Expat Tax Info from Barron HarperReport of Foreign Bank and Financial Accounts

By Barron Harper
www.taxbarron.com

Each year, Americans who have ownership interest in foreign financial accounts must consider whether to file Form TD F 90-22.1 REPORT OF FOREIGN BANK AND FINANCIAL ACCOUNTS (FBAR). According to the filing instructions, ‘Each United States person, who has a financial interest in or signature authority, or other authority over any financial accounts in a foreign country, if the aggregate value of these financial accounts exceeds $10,000 at any time during the calendar year, must report that relationship each calendar year.’

A United States person means 1) a citizen or resident of the United States, 2) a domestic partnership, 3) a domestic corporation, 4) a domestic estate or trust. A financial account generally includes any bank, securities, securities derivatives or other financial instruments accounts. The term also means any savings, demand, checking, deposit, time deposit, or any other account maintained with a financial institution or other person engaged in the business of a financial institution.

The form is an information report used as a law enforcement tool and is required by the Bank Secrecy Act (BSA), Title 31, U.S. Code 5314. BSA, while requiring FBAR reporting for aggregate account values exceeding $10,000, further defines accounts as including stock, securities and other non-monetary assets. Due to the weakening of the U.S. dollar to other foreign currencies, the $10,000 threshold can now be easily exceeded. For 2007, $10,000 equaled approximately €7,300.

The due date for FBAR calendar year 2007 is 30 June 2008. No extension is available to delay filing. Regardless whether the form is timely filed, Americans who fall under the definition for required filing should file this report by registered or certified mail post haste. A fine of up to $10,000 could be assessed for non-compliance. The form can be downloaded at: http://www.irs.gov/pub/irs-pdf/f90221.pdf

Related Links:
Report of Foreign Bank and Financial Accounts - IRS page and IRS Press Release
Expat Tax Services