The FBAR and FATCA: what’s the difference? (Part 3 of 3)

In parts one and two of this series, we discussed the details of the FBAR and FATCA and if you need to file them with your individual tax return. After reading these posts, you may wonder why you’re required to provide the same information twice.Though the forms share similarities, FBAR and FATCA differ:

• FBAR monitors closely foreign financial accounts with an aggregate value of $10,000 or more. Any U.S. “person,” including entities, must file.
• FATCA focuses on foreign financial accounts and investments with a higher aggregate value. At this time, only individuals need to file.

So if overlap exists, why must you potentially submit both forms? The short answer is the two government agencies don’t talk to each other in a timely manner. Here’s the background:The FBAR was developed following the 1970 Bank Secrecy Act to assist law enforcement and help prevent money laundering. The Form 8938/FATCA filing requirement began with the 2010 Hiring Incentives to Restore Employment (HIRE) Act, preventing tax evasion.In 2003, the Financial Crimes and Enforcement Network (FinCEN) delegated enforcement authority for the FBAR to the IRS, but taxpayers still report this form directly to the Department of the Treasury.The Treasury Dept. doesn’t share this information with the IRS until several months after the FBAR filing deadline (by then, tax return filing deadlines already passed).If you’re required to file FATCA, you must present the IRS with all the information you provided for the FBAR.Please understand this blog only serves as a brief overview. If you think you need to file an FBAR or Form 8938/FATCA, you need many more details than we can expound.For more information, the IRS offers an FBAR Reference Guide and a webinar about filing. A Frequently Asked Questions document is available about filing Form 8938, as well as the instructions for this form.Another good choice is to consult your CPA. If you’re in North Florida or beyond, the knowledgeable team at Patrick & Robinson CPAs can help you resolve any tax-related issues. Contact us at Office@CPAsite.com or 904-396-5400.