Gary Bode, CPA: if you aren't sure you need to file FBAR, or just need help completing TD F 90-22.1, please call us for a free initial consult at 399-2705.
The Financial Crimes Enforcement Network (FinCEN), a regulatory arm of the Department of Treasury, issued a new TD F 90-22.1, commonly known as FBAR. The revised TD F 90-22.1 has clearer instructions than the old FBAR. And, the IRS issued Notice 2011-31 which describes additional reporting requirements. All of which modifies the underlying Bank Secrecy Act.
Remember FBAR (TD F 90.22.1) is due on June 30th. Continuing to hide money in offshore accounts is inadvisable.
-Gary Bode, Wilmington NC CPA and tax accountant
What is a FBAR (TD F 90-22.1)?
FBAR is a form which self reports a financial interest in, or signature authority over foreign financial accounts, where the aggregate value of those accounts exceeds $10,000 at any time during the calendar year. To the IRS of course. While the form has been around awhile, IRS pressure has increased for US persons to reveal foreign bank accounts.
The Foreign Account Tax Compliance Act (FATCA) - Heads are Rolling
The U.S. has been hounding foreign banks for information on accounts held by U.S. citizens, via the FATCA program and understandably, not winning many friends either. For FBAR purposes, the financial institution has to be on foreign soil, i.e. account holders in foreign branches of American banks need to file TD F 90-22.1. Conversely, accounts held in U.S. branches of foreign banks do not. A Swiss Bank finally relinquished some such information, leading to conviction of Michael Schiavo, a venture capitalist who diverted money to a Bermuda offshore account. The IRS expects recovery of $76G+ from Schiavo who also faces up to five years in prison. The IRS has offered two amnesty programs for FBAR violators, with good success. Schiavo serves notice on remaining violators that the IRS is serious. Combined with the reality of FATCA eventually breaking the anonymity of foreign banking, taxpayers should beware of secret offshore accounts. Will FATCA completely succeed? Probably not. And the last foreign bank standing will most likely have a rush of new U.S. customers.
What Types of Foreign Financial Accounts must be reported on FBAR (TD F 90-22.1)?
• Checking, savings, demand and time deposit accounts
• Brokerage and securities accounts
• Commodity futures or options accounts
• Insurance policies with cash surrender value
• Annuities with cash value
• Mutual funds or similar pooled funds
Penalties for Non Disclosure?
Intentional failures to file FBAR can be subject to both criminal liability and civil penalties of up to the greater of $100,000 or 50% of the account balance. This penalty can be applied for each year an FBAR is willfully not filed, going back to 2004.
Non-willful failures to file TD F 90-22.1 can be subject to a penalty of $10,000 per year for each year an FBAR is not filed, also going back to 2004. This penalty can be waived if reasonable cause is shown for the failure to file.
The era of offshore accounts is probably over. But surely U.S. taxpayers will still find ways to hide income from the IRS. We’re a Wilmington NC CPA firm, but serve a wider geographic base. We offer a free phone consult for FBAR, TD F 90-22.1 issues. Please call us at (910) 399-2705.
