IRS Reminds Taxpayers to Report Certain Foreign Bank & Financial Accts by June 30!
The IRS has reminded again that "U.S. persons who have bank and other financial accounts in a foreign country may be required to report those accounts to the U.S. Department of Treasury by the June 30 deadline."
It appears that more people in the U.S. have foreign financial accounts than ever before, and though there is nothing improper about setting up or maintaining such accounts, the IRS officials "are concerned that U.S. persons may overlook that their accounts are large enough to trigger reporting obligations."
According to the US tax code, “Foreign account owners must remember that they may have to report their accounts to the government, even if the accounts do not generate any taxable income.”
The current tax law states that "U.S. taxpayers are required to file a Report of Foreign Bank and Financial Accounts (FBAR), Form TD F 90-22.1, each year if they have a financial interest in or signature authority or other authority over any 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."
Here are some facts regarding the FBAR form.
1. Filing Due Date:
The 2007 FBAR form is due June 30, 2008. The FBAR is not an income tax return and should not be mailed with any income tax returns. The FBAR must be filed on or before June 30 of the following year.
2. Filing Address:
The Form must be mailed to:
U.S. Department of the Treasury,
P.O. Box 32621,
Detroit, MI 48232-0621.
3. Extension Request:
Requests for an extension of time to file an FBAR are not granted.
4. Penalties for Non-Compliance:
Civil and criminal penalties for non-compliance with the FBAR filing requirements are severe.
a. What are the Civil Penalties?
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.
b. What are the Civil Penalties?
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.
It is worth noting that both Civil and criminal penalties may be imposed together.
According to the IRS, "If a holder of a foreign account was required to file FBARs for earlier years, however, he or she should file the delinquent FBAR reports and attach a statement explaining why the reports are filed late." The IRS has further stated, that "No penalty will be assessed if IRS determines that the late filings were due to reasonable cause. The account holder should keep copies of their statement for his or her own record."
5. Where can I get these Forms?
FBAR forms and instructions are also available on IRS.gov or the FinCEN Web site and by calling 1-800-829-3676.