September 20, 2021
The FinCen Form 114 (aka, FBAR) has been around for decades. On it’s surface, this important annual disclosure appears harmless enough since it generally requires U.S. citizens and resident aliens to annually report their foreign financial accounts when certain conditions are met.
But don’t be fooled.
The FinCEN Form 114 is managed by the Financial Crimes Enforcement Network; a bureau of the United States Department of the Treasury. FinCEN’s charter is to collect and analyze financial transaction information in order to combat financial crimes such as money laundering and terrorist financing. The Form 114 is one of the tools this bureau utilizes to gather information required to perform its duties.
Even though the Internal Revenue Service assist FinCEN with the collection of penalties associated with non-compliance, the FBAR Form itself is not tax assessing.
In a recent court case (U.S. vs. J. Boyd, 03.24.2021), a taxpayer had fourteen financial accounts in the United Kingdom from which she received interest and dividends. She failed to report this income on her personal income tax returns and failed to disclose her foreign financial accounts. In order to correct her mistakes, she participated in the IRS’s Offshore Voluntary Disclosure Program and submitted an FBAR listing her multiple foreign accounts. Amended income tax returns were also submitted to include the missing interest and dividend income.
Upon examination of FBARs submitted by the taxpayer, the IRS concluded that she had committed thirteen non-willful violations of the FinCEN 114/FBAR reporting requirements – one for each account not disclosed in a timely manner (i.e., it did not assess a penalty on one of her accounts). The taxpayer disagreed stating only a single violation had occurred because the penalty related to the timely filing of the FinCen Form 114/FBAR itself, not each account separately. The government then sued the taxpayer for non-willful civil penalties totaling US$47,279 plus related late-payment penalties and interest. The district court agreed with the government. The taxpayer appealed the decision.
In a case of first impression, the Ninth Circuit Court of Appeals examined the relevant statutory language and regulatory history for reporting a relationship with a foreign financial agency and concluded that it authorizes a single non-willful penalty for the failure to file a timely FBAR. When challenged by the IRS, the court noted that it found nothing in the statute or regulations to suggest that the penalty can be calculated on a per-account basis for a single non-willful failure to timely file an FBAR.
As a result, the taxpayer’s failure to timely file her FBAR resulted to one non-willful violation (not thirteen) and the maximum penalty could not exceed US$10,000.
March 25, 2020
AS OF APRIL 7, 2020
INDIVIDUAL TAXPAYERS RESIDING WITHIN THE U.S.
As part of the U.S. federal government’s COVID-19 pandemic containment response, the U.S. Treasury Department and Internal Revenue Service recently announced that the Federal April 15, 2020 filing due date for individual income tax returns has been automatically extended to July 15, 2020.
No extension form is required to be filed and a taxpayer doesn’t have to be impacted by COVID-19 to qualify.
Taxpayers may also defer Federal income tax payments that are normally due on April 15, 2020 to July 15, 2020 without interest and penalties, regardless of the amount owed.
INDIVIDUAL TAXPAYERS RESIDING OUTSIDE OF THE U.S.
For U.S. citizens & resident aliens who have their tax home and abode outside the U.S. and Puerto Rico on April 15, the normal Federal tax return filing due date is also April 15 each year, even though they may qualify for the automatic 2-month extension to June 15. Because the normal tax return filing due date is April 15, 2020, the special COVID-19 automatic extension to July 15, 2020 also applies to this group of taxpayers.
Such taxpayers may also defer Federal income tax payments that are normally due on April 15, 2020 to July 15, 2020 without interest and penalties, regardless of the amount owed.
MOST U.S. STATES PROVIDE SIMILAR RELIEF
While the Federal automatic extensions are a welcomed relief for taxpayers whose lives have been severely disrupted by the COVID-19 virus, they do not apply to U.S. State income tax filings or payments of tax owed.
Instead, each U.S. State has been left to decide whether or not to modify its tax return filing and payment due dates. As of today, most states have modified their income tax return filing and payment due dates. You should check with your tax professional or visit your state’s website for the most current information.
FREQUENTLY ASKED QUESTIONS (FAQs)
The IRS has established a special page for frequently asked questions related to income tax filing and payment due dates. You may access it by clicking the link below.
CONSULT YOUR TAX PROFESSIONAL
The content of this article is strictly informational. It is not intended to be used and should not be used as tax advice. You should consult with your tax advisor for the most up-to-date information applicable to your situation.
November 27, 2019
Zander Sterling, LLC is currently seeking an experienced U.S. expatriate / foreign national Client Serving Associate to join our growing team.
Key Position Details:
• Serve as contact point for all clients to help ensure their requests are addressed in a timely manner.
• Perform administrative tasks as needed to support firm’s client services and internal initiatives.
• Organize and manage all tax compliance administrative duties including tax season kick-off activities, engagement letters,
client communications, tools and status reports, etc.
• Coordinate and track the status of authorized services with non-U.S. network firms.
• Prepare tax compliance work papers in accordance with firm policies and procedures.
• Assemble and process tax returns and other compliance deliverables.
• Monitor and consistently enhance the firm’s tools and processes that support the client experience.
