On February 29, 2012 the Financial Crimes Enforcement Network’s (FinCen) published rules requiring the E-Filing of all Bank Secrecy Act (BSA) submissions. As of July 1, 2013, FinCen’s regulations require that all FBARs be filed electronically through the BSA E-File System. The E-File system is not difficult to navigate and the electronic FBAR is a fillable pdf that is submitted to the E-File system once it has been completed. The E-File requirement is not a significant burden, but taxpayers should be aware of a couple things.
In our oral communications with FinCen, Flott & Co. PC were told that any prior year FBARs or amended FBARs must be filed electronically. So any FBAR that is submitted on or after July 1, 2013, regardless of what year it is filed for, must be filed through the E-File system.
In addition, FinCen has the authority to impose a $500 penalty for each failure to comply with FinCen’s regulations. This authority means that if a taxpayer files paper FBARs for calendar years 2007 through 2012 on July 15, 2013, FinCen has the right to impose a fine of $3,000 (6 FBARs multiplied by $500). At this point it is unclear if the penalty will be imposed automatically or if FinCen will use discretion in imposing this penalty. Regardless, taxpayers should be aware that they FinCen has the authority to fine them for paper filed FBARs.