Form TD F 90-22.1 “Report of Foreign Bank and Financial Accounts” (FBAR)
The U.S. government revenue efforts to collect revenues have gotten more aggressive in recent years. In particular the Internal Revenue Service has targeted American citizens and permanent residents living abroad. Many citizens who have been living abroad for extended periods of time have neglected to file a Foreign Bank Account Report (FBAR) per IRS compliance guidelines.
The FBAR is required because foreign financial institutions may not be subject to the same reporting requirements as domestic financial institutions. The FBAR is a tool to help the United States government identify persons who may be using foreign financial accounts to circumvent United States law. Investigators use FBARs to help identify or trace funds used for illicit purposes or to identify unreported income maintained or generated abroad.
Who Must File Form TD F 90-22.1?
Form TD F 90-22.1 is required by United States persons that have a financial interest in or signature authority over foreign financial accounts must file an FBAR if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year.
A United States person means United States citizens; United States residents; entities, including but not limited to corporations, partnerships, or limited liability companies created or organized in the United States under the laws of the United States and trusts or estates formed under the laws of the United States.
These individuals are required to file a Report of Foreign Bank and Financial Accounts (FBAR) using Form TD F 90-22.1 by June 30 of the succeeding year. Failure to do so may result in significant financial penalties.
What is Considered a Foreign Financial Account?
The location of where the account is maintained determines if it is foreign. Generally, the Treasury Department has defined the term “bank account” to mean a savings deposit, demand deposit, checking or any other account maintained with a person engaged in the business of banking.
Reportable accounts include bank, securities and brokerage accounts, commodities or futures options, mutual and pooled funds and insurance or annuity policies with a cash value.
Contact Christopher J. Byrne PLLC as soon as possible to insure you are fully compliant with all FBAR regulations of the IRS.