U.S. persons having interests in foreign financial accounts must file an annual report with the U.S. government. The 2010 Report of Foreign Bank and Financial Account (FBAR) must be received by the U.S. Treasury Department in Detroit, Michigan on or before June 30, 2011. The normal postmark rule for timely mailing of tax returns is not applicable. In addition, no extension of time permitted. Owners of entities that are required to file the FBAR must also file FBARs at the owner level if they have more than a 50% direct ownership interest. Significant penalties exist for late or non-filing.
The FBAR is an information return and is filed annually. The FBAR is required for all years in which the maximum bank account value (multiple accounts are aggregated for this purpose) exceeds US$10,000. A year-end exchange rate is used for conversion purposes. In addition, any account earnings must be included in the U.S. income tax return.
The IRS currently has an amnesty program that provides an incentive for those who have failed to file the FBAR and/or to report the foreign account earnings on their income tax returns. The program ends on August 31, 2011. See my posting dated February 28, 2011 for more information.
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