Are you Complying with the Offshore Reporting Requirements?
Did you know that there is an important due date coming up, June 30, 2011?
If you are a “U.S. person” and hold foreign assets with an aggregate value of $10,000 or more, this is the deadline for filing a form with the U.S. Treasury – Form TD F 90-22.1. This “foreign bank account report” (FBAR) allows the Treasury to look at any foreign “bank, brokerage, or ‘other’ financial accounts” you held during 2010.
You must file the form if you have a financial interest in, or signature or other authority over foreign bank, securities or “other” financial accounts with an aggregate value exceeding $10,000. Also, you must report if you have an offshore account that contains only precious metals, other non-cash assets, or if the account generates no income.
You must also report your foreign accounts each year on Schedule B of your federal income tax return.
The tax penalties for failing to file the form are massive. You could end up paying a $10,000 fine for each unreported account each year you neglect to file the FBAR. If you “willfully” fail to file the form, you could face a fine up to $500,000, five years imprisonment, or both.
In early 2010, President Obama signed the Hiring Incentives to Restore Employment (HIRE) Act. The HIRE Act significantly expands the scope of offshore reporting requirements if you hold more than $50,000 of “foreign financial assets.” These requirements take effect in 2011 and will be reported on newly created IRS forms in 2012.
The offshore reporting requirements are complex, time consuming, and are only going to get more complicated. If you have questions or need assistance, please contact Anders or your tax advisor.