The FBAR Deadline is June 30, but what is an FBAR?
In the last few years, FBARs have suddenly been getting a lot of press. Although the form has been around for years, the IRS has recently increased their enforcement (and the penalties!) for failure to file the FBAR for the current or prior years. Remember a few years ago when everyone was getting in trouble for having accounts in Switzerland and not reporting the income on their US tax returns? The purpose of the FBAR is to prevent people from sheltering income in foreign countries.
Form TDF 90-22.1 is the Report of Foreign Bank and Financial Accounts, commonly known as FBAR. If you have financial interest in, signature authority, or other authority over foreign accounts with an aggregate value exceeding $10,000 at any point during the year, you must file an FBAR. The FBAR reports the financial institution, account number, and maximum value during the year for each foreign account.
Failure to file an FBAR can result in civil or criminal penalties, or both. The civil penalty for failure to file can be $10,000 per year, not limited to the account’s value. For example, if you have a foreign account with a value of $20,000 and didn’t file the FBAR for five years, you could owe a penalty of $50,000 even though your account balance was only $20,000. Penalties are significantly greater if it is determined to be a willful failure to file.
If you have been reporting the income, but you haven’t filed your FBARs, the 2011 Offshore Voluntary Disclosure Initiative provides taxpayers an opportunity to come forward to disclose foreign accounts and avoid the risk of detection by the Internal Revenue Service and possible criminal prosecution.
Keep in mind, this form must be received (not postmarked) by June 30, and there is no extension of time to file.
For more information on filing your FBAR or the 2011 Offshore Voluntary Disclosure Initiative, please contact your Anders advisor.