June 30 is the deadline for filing the current year Report of Foreign Bank and Financial Accounts, Treasury Form TD F 90-22.1 (FBAR). “United States persons” having a financial interest in or signature authority or other authority over any financial account in a foreign country have an FBAR filing requirement if the aggregate value of these accounts exceeds $10,000 at any time during the calendar year.
The new FBAR instructions (revised in October 2008) contained a change in the definition of “United States person.” Under this new definition, persons can include U.S. citizens or residents, certain foreign persons in and doing business in the United States (including those filing Form 1040NR), domestic corporations, domestic partnerships, domestic estates or domestic trusts. Since issuing the new form, the IRS has received a number of questions and comments regarding the new definition and realizes that it may have to issue new guidance to clarify what the new definition means.
Because the June 30, 2009, deadline is so near, the IRS announced on Friday that it is allowing all persons to rely to on the definition of “United States person” found in the prior version of FBAR for determining who must file an FBAR (Announcement 2009-51). Under this definition, foreign persons are not required to file an FBAR.
This substitution applies only to FBARs due on June 30, 2009. The IRS anticipates issuing further guidance for FBARs due in subsequent years. All other filing requirements concerning the FBAR form are still in effect, and the information needs to be reported by June 30, 2009, on the newly updated, current year, Treasury Form TD F 90-22.1 (FBAR).
FBAR Filings Must Be Received by June 30
Unlike the rule for tax forms, FBAR forms are deemed filed when received by the IRS, not when postmarked. (As a result, use of certified mail with return receipt requested is recommended.) No extension of time to file is granted.
Persons required to file the form who do not do so by June 30 are subject to a penalty. For a willful violation, the penalty can be as high as the greater of $100,000 or 50% of the amount in the foreign account. For a nonwillful violation that is not corrected and for which there is no reasonable cause, the penalty can be as high as $10,000. Further, practitioners may be subject to OPR disciplinary action if they do not exercise due diligence with respect to their client’s FBAR filing requirements (see IRS, “Professional Responsibility and the Report of Foreign Bank and Financial Accounts.”)
Eileen Reichenberg Sherr, CPA, M. Tax, is a senior technical manager with the AICPA in Washington. She can be reached at email@example.com.