U.S. taxpayers living abroad and at home who have foreign bank accounts, stock accounts, and other financial accounts must disclose that information in Question 7, Part III, Schedule B of the Form 1040. 

 

Form TDF 90-22.1  is required to be filed by U.S. citizens and permanent  residents who have financial interest in or signature or other authority over any financial accounts, including bank, securities, or other types of financial accounts in a foreign country, if the aggregate value of these financial accounts exceeded $10,000 at any time during the tax year (the highest value of each account during the tax year combined with all other foreign accounts exceeds $10,000 at any one time during the year). The form is due on June 30th of each year following the year reported on (7/2/07 for 2006). The due date cannot be extended.  The extensions filed for your tax returns do not extend the due date of this form. The address to file this return which is a P.O. Box is shown on the form. We are informed that the following street address can be used for DHL or Fed Exp delivery of the form in order to meet the deadline : U.S. Department of Treasury, Currency Transaction Reporting,  985 Michigan Avenue, Detroit, Michigan 48226.  We have not been able to confirm this address and therefore you use it at your own risk.

 

In recent testimony by Treasury Department officials, it was made clear that addressing the lack of disclosure of foreign financial accounts has become a priority. IRS has recently developed an Offshore Voluntary Compliance Initiative (OVCI) that allows partial amnesty until April 15, 2003. Also, new, easier to impose penalties, on top of those that already exist, are likely to be added by Congress this year for non-filing of the Treasury Form TD F 90-22.1. The Secretary of the Treasury may impose a civil penalty on any person who willfully violates this reporting requirement. The civil penalty is the amount of the transaction or the value of the account, up to a maximum of $100,000; the minimum amount of the penalty is $25,000. In addition, any person who willfully violates this reporting requirement is subject to a criminal penalty. The criminal penalty is a fine of not more than $250,000 or imprisonment for not more than five years (or both); if the violation is part of a pattern of illegal activity, the maximum amount of the fine is increased to $500,000 and the maximum length of imprisonment is increased to 10 years.

Congress in 2004 amended this section to provide that the Treasury can assess the a $10,000 penalty whether the failure to file this information form is willful or not. This penalty can be waived by the Treasury for reasonable cause if the return has been filed.  The Treasury has not given any guidance on reasonable cause or on when it will or will not impose a penalty. Any form not filed is subject to the same penalty upon later discovery by the IRS. Therefore, it is best to attach an explanation with reasonable cause to any late filed TDF 90-221.

 We can assist you with filing these forms and meet other disclosure requirements of any foreign activities such as ownership interests in foreign corporations, foreign trusts, and foreign partnerships.  This return is not filed with your tax return and goes to a different address. It is best to file it certified mail return receipt.

FREQUENTLY ASKED QUESTIONS ON THE FBAR (TDF 90-22.1)

 

Client Foreign Bank or Financial Account Questionnaire