Foreign Bank Accounts
With the June 30 deadline fast approaching for the Report of Foreign Bank and Financial Accounts, I have seen several articles this week on foreign banks turning away American depositors. The FBAR report is to completed for companies and individuals that have more than $10,000 in a foreign bank account outside the United States. If an individual has control over a company’s foreign account then they must file a report has well. The penalties for not filing the report or filing a false report are substantial at $500,000 fine and five (5) years in prison. The form is TD F90-22.1 and is fairly simple to complete. The IRS form indicates that it takes about 75 minutes to complete. Unfortunately, the Treasury Department does not offer an extension for the report. The IRS is requiring that the question regarding foreign bank account on individual tax returns.
A few years ago, the IRS and the Treasury Department allowed voluntary disclosure for those who needed to file the report but had never done so. As I indicated earlier the IRS is implementing new rules to force overseas banks to report accrued interest on accounts held by U.S citizens beginning January 1, 2013. According to the articles, some Americans located overseas may not have access to a bank in the foreign countries.
After USB turned over names of U.S. depositors, the IRS and Congress has begun to tighten the rules for foreign bank reporting. As indicated earlier, if you need to file the report, I would suggest that you do so due to the penalties. Feel free to comment or ask questions about this form or filing deadline..
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