Foreign Bank Account Exceeding $10,000
In addition to the income tax disclosure requirements discussed above, taxpayers, including tax-exempt organizations, are required to file Form TD F 90-22.1 annually if they have a financial interest in or signature authority over financial accounts, including bank, securities or other types of financial accounts, in a foreign country, if the aggregate value of these financial accounts exceeds $10,000 at any time during the calendar year.
Form Treasury Department Form TD F90-22.1 Due Date
The form must be received by June 30 of the year following the calendar year being reported. It is not filed with the IRS but is filed with the Treasury Department. See addresses below.
Income Tax Filing Extension Does Not Help or Apply to This Separate Filing
Because it is not a tax form, the June 30 deadline applies, even if a taxpayer obtains a income tax-filing extension.
Extension For Those With Signature Authority Only
A small subset of filers with only signature authority required to file the Report of Foreign Bank and Financial Accounts (FBARs) will receive a one-year extension beyond the past filing date of June 30, 2011 for 2010 returns. Such parties include the following individuals:
- An employee or officer of a covered entity who has signature or other authority over and no financial interest in a foreign financial account of another entity more than 50 percent owned, directly or indirectly, by the entity (a “controlled person”).
- An employee or officer of a controlled person of a covered entity who has signature or other authority over and no financial interest in a foreign financial account of the entity or another controlled person of the entity.
Civil and Criminal Penalties Can Be Significant
Civil penalties for a non-willful violation can range up to $10,000 per violation.
Civil penalties for a willful violation can range up to the greater of $100,000 or 50 percent of the amount in the account at the time of the violation.
Criminal penalties for violating the FBAR requirements while also violating certain other laws can range up to a $500,000 fine or 10 years imprisonment or both.
Civil and criminal penalties may be imposed together.
If you determine that you were required to file FBARs for earlier years, you should file the delinquent FBAR reports and attach a statement explaining why the reports are filed late. No penalty will be asserted if IRS determines that the late filings were due to reasonable cause. Keep copies, for your records, of what you send.
Unreported Income Related To Foreign Accounts
If, however, you have any unreported taxable income related to the foreign accounts, you should instead follow the procedures for making a voluntary disclosure to IRS under newly established third 2012 Offshore Voluntary Disclosure Initiative. For more on this please see my article entitled Offshore Accounts: IRS Third Amnesty Program
Where To File
Mail the completed FBAR form to:
U.S. Dept. of the Treasury
P.O. Box 32621
Detroit, MI 48232-0621
If mailed by a method other than U.S. mail is:
U.S. Department of the Treasury
Currency Transaction Reporting
985 Michigan Avenue
Detroit, Mich., 48226.
No Electronic Filing Currently Available
Note that the FBAR form is not available for electronic filing
Copyright © 2012 - Steven J. Fromm & Associates, P.C., 1420 Walnut Street, Suite 300, Philadelphia, PA 19102. All rights reserved.
Jonathan Weiss, November 11, 2008: “Steve is an excellent attorney who has provided help for my family personally for business, tax, and other services for many years. He is extremely knowledgeable and thorough, and is extremely good at explaining legal concepts to me in clear terms understandable to a non-attorney. It is difficult to pick only three attributes above, since Steve’s work meets most if not all of the attributes above.”