What is an "FBAR"?
U.S. Treasury Department Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts.
Am I required to file an FBAR?
If you had a financial interest in or signature power over a offshore account, and that account was worth more than $10,000 on any day last year, you are required to file an FBAR this year.
When is the FBAR due?
It must be received by the US Treasury (not the IRS) by June 30th. There are no extensions of time. Important note for 2012: Because June 30th falls on a Saturday, the FBAR must be received by the Treasury by Friday, June 29th.
What is the penalty for failing to file a required FBAR?
Depending on the circumstances, the civil penalty can be $10,000, $100,000, or 50 percent of the balance in the offshore account at the time of each violation. The civil penalty can easily be greater than the balance in the account. There are also potential criminal penalties.
FBAR (Foreign Bank Account Reporting)
Treasury Dept Form TD F 90-22.1
Burlingame - San Mateo - Foster City CPA Since '88
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Other Important Information:
If I am not the owner of the account, do I still need to file an FBAR?
If you have signing power over the offshore account, you must file. A common example of this is an account set up in another country by a U.S. resident for the benefit of his parents. Because he has signing power over the offshore account, he must file. Another common example is when non-U.S. parents add their children as signers on their bank and brokerage accounts so that it is easier for the children to manage the parents' finances in the event they become disabled. Even though everyone agrees that the accounts still belong to the parents, if the children are U.S. citizens or residents, they have a filing requirement.
What qualifies as a financial account?
Not just bank and brokerage accounts held by financial institutions, but also life insurance policies with cash value and annuity policies. Having an ownership interest in or acting on behalf of a foreign entity may also trigger a filing requirement.
Amnesty - The Offshore Voluntary Disclosure Program (OVDP)
The IRS has reopened the OVDP. This is the 3rd round of amnesty for people with offshore accounts.
This version of amnesty is substantially the same as the prior versions with one major difference: there is no deadline and the program will be open for an indefinite period. However, the IRS reserves the right to terminate the program or to change the penalty rates at any time.
Why should I participate in the amnesty program?
The penalty imposed as part of the program is substantially lower than the penalty if you are caught outside of the program. The penalty assessed by the program is 27.5%, 12.5%, or 5% of the highest balance in the offshore account during the past eight years. The amount of the penalty depends on the size of the accounts. If the total of your accounts never exceeded $75,000, you will qualify for the 5% penalty. Tax, penalty, and interest on an previously unreported income, such as interest and dividends, is also due.
What does the amnesty program require me to file?
- All of the missing FBARs for the past eight years
- Up to eight years of amended tax returns if income was not reported.
- A few other forms and statements provided by the Treasury Department and completed with your individual information.
The information above is a general outline of the FBAR filing requirements and the amnesty program. Questions about your specific situation should be discussed with an experienced CPA.
Bess Kane, CPA
May, 2012
