents.
-corporations, partnerships, or limited liability companies, founded or operated in the U.S.;
-trusts or estates formed under the laws of the United States.
In other words, the October 15 filing day for FBARs has become the real deadline. But what also matters is the IRS has signaled it will be less lenient for late filers than it was in the past. Before, you could file an FBAR late after the original June 15 deadline with little to no risk of penalties if you could come up with a reasonable explanation for filing late. A “reasonable” excuse, according to the IRS, was that “information from foreign financial institution was not available by the due date.”
But the IRS’ previously leniency for filing FBARs has been replaced with a new due date with stricter implications. The October 15 deadline is indeed an extension of the official April 15 due date, but the IRS will likely be unforgiving if you file after October 15. A mere “non-willful” late filing could trigger a penalty of $10,000, for example.
The time to file is thus now if you haven’t done so already.
Questions? Contact our team of tax professionals for a Free Consultation.