For those U.S. citizens and resident aliens who reside outside the United States the deadline for filing your 2014 U.S. Federal individual income tax return and FinCEN Form 114 Report of Foreign Bank and Financial Accounts has arrived.

2014 Form 1040

Treasury Regulation 6081 extends the due date for filing your U.S. Federal individual income tax return until the fifteenth day of the sixth month following the close of the tax year. As the vast majority of individual taxpayers are on a calendar year their 2014 individual income tax return has an extended filing due date of June 15, 2015.

For those individuals who are not yet ready to file an additional extension to file until October 15, 2015 can be obtained by filing Form 4868 Application for Automatic Extension of Time to File U.S. Individual Income Tax Return with the internal Revenue Service on or before June 15, 2015. Form 4868 actually grants a 6 month extension of time to file and a recent article by a Canadian based tax attorney argues that December 15, 2015 is actually the new filing deadline.

But Treasury Regulation 6081 clearly states that the automatic 6 month extension runs concurrent with the 2 month extension previously noted.

2015 Estimated Income Tax

The extension of time to file your 2014 U.S. Federal individual income tax return did not extend the time to pay ant 2014 tax due nor did it extend the date for making 2015 estimated tax payments. 2015 quarterly estimated tax payments are due on April 15, June 15 and September 15, 2015 and January 2016. The cost of obtaining a U.S. dollar check from a local bank continues to increase. Many individuals do not realize that quarterly estimated tax payment can be made to the Internal Revenue Service online if they have a U.S. bank account. Payments can be made by registering with the Internal Revenue Service at www.eftps.gov.

FinCEN Form 114 Report of Foreign Bank and Financial Accounts

Your 2014 FinCEN Form 114 must be efiled before June 30, 2015 at www.fincen.gov. The predecessor to Form 114 was Form TD F 90-22.1 that was paper filed with the U.S. Treasury in Detroit, Michigan. Most Americans who have lived abroad for a number of years were very casual about the filing of Form TD F 90-22.1 and their attitude was not helped by lax enforcement of the filing requirements that started 30 to 40 years ago. What many individuals are seemingly unaware of is that FinCEN is an abbreviation for the Financial Crimes Enforcement Network which analyzes information required under the Bank Secrecy Act. If you have casually filed this Form in the past you should consider who is now reviewing your information.

FATCA, FinCEN Form 114 and Form 8938 Statement of Specified Foreign Financial Assets

With some 80,000 foreign banks, financial institutions, brokerages, insurance companies and any other entity outside the United States in which a U.S. citizen or resident alien has a deposit now having reported such information to the U.S. Treasury the open question is when will the Treasury computers begin to cross-reference the information submitted by individual taxpayers and start the process of determining why certain foreign accounts have not been reported.

The Internal Revenue Service Commissioner has clearly voiced his frustration with individuals who continue to avoid payment of income tax and disclosure of assets outside the United States. For the past 7 years the Internal Revenue Service has voluntary disclosure programs such as the Offshore Voluntary Disclosure Program (OVDP) and the Streamlined Foreign Offshore Procedure in place that about 18,000 taxpayers have used. The Commissioner has stated that once individual taxpayers begin to receive letters inquiring as to why certain foreign accounts have not been reported and given their failure to take advantage of one of the amnesty programs that such individual will be prosecuted to the full extent of the law. Thus, for those who have not fully reported their offshore assets their window of opportunity to take advantage of one of the amnesty programs is rapidly closing.

Form 8938 Statement of Specified Foreign Financial Assets

The Treasury Department has now issued final regulations as to reporting an interest in a specified foreign financial asset on Form 8938. The final regulation requires the reporting of the following assets: foreign bank and financial accounts, foreign trusts and foreign estates, stock issued by foreign corporations, foreign partnerships, notes, bonds, debentures or other debt issued by a foreign person, interest rate swaps, currency swaps and other similar agreements with a foreign counterparty and certain foreign derivatives. The reporting threshold remains at $50,000 on the last day of the year for single taxpayers living in the U.S. and $200,000 for those living abroad, and $100,000 on the last day of the year for married taxpayers living in the U.S. and $400,000 for those living abroad.

Federal Income Tax Withholding

An individual must either pay 90% of their current year tax liability or 100% or 110% of their prior year tax liability to avoid being subject to an underpayment penalty. The penalty is measured by tax due and paid by April 15, June 15 and September 15, and January of the following year. For those who make quarterly estimated tax payments the question as to whether they are underpaid or not is clear. It is less so in cases where an employer withholds income tax and where an employee’s compensation is based on commissions and varies each month. The IRS has taken a position that income tax withheld must be recognized within one of the four above noted periods. The Court recently ruled that income tax withheld is treated as being evenly withheld throughout the year.

Any tax advice in this communication is not intended to be used, and cannot be used, for the purpose of (I) avoiding penalties imposed under the United States Internal Revenue Code, or (ii) promoting, marketing or recommending to another person any tax related manner.

The tax advice given by this column is, by necessity, general in nature. You should, of course, check with your own U.S. tax consultant as to how specific transactions affect you since tax advice varies with individual circumstances.