~~Taxpayers who hold certain foreign accounts outside the United States are required to file certain information reports with the Department of Treasury (separate from the IRS). The amount of assets in these accounts that generate this reporting requirement is not very high in many cases and this can certainly trip up taxpayers. The penalties for not making this filing can be very steep (in excess of $10,000).
Form 114 is normally required for farmers who have these foreign accounts and this form used to be due on June 30 with no extensions. Starting this year, the due date has been changed to April 15 and you are allowed an automatic extension to October 15 (just like individual tax returns). We were wondering how the extension would work. Would extending the personal return automatically extend the due date of the 114 (since it is filed separately from the IRS).
Now, we don't have to worry any more about this. The Department of Treasury just released a notice indicating that there will be an automatic extension to October 15 for all taxpayers. You will not have to file any paperwork with the Department to file Form 114 by October 15. This is very good news.
If you have foreign bank or investment accounts, make sure to discuss this with your tax advisor. If you have not reported these accounts, you may need to go back six years and voluntarily report it to the Department of Treasury and the IRS. The penalties for not doing this can easily exceed the dollars in those accounts.