Tuesday, June 21, 2011

June 30th and the FBAR

If you have a foreign bank account, either personally or through work, please remember that you may have to report the account(s) to Treasury by the end of this month. This report is called the Report of Foreign Bank and Financial Accounts, Form TD F 90-22.1, and is usually referred to as the FBAR. If the value of the account(s) exceeds $10,000 at any time, then anticipate that you have to file.

Where the FBAR may get tricky is when one has a signature authority over a foreign account at work. Say for example that your company regularly travels to or has a location in Poland. It is very possible that there will be a Polish account, if for no other reason than for administrative ease. Say that you have authority to sign on that account, although you have no ownership over the account. The company owns the account, not you. Is an FBAR still required?

In the past many an accountant would have said no, but the rules are changing. Believe it or not, the situation described may require an FBAR, although it may also qualify for transitional relief. You do not want to mess with FBAR penalties, as they are quite severe and – in some cases – out of proportion to the money in the account. Treasury is convinced that considerable money is hidden offshore and is having much less patience with such matters.

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