U.S. persons having interests in or signature authority
over a foreign financial account must file an annual report with the U.S.
government if the maximum value of all foreign accounts exceeds US$10,000 on
any day during the calendar year. A
foreign exchange rate is used for conversion purposes. Conversion rates as of December 31st
should be used and they are published here.
New for 2013 is that the old paper-filed Form TD F
90-22.1 has been replaced by new FinCEN Form 114 which must be electronically
filed. FinCEN stands for Financial
Crimes and Enforcement Network. The
foreign bank and financial accounts report, or FBAR, must be filed by June 30,
2014 through the BSA E-Filing System here. BSA stands for Bank Secrecy Act. You may file your FBAR by using the services
of a third-party upon granting the proper permission. An attorney, CPA, or enrolled agent may act
as an account holder’s representative.
No extension of time is permitted. Significant penalties exist for late or
non-filing. Such penalties can range
from $500 to the greater of $100,000 or 50% of the account balance. In addition, criminal penalties can range
from a fine of up to $500,000 plus 10 years in jail in some situations. Clearly the US government is serious about
forcing FBAR compliance. You should
consult legal counsel if you have serious concerns about any delinquency.
Owners of entities that are required to file an FBAR must
also file an FBAR at the owner level if they have more than a 50% direct or
indirect ownership interest. So-called
“disregarded entities” for income tax purposes are not disregarded for this
purpose and must file the report.
Records of accounts required to be reported on the FBAR should be kept
for five years from the due date of the report.
Be sure to also check the appropriate boxes at the bottom
of Schedule B, Form 1040, and to include any account earnings in your U.S.
income tax return.
For more information, consult the IRS’ online FBAR
Reference Guide here.
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