If you are reading this post, most likely you already know something about the FBAR, the inglorious "Report of Foreign Bank Accounts," the form IRS changed to FinCEN Form 114, just perhaps to confuse us further. As we've written about extensively, the FBAR/Form 114 is a nasty requirement full of nasty consequence for people who file it wrong or not at all.
What you may not know, as of this writing, is that the United States is the only government in the world that requires its "persons" to report their foreign financial accounts to their government.
The Russian FBAR Bear is about to close the "compliance" gap!
So…are we surprised that one of the most government-controlled economies in the world will start on January 1, 2015, to require citizens of the Russian Federation to report ownership of foreign bank accounts to their government in a fairly similar format to the US’s FBAR filing.
The Russian "FBAR" requirement was passed in July, 2014 as part of the bill called “On amending certain laws of the Russian Federation." Unlike with an FBAR, there is no threshold for a filing requirement (mere ownership of an account is reportable). A Russian taxpayer owning a foreign bank account is obliged to furnish tax authorities with copies of bank account statements translated into Russian. The statements have to be certified by the bank and a notary public. Penalties for failure to file a “Russian FBAR” are still being worked on. According to the current drafts of the laws, penalties are projected to be much less in comparison to its American rival: from 500 to 5,000 Rubles ($8 to $80..and falling?).
This is what you get when your banking laws violate liberty and common sense: Russia will follow your example
As a Ukrainian national, I have watched with a heavy heart as Russia imposes its will on my homeland. As Director of Tax Compliance at Parent & Parent LLP, I have seen first hand the damage the US tax code and Banking laws are doing to US persons with foreign interests, as we do our best to limit the damage caused by the most complicated laws in the history of the world. In both cases, the Russian incursion into Crimea and the IRS over-regulation of US persons, I see two outrages, two outrages that are overlooked.
What will happen?
With regards to the man who is attempting to take to take over my homeland, yes, I can see why Putin would wants to know about Russians' foreign bank accounts. We could certainly understand why he would find that information useful. But the country that claims to be "the land of the free," well why does it want to know about the value of your foreign bank accounts? Why? It was already a crime to evade taxes, well before the FBAR was required (and now FATCA makes self-reporting somewhat superfluous, as bank do the reporting themselves) — why does the US have laws that Putin can't wait to emulate?