• Support marketing activities, including website, social media and industry events.
• Support sales efforts.
• Part-time (24 hours per week). Could also be structured as a seasonal position if desired.
• Outstanding year-round work schedule flexibility and work/life balance.
• Position is based in Indianapolis, Indiana, USA.
• Competitive compensation and benefits.
• Estimated start date: January 1, 2020.
Minimum Candidate Requirements:
• 2-3 years relevant administrative assistance (or equivalent) experience.
• Strong writing and verbal communication skills.
• Excellent work ethic, self-motivated, honest and ethical.
• Professional behavior and appearance.
• Ambitious, self-motivated and comfortable with ambiguity.
• Require minimal supervision after initial direction provided.
• Outstanding interpersonal skills; proven ability to work effectively in a team-based environment and across different cultures.
• Enjoy and thrive in a fast-paced, entrepreneurial environment.
• Proficient with MS Office suite of tools.
• Experience supporting corporate global mobility programs preferred.
All interactions will be kept confidential.
If you are interested in this opportunity, please apply via ZipRecruiter by clicking the link below.
November 26, 2019
Zander Sterling, LLC is featured in the November issue of Carmel Monthly Magazine!
November 26, 2019
Zander Sterling is featured in the November issue of Zionsville monthly magazine!
September 9, 2019
The IRS is modifying the design of Form 1040, U.S. Individual Income Tax Return.
A recently released draft is the second major overhaul in two years of this widely-used income tax declaration. Fortunately, the changes should be well-received by taxpayers and tax service providers.
The most recent round of draft changes brings welcomed consolidation of key information into fewer schedules. While the 2018 Form 1040 included 6 supporting schedules, the 2019 draft form only includes 3 schedules.
The reduction in schedules has been accomplished by relocating information previously on a schedule to the main body of Form 1040 and consolidating the remaining schedules as follows:
Schedule 1 – Additional income and adjustments to gross income,
Schedule 2 – Additional taxes (combines information on 2018 schedules 2 and 4) and,
Schedule 3 – Additional credits and payments (combines information on 2018 schedules 3 and 5).
The draft form may be viewed by clicking the link below.
July 19, 2019
The HR Indiana Conference is one of the largest regional human resources conferences in the United States. It offers world-renowned keynote speakers, three days of educational sessions, networking opportunities and exposure to the latest HR products and services.
Multiple representatives from Zander Sterling will be there to discuss tax challenges related to managing a globally mobile workforce. Please stop by our booth in the exhibit hall and introduce yourself! We would love to meet you!
Learn more about this outstanding event by clicking the link provided below.
Hope to see you soon!
July 19, 2019
Form 1040 is changing again for 2019.
After going to great strides to reduce the main U.S. Individual Income Tax Return to a postcard size document, the IRS is once again modifying Form 1040.
Key changes include moving the signature box to page 2, spaces for entering spouse and dependent names, all income lines are now listed on page 1, removal of the checkbox for health care coverage since that’s no longer mandatory, separate lines for a variety of credits, and some other “housekeeping” adjustments.
Overall, we believe the revisions create a more cohesive and logical flow of the key income, deductions and credits.
What do you think?
You can see the draft form by clicking the link below.
July 2, 2019 // by Rocky Mengle, Kiplinger
When someone mentions the IRS, the typical reaction is a visceral one of dread or fear. And deservedly so because of the reputation the IRS has created for itself. Remarkably, even people from other countries are aware of the not-so-friendly IRS. Yes…things have really become that bad.
But here’s a little bit of hope. With the passage of the Taxpayer First Act, Congress has undertaken actions to begin addressing the systemic challenges that exist within the IRS.
Check out this nice summary of some of the key improvements we can all expect in the near future.
June 19, 2019 // by U.S. Internal Revenue Service
Nearly 2 million Individual Taxpayer Identification Numbers (ITINs) are set to expire at the end of 2019. That’s a huge number. And with the IRS being a bit short-handed these days, it makes sense that they are encouraging affected taxpayers to renew their ITIN early.
Everything you need to know regarding how to renew an ITIN can be found here. Check it out and take action now if needed. You’ll be glad you did come tax time.
Want assistance with your ITIN renewal? Please contact us.
May 31, 2019 // by U.S. Internal Revenue Service
As a result of the sweeping tax law changes brought about by the 2017 Tax Cuts and Jobs Act, the IRS is revising Form W-4 -Employee’s Withholding Allowance Certificate.
While this may sound simple, creating a form that provides simplicity, accuracy and privacy for employees while simultaneously minimizing the administrative burden for employers and payroll processors is anything but simple.
May 21, 2019 // by Kaitlan Collins and Jeremy Diamond, CNN
President Trump continues to examine and revamp the U.S. immigration system. He’s searching for the right person to lead the charge. Here’s a peek into who he’s considering for the role.
March 28, 2018 // by Hunter Hallman, Bipartisan Policy Center
Ever wonder if undocumented immigrants in the United States pay federal taxes? After all, they’re not in the U.S. legally. So how do they pay taxes and why would they? This article from the Bipartisan Policy Center in Washington, D.C. sheds some light on this contentious subject.