For many individuals and businesses in Texas, April 15 is the big day for federal tax matters. Not getting returns and payments in by mid April can result in penalties and interest, which is something everyone wants to avoid. Tax matters are a year-round concern, despite the importance placed on April 15. In fact, this year June 30 is also a tax day many businesses or individuals should consider if they have any foreign accounts.
For any Texas resident or business that holds funds outside of the United States, June 30 represents the rollout of the federal FATCA implementation. FATCA is a law that requires governments and foreign institutions to report funds and assets owned by US citizens. Information is relayed directly to the IRS or to home governments. Foreign governments then turn information over to the US Treasury, and the Treasury provides that information to the IRS. The process is layered, but eventually income and assets from foreign accounts could impact domestic taxes for individuals or businesses.
The end of June and beginning of July also represent the deadlines for voluntarily disclosing offshore account information. Under the old Offshore Voluntary Disclosure Program, payments could be deferred slightly without interest. The 2014 program requires a 27.5 percent penalty due at the time returns are filed.
Reporting forms are due in June from entities that have held over $10,000 in assets in a foreign account at any point during the previous year. Though the forms, which are known as FBARS, have been part of tax law since the 70s, the documents were not widely enforced by the IRS until 2009. According to experts, failing to file a FBAR when appropriate can bring severe criminal and civil penalties — in some cases, consequences are more severe than those associated with tax evasion.
Individual and business taxes are complicated enough, but when you integrate foreign accounts into the mix, the number of forms and rules increases. Understanding how all financial decisions impact tax requirements is essential to businesses and individuals who want to avoid entanglements with the IRS.
Source: Forbes, “Surprisingly Important IRS Deadline? June 30, Here’s Why” Robert W. Wood, Jun. 25, 2014