FBAR News

FBAR News
With the upcoming June 30th deadline to file 2013 FBAR forms for US Taxpayers with foreign accounts over $10,000 and so much News regarding FBAR's, it's a good time to review the FBAR requirement as well as the news relating to the IRS' Enforcement Efforts regarding FBAR's and Offshore Voluntary Disclosures, including:

1. Report of Foreign Bank and Financial Accounts (FBAR)
2. New Reporting Requirements by U.S. Taxpayers Holding Foreign Financial Assets (Form 8938)
3. Offshore Voluntary Disclosure Program 

1.  Report of Foreign Bank and Financial Accounts (FBAR) 
If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, the Bank Secrecy Act may require you to report the account yearly to the Internal Revenue Service by filing Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR).

• Who Must File an FBAR (Form TD F 90-22.1)

United States persons are required to file an FBAR (Form TD F 90-22.1) if:

1. The United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; and
2. The aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year to be reported.

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 or under the laws of the United States; and trusts or estates formed under the laws of the United States.

Look to the form’s instructions to determine eligibility for an exception and to review exception requirements.

• Reporting and Filing Information 

A person who holds a foreign financial account may have a reporting obligation even though the account produces no taxable income. Checking the appropriate block on FBAR-related federal tax return or information return questions (for example, on Schedule B of Form 1040, the "Other Information" section of Form 1041, Schedule B of Form 1065, and Schedule N of Form 1120) and filing the FBAR, satisfies the account holder's reporting obligation.

The FBAR is not filed with the filer's federal income tax return. The granting, by the IRS, of an extension to file federal income tax returns does not extend the due date for filing an FBAR. You may not request an extension for filing the FBAR. The FBAR is an annual report and must be received by the Department of the Treasury in Detroit, MI, on or before June 30th of the year following the calendar year being reported. While FinCEN strongly encourages individuals to electronically file FBARs, the form can be mailed to one of the two addresses below, provided that the mailing is received by June 30, 2013:

File by mailing the FBAR (Form TD F 90-22.1) to:
United States Department of the Treasury
P.O. Box 32621
Detroit, MI 48232-0621

If an express delivery service is required for a timely filed FBAR, address the parcel to:
IRS Enterprise Computing Center
ATTN: CTR Operations Mailroom, 4th Floor
985 Michigan Avenue
Detroit, MI 48226

Delivery messenger service contact telephone number: (313) 234-1062. 
Account holders who do not comply with the FBAR reporting requirements may be subject to civil penalties, criminal penalties, or both.

• Electronic Filing for FBAR Forms – MANDATORY Beginning July 1, 2013

On June 29, 2011, FinCEN announced that all FinCEN forms must be filed electronically with certain exceptions. The FBAR was granted a general exemption from mandatory electronic filing through June 30, 2013. E-filing is a quick and secure way for individuals to file FBARs (Form TD F 90-22.1). Filers will receive an acknowledgement of each submission. For more information about FBAR e-filing, read the FinCEN news release.  FinCEN BSA E-filing System.  

The FBAR filing requirements, authorized under the Bank Secrecy Act, have been in place since 1972. The FBAR form is used to report a financial interest in, or signature or other authority over, one or more financial accounts in foreign countries. No report is required for a year if the accounts’ aggregate value does not exceed $10,000 at any time during that year.

2. New Reporting Requirements by U.S. Taxpayers Holding Foreign Financial Assets (Form 8938)
Taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS on Form 8938, Statement of Specified Foreign Financial Assets. File Form 8938 if max value of account exceeds $50,000 at any point during the year. Must use US Treasury FMS website Treasury Reporting Rates of Exchange to calculate foreign currency exchange rate.

The new Form 8938 filing requirement does not replace or otherwise affect a taxpayers requirement to file FBAR. A chart providing a comparison of Form 8938 and FBAR requirements, and other information to help taxpayers determine if they are required to file Form 8938, may be accessed from the IRS Foreign Account Tax Compliance Act Web page.

3. Offshore Voluntary Disclosure Program
On Jan 9, 2012, the IRS reopened the Offshore Voluntary Disclosure Program following continued interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programs. This program will be open for an indefinite period until otherwise announced.

Source: IRS