Trump’s Chinese Bank Account Raises Questions for U.S. Taxpayers with Foreign Accounts

Posted on Wed, Oct 28, 2020 ©2020 Drucker & Scaccetti

International-ServicesLast week's presidential debate and discussion surrounding President Trump's Chinese bank account conjured up many questions regarding reporting requirements for foreign accounts. Coincidentally, the U.S. Treasury's Financial Crimes Enforcement Network ("FinCEN") posted to its website on October 14, 2020, extending the deadline to report such bank accounts and briefly threw the accounting world into a frenzy. Here’s what happened…

 

On October 14, 2020, FinCEN announced taxpayers would have until December 31, 2020, to file reports for the 2019 tax year given the global pandemic and other extenuating circumstances during 2020. Two days later, after the extended deadline of October 15th had passed, FinCEN posted an update saying the extension to December 31 was only meant for victims of natural disasters, not all taxpayers. Because some taxpayers relied on FinCEN’s incorrect post regarding the extension, missing their October 15th filing deadline, FinCEN then announced all taxpayers would have until this Friday, October 30, 2020, to file their reports while victims of the various natural disasters of 2020 have until December 31, 2020, to file.

 

Each year, U.S. taxpayers with overseas accounts exceeding $10,000 in aggregate, at any time during the calendar year, must file FinCEN Form 114, Report of Foreign Bank and Financial Accounts ("FBAR"), by April 15th and disclose the maximum value of each account. In normal circumstances, FinCEN offers an automatic extension to October 15th to file the report, which conveniently aligns with the extended due date of individual federal income tax returns.

 

Penalties for failure to file FinCEN Form 114 are significant.  Note there is a difference between reporting the account(s) on a tax return and disclosing it in an FBAR filing. In many circumstances, you need to do both. Willful failures to file can cause an annual penalty of $100,000 or 50% of the total balance of the foreign account per violation, whichever is greater.  Non-willful failures to file carry a penalty of $10,000 per violation.  A six-year statute of limitations exists for assessments based on failures to file required FinCEN Forms 114.

 

President Trump has a bank account in China that is owned by one of his business entities. His attorney has stated it was opened during 2013 to pay local taxes related to his business dealings and is inactive. The president has at least two other foreign accounts that have been disclosed, one in Scotland and one in Ireland. If the aggregate value of the accounts were not at least $10,000, the President would not have a disclosure filing requirement with FinCEN. 

 

If you are the owner of a foreign bank account or financial asset or had signature authority over a foreign bank account and have not filed the FinCEN114, call on The Tax Warriors® at Drucker & Scaccetti today to help, while there is still time.

Topics: FinCEN 114, fbar, President Trump, foreign reporting, New York Times, China

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