Q. What is an FBAR and When is it Due?
A. An FBAR is a Report of Foreign Bank and Financial Accounts (Form No. TD F 90-22.1). The FBAR is due by June 30 of the year following the year that the account holder meets the $10,000 threshold.
Q. Who must file an FBAR?
A. Any United States person who has a financial interest in or signature authority or other authority over any financial account in a foreign country, if the aggregate value of all foreign financial accounts, exceeds $10,000 at any time during the calendar year.
Q. What is a United States person?
A. United States person includes a citizen or resident of the United States, a domestic partnership, a domestic corporation, and a domestic estate or trust.
Q. What constitutes signature or other authority over an account?
A. A person has signature authority over an account if such person can control the disposition of money or other property in the account by delivery of a document containing his/her signature (or his/her signature and the signature of one or more other persons) to the bank or other person whom the account is maintained.
Other authority exists in a person who can exercise power that is comparable to signature authority over an account by direct communication to the bank or other person with whom the account is maintained, either orally or by some other means.
Q. What is a Financial Account?
A. A financial account includes any bank, securities, securities derivatives or other financial instruments accounts which includes: savings, demand, checking, deposit or any other account maintained with a financial institute or other person engaged in the business of a financial institution. Additionally, financial account also generally includes any accounts in which the assets are held in a commingled fund, and the account owner holds an equity (ownership) interest in the fund (including mutual funds). Items such as individual bonds, notes or stock certificates held by the filer are not a financial account nor is an unsecured loan to a foreign trade or business that is not a financial institution.
Q. Is an FBAR required if the account generates neither interest nor dividend income?
A. Yes, an FBAR must be filed whether or not the foreign account generates any income.
Filing the FBAR Form
Q. Where do I file the FBAR?
A. Send completed forms to:
US Department of Treasury
PO Box 32621
Detroit, MI 48232-0621
If an express delivery service is used, send completed forms to:
IRS Enterprise Computing Center
ATTN: CTR Operations Mailroom, 4th Floor
985 Michigan Avenue
Detroit, MI 48226
The contact phone number for the delivery messenger service is (313) 234-1062. This number cannot be used to confirm that your FBAR was received.
The FBAR is not filed with the filer’s Federal tax return.
Q. How do I verify that my FBAR was filed?
A. 90 days after the date of filing, a filer can request verification that the FBAR was received. Verification request may be made by calling (866) 270-0733 and selecting option 1. Up to five documents may be verified over the phone. There is no fee for this verification.
FBAR filing verification requests may be made in writing and must include: the filer’s name, taxpayer identification number, and the filing period. Written requests include a $5 fee for verifying five or fewer FBARs and a $1 fee for each additional FBAR.
A copy of the filed FBAR can be obtained at a cost of $0.15 per page. Check or money order should be made payable to the United States Treasury.
The request and payment should be mailed to:
IRS Enterprise Computing Center/Detroit
ATTN: Verification
P.O. Box 32063
Detroit, MI 48232
Q. How does an FBAR filer amend a previously filed FBAR?
A. FBAR filers can amend a previously filed FBAR by:
- Checking the “Amended” box in the upper right-hand corner of the first page of the form;
- Making the needed additions or corrections;
- Stapling it to a copy of the original FBAR; and
- Attaching a statement explaining the additions and corrections.
Taxpayers considering filing an amended FBAR report should seek the advice of a qualified tax attorney before filing.
Q. How long should account holders retain records of the foreign accounts?
A. Records of accounts required to be reported on an FBAR must be retained for a period of five years. Failure to maintain required records can result in civil penalties, criminal penalties or both.
Penalties
Q. What happens if an account holder is required to file an FBAR and fails to do so?
A. Failure to file an FBAR when required to do so may potentially result in civil penalties, criminal penalties or both. If you learn that you were required to file FBARS for earlier years you should consult an attorney to determine whether you should file delinquent FBAR reports
Q. Can FBAR penalties exceed the amount in a taxpayer’s foreign account?
A. Yes. Under the penalties provision (found in 31 U.S.C. 5314(a)(5)) it is possible to assert civil penalties for FBAR violations in amounts that exceed the balance in the foreign financial account.
Disclosure Programs
Q. Should I participate in the IRS’s Voluntary Disclosure Program?
A. The IRS recently announced that it had reopened its voluntary disclosure program. Those considering participation in the voluntary disclosure program should seek the advice of a qualified tax attorney.
All U.S. persons with unreported foreign financial accounts should seek the advice of qualified tax counsel concerning FBAR reporting issues.
Stephen J. Pieklik of the Pittsburgh tax law firm Williams Coulson has succesffuly advised many clients with respect to foreign financial account matters, including the 2009 Offshore Voluntary Disclosure Program, the 2011 Offshore Voluntary Disclosure Initiative, and the 2012 Offshore Voluntary Disclosure Program.