Deadline extended for filing report on cash held overseas – opportunity to get all reports filed – conclusion

I have several posts about the mandatory report of overseas bank accounts.  This issue can easily involve NPOs that have overseas operations. The form used to report and the whole process is referred to as FBAR. Actual name is Report of Foreign Bank and Financial Accounts.

Extension of deadline

The IRS has extended a deadline for filing the FBAR reports for 2009 and earlier. The new deadline is November 1, 2011.

This means “persons” could catch up on the filing of all those reports that had never been filed. Persons include NPOs with bank accounts used in overseas projects.

By the way, the extension does not apply to the 12-31-10 reports which must be filed by 6-30-11.

What is the real agenda here?

I am watching this massive enforcement effort only for the entertainment value (yes, yes, I know you are very worried about an accountant who finds amusement in watching the IRS chase tax evaders).  As a result, I don’t know the ins and outs, but would speculate that the IRS has extended this deadline as a carrot to encourage people to self report their hidden money. A separate part of this issue is the IRS is promising not to pursue criminal prosecution of people who self-report their tax evasion before the IRS catches them. If someone decides to declare their hidden money and pay the taxes & penalties, there is still this whole issue of big penalties from not filing all those years worth of FBARs. By extending the deadline for every past-due FBAR, the IRS is offering another enticement to get evaders into the system. 

So the IRS is offering two carrots as an encouragement for people to voluntarily report all the money they have hidden: first, no jail time for tax evasion; second, none of that $100K per year penalty from not filing the FBARs. That is my guess.

How does this affect nonprofits?

If my read described above is correct, the IRS is not concerned about the nonprofits not filing FBARs. They are after the really big fish that have really big dollars off the table (how’s that for a jumbled metaphor?)

However, this provides opportunity for nonprofits that have not filed FBARs in the past to get them filed without the risk of penalties.

Time to start filing?

There may be nonprofit organizations that are not aware of the FBAR filing requirements. There may be nonprofits with situations that are so complicated or decentralized or cumbersome that it would take a horrible amount of time to comply. Some may just not have gotten around to it.

If you or your organization are in the situation where you have not filed FBARs in the past, now would be a really, really good time to figure out a plan to get all those reports filed. Until November 1 of this year, you can do so without fear of those $10,000 penalties.

I do not know if the IRS will get serious in enforcing the FBAR filing requirements for NPOs.  Even if they don’t, it would be wise to get into compliance. If we in the NPO community can greatly increase the level of compliance within our community, it greatly reduces the risk that the IRS will jump in with hard-core enforcement.

If you are seriously out in the cold on the whole FBAR issue, I would encourage you to get assistance from informed legal counsel.

If you haven’t filed in the past, I would encourage you seriously consider filing those pesky FBARs.

Additional resources:

Here is the TD F 90-22.1, Report of Foreign Bank and Financial Accounts

The Journal of Accountancy article is IRS further extends deadline for certain 2009 and earlier FBARs

My previous posts at:

One Response to Deadline extended for filing report on cash held overseas – opportunity to get all reports filed – conclusion

  1. […] see articles I wrote last year, which you can find in part one, part two, part three, and part four. Share this:FacebookEmailLike this:LikeBe the first to like […]

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