BNA Bloomberg Daily Tax Report Quotes Charles Ruchelman on Treasury/FinCEN's Proposed FBAR Regulation

Daily Tax Report

Charles M. Ruchelman commented on the Treasury Department's Financial Crimes Enforcement Network's proposed rules that would both broaden and narrow the requirements for individuals and companies filing a Report of Foreign Bank and Financial Accounts (FBAR). The potential takeaway is that certain employees with signatory authority would be exempt from filing Form 114 if their employers maintain a list of employees with signature authority.  Also, the IRS removed the 25 account data entry exemption.  Now those with more than 25 accounts need to file an FBAR and include relevant data for each account.  For the full article, please visit the Daily Tax Report's website (subscription required).

Excerpts taken from the article.

"There has to be some upper limit to how many accounts a person is required to type onto the electronic Form 114," Charles Ruchelman, a member at Caplin & Drysdale Chartered in Washington, told Bloomberg BNA March 3. "Obviously, if an FBAR gets selected for examination, the person should have and turn over all the information relating to the 25 or more accounts. But most returns are not examined and one has to wonder whether this added burden on taxpayers is actually helping with tax reporting enforcement or is this just needless paperwork."

Ruchelman calculated that a taxpayer with financial stakes in 25 or more accounts could file a "check-the-box" version of the form in an hour or less. Filing the full form can take several hours. About 10,800 taxpayers with more than 25 foreign accounts filed Form 114 in 2013 claiming nearly 5.4 million accounts, according to the FinCEN proposal. That means these taxpayers have about 500 accounts on average they would need to report, he said. Ruchelman suggested the government should instead raise the number of accounts needed to qualify for the exemption.

Regarding the new signature authority exemption, Ruchelman said the rules don't address which party is penalized if an employee with signatory authority doesn't file an FBAR and the company doesn't keep a list.

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