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The June 30, 2012, deadline for filing a Report of Foreign Bank
And Financial Accounts ("FBAR") with the Department of
the Treasury is rapidly approaching. (Form TD-F 90-22.1). The
government established the FBAR reporting requirement following the
terrorist attacks of September 11, 2001, as a way to combat
financing of terrorism through foreign accounts. The government has
vigorously enforced FBAR rules and regulations and instituted
substantial penalties. However, individuals and entities who failed
to file required FBAR forms for past reporting years have a new
opportunity to reduce applicable penalties.
Under the current regulations, United States citizens, resident
aliens of the United States, and entities formed under the laws of
the United States or any State must file an FBAR on or before June
30 of each year identifying each "bank, securities, or other
financial account in a foreign country" held during the
previous year, in which the taxpayer has "a financial interest
in, or signature or other authority over" that has an
aggregate value of $10,000. Where multiple United States persons
have a financial interest or signature or other authority over the
same account, each must file an FBAR. Failure to comply with FBAR
reporting requirements can have serious consequences. A willful
violation of the requirements can result in a civil penalty ranging
from $25,000 to $100,000, for each account not reported, and/or
criminal prosecution.
Fortunately for United States citizens, resident aliens, or
entities who failed to file FBAR forms for prior reporting years,
on January 9, 2012, the Internal Revenue Service indefinitely
reopened the Offshore Voluntary Disclosure Program
("OVDP"). The OVDP allows delinquent FBAR filers to come
forward and pay reduced penalties. This is the third iteration of
the OVDP, and the IRS received more than 33,000 voluntary
disclosures as a result of its 2009 and 2011 offshore
initiatives.
Any individual or entity with a financial interest in or
authority over any accounts located outside the United States would
be wise to consult with an attorney or accountant prior to the FBAR
deadline on June 30, 2012, or regarding the OVDP.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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