Steven Toscher Quoted in Tax Notes on Proposed Changes to FBAR rules
FBAR CHANGES TRY TO BALANCE COMPLIANCE BURDEN, ENFORCEMENT.
Published by Tax Analysts(R)
A new proposal from Treasury’s Financial Crimes Enforcement Network regarding the filing of Form 114, “Report of Foreign Bank and Financial Accounts,” would substantially change what is required of some financial professionals who file the foreign bank account reports as part of their employment responsibilities.
Under the notice of proposed rulemaking, issued March 1, gone is the limitation on reporting requirements for filers who have 25 or more foreign financial accounts. Instead, the rules dictate that detailed account information would be needed on all foreign accounts for which an FBAR is required. In a more taxpayer-friendly change, the rules would eliminate the requirement for officers and employees of institutions to report institutional accounts that they have solely as a result of their employment and over which they have signature authority but no financial interest, provided their employer has an FBAR filing obligation. The rules would also require institutions to maintain for five years a list of all officers and employees with signature authority over those accounts, which could be made available to FinCEN upon request.
FinCEN said the rules attempt to “strike the balance” between providing law enforcement with useful information and imposing burdensome reporting requirements.
Steven Toscher of Hochman, Salkin, Rettig, Toscher & Perez PC said the proposed amendments reflect the continued trend in the importance of FBAR reporting to tax and law enforcement. While he said the proposed rulemaking should be welcomed by some taxpayers, specifically the guidance’s new simplified and expanded exemption for officers and employees with signature authority, they are not all beneficial to taxpayers.
“What may not be greeted with such enthusiasm is [the change to] the long-established rule which allowed a filer with 25 or more accounts not to list the specific account information on the forms, but just maintain the information if requested,” Toscher said. “In my experience, we have never seen FinCEN ask for the information from a taxpayer, and FinCEN now recognizes this historical exemption provided a significant gap in its ability to carry out its mission. While many taxpayers will complain, there were 10,800 FBARs filed in 2013 (for 5,366,000 accounts) relying upon the exemption, [so] from a law enforcement perspective, it appears to be a good change.”