CategoryBanking

A New Year’s (Awaiting) Resolution

How FASB’s Change to “Materiality” Could Materially Change 2016

By: Peter Simmons and Amanda Wilson

As we close the books on the first chapter of our 2016 year, many investors cling to their New Year’s resolutions, hoping to make a material change that catalyzes a happy, healthy, and productive New Year. Yet it is a proposed change to “materiality” that the Financial Accounting Standards Board (FASB) hopes to implement that may undercut the efforts of these inspirited investors. The proposal would effectively transform the definition of “materiality,” which defines the information companies have a duty to share with investors. This change to “materiality” could lead to material consequences in the world of financial reporting.

Under FASB’s current rules, information is deemed material if omitting or misstating it could influence investment decisions made by users…to continue reading, click here.

Have a Foreign Bank Account?

By:  Amanda Wilson

A taxpayer that has a foreign bank account is required to file a special form, the Report of Foreign Bank and Financial Accounts, disclosing information about the account. Failure to file this form, which is commonly referred to as an FBAR, can result in significant penalties. A person that fails to properly file an FBAR can be subject to a penalty up to $10,000 per violation. This penalty can be increased to the greater of $100,000 or 50% of the balance in the account at the time of the violation if the violation was willful.

Where the IRS views the facts as being particularly egregious, multiple penalties can be imposed (a penalty for each year that the FBAR was not filed). An example of this can be found in a recent Florida case, United States v. Zwerner. Yesterday, a jury upheld the imposition of penalties and interest amounting to $2.2 million, where the foreign bank account had at its highest point a balance of $1.5 million. In other words, penalties and interest were roughly 145% of the peak balance.

While the Florida case is an extreme situation, it is nonetheless a cautionary tale and shows the importance of timely and properly filing the FBAR. For taxpayers that have an obligation to file but have not done so, the IRS does offer a voluntary disclosure program.

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