FBAR and FATCA
These IRS initiatives have beome the twin 800 pound gorillas of US expat tax and US resident issues. Read carefully if you are an expat (or thinking of becoming one), if you are a US work or resident visa holder - or if - for any other reason, you are an owner of - or even a signer on - a non-US bank or brokerage account.
FOREIGN BANK ACCOUNT REPORTING – FBAR – IN FORCE NOW
IF YOU HAVE a non-US bank or brokerage account or accounts – or, are thinking of doing so – we urge you to read these articles and become aware of the draconian fines and penalties for falling afoul of these two new US Treasury and IRS compliance hot buttons.
See who is or is not subject to FBAR; you may be – the rules are extensive and complex.
Here is the latest news from the professional and business press on FBAR :
— Sacre Bleu! The Foreign-Account Penalty – Wall St. Journal – 4-30-11
— Do Your Clients’ Foreign Assets Create Criminal Tax Exposure? - AdvisorOne – 4-25-11
— IRS Issues Final FBAR rules, revised FBAR form - Forbes – 4-24-11
— Final Regs Issued On FBAR Reporting Requirements - Assn of Corporate Counsel/Lexology.com – 4-18-11
FORMS YOU MAY NEED:
– TDF90-22.1 – Report of Foreign Bank and Financial Accounts (short form) - rev March 2011 (PDF) – to report a single account
– TDF90-22.1 – Report of Foreign Bank and Financial Accounts (long form) – rev March 2011 (PDF) – to report multiple accounts
— TDF90-22.1 – Full Long Form and Instructions – online IRS website link: http://www.irs.gov/pub/irs-pdf/f90221.pdf
DUE DATE: The deadline is an ARRIVAL deadline, not a proof-of-mailed-by deadline. Due date is June 30th for the prior tax year. That is, June 30, 2011 for tax year 2010. We strongly suggest using FedEx, DHL or certified mail so you have proof of mailing and proof of arrival by the June 30th due date.
WHAT TYPES OF ACCOUNTS MUST BE REPORTED?
Details on various forms of foreign financial accounts – and there are many – are on the IRS web page: “FAQs Regarding Report of Foreign Bank and Financial Accounts (FBAR) – Financial Accounts.” (Note: as of 5-20-11, IRS note’s that updated rules issued 2-24-11 are not reflected on this page so anything you read should also be checked against other sources.)
FBAR: ARE YOU REQUIRED TO FILE?
IF you are a US Person and have a financial interest in or signature or other authority over any foreign financial accounts as defined in the above section – AND IF the aggregate value of these accounts exceeds $10,000 at any time during the calendar year – YOU HAVE A LEGAL REQUIREMENT TO FILE THIS FORM.
Details on what qualifies as a “US Person” are detailed on the IRS web page: “FAQs Regarding Report of Foreign Bank and Financial Accounts (FBAR) – United States Person” (Note: as of 5-20-11, IRS note’s that updated rules issued 2-24-11 are not reflected on this page so anything you read should also be checked against other sources.)
FATCA – FOREIGN ASSET TAX COMPLIANCE ACT - (starting 2011 tax year)
WHAT TYPES OF ACCOUNTS MUST BE REPORTED?
Other than as outlined in the “FATCA – the Basics” link, full details on the FATCA program have not yet been released, although a draft of the IRS form to be used (Form 8938) has recently been published. We’ll update this information as we receive updates. A November, 2010 article – FATCA – the Basics (PDF) – appeared in Forbes
FINAL NOTE:
While we will continue to keep you advised via this website on FBAR and FATCA, because of the financial and legal liability issues and stiff penalties involved, and after consultation with our malpractice insurance carrier, GlobalTaxHelp cannot file this form on behalf of clients. Anyone required to file this form (TDF 90.22.1) must do so directly. There is no provision for e-filing; paper must be used.
FBAR rules have become a major irritant, to be sure, but a fact of expat life these days, indeed the governments expanded compliance net extends to many more “US persons” than just expats. Make sure you know your status and your possibility of being required to file such reports..
Earlier articles on FBAR/FACTA:
— Navigating the Latest US Tax Maze – Gulf News (UAE) – 1-29-11
— FBAR – New Amnesty Program? – Lexology-ACC - 1-26-11
— Still Have a Foreign Account? - Forbes – 1-20-11
— FBAR – One Court Pushes Back - Forbes – 12-15-10
— FATCA – the Basics - Forbes – 11-1-10
— What to Do if Your Foreign Account is a PFIC - BNA – 11-10-10
— Six Questions about Foreign Bank Accounts – Forbes – 8-2-10
— Ten Things to Know about Offshore Bank Accounts – Forbes – 7-26-10