IRS Warns of Impending FBAR Deadline June 30th
Daszkal Bolton would like to remind clients to submit reports of any foreign bank accounts to the IRS on or before the June 30, 2012 deadline for Form TD F 90-22.1.
If you have a bank or other financial account in a foreign country, or signature authority over such an account, you will be required to report the account using “Report of Foreign Bank and Financial Accounts,” to the Treasury Department by June 30th. Reporting of these accounts may be required, even if they do not generate any taxable income!
U.S. citizens, residents, and U.S. based entities that have $10,000 or more in foreign bank accounts or offshore financial accounts are required to file the Foreign Bank Account Report, or FBAR, form. Form TD F 90-22.1 is not a tax form and should not be filed with any income tax return, and it may be filed either electronically or on paper. Requests for an extension of time to file this form cannot be granted, it must be received by the IRS on or before June 30, unlike other IRS forms, which can be postmarked on the due date.
Penalties for failure to file an FBAR include hefty fines and possible imprisonment. Those who willfully fail to file an FBAR are subject to penalties as high as 50 percent of the total balance of the account. Each year of non-compliance results in a separate violation and penalty (i.e. multiple 50 percent penalties), which can equal 300 percent of the foreign account amount.
The Offshore Voluntary Disclosure Initiative was created for citizens, residents and entities that have failed to file the FBAR in the past, who wish to comply with tax laws regarding their foreign accounts. Through the OVDI, some taxpayers may be eligible for penalties as low as 5 percent, though many will face a 27.5 percent penalty. To participate in the program, taxpayers must file all original and amended returns (including payment of back taxes and interest) for up to eight tax years. Remember that if the IRS discovers the account first, the penalties can be severe. OVDI and disclosure may protect filers from criminal tax exposure. There are other important issues at stake, please contact a certified international accounting expert before taking any action.
Contact Us:To discuss this issue at hand and for help with FBAR, please contact Mark Chaves, CPA, Partner-in-Charge of International Tax. If you wish to participate in the OVDI, need to discuss disclosure whereby you file the FBAR and amended tax returns, or have questions regarding the risk of investigation and FBAR penalties, mark can be reached at 561-367-1040 or firstname.lastname@example.org.