Tax Alert: Taxpayers Advised to Report Foreign Bank and Financial Accounts by June 30
6/01/2009
The deadline to file the Foreign Bank Account Report (FBAR) is June 30. The IRS has been increasing its focus in this area and has announced it will be imposing significant penalties where the FBAR is not filed on a timely basis and will undoubtedly act even more harshly where the income earned by United States taxpayers from foreign accounts is omitted from their income tax returns.
Each United States person (citizen or resident of the United States or a person in and doing business in the United States) who has a financial interest in or signature or other authority over any foreign financial accounts, including bank, securities, or other types of financial accounts, in a foreign country must report that relationship each calendar year by filing the FBAR with the Department of the Treasury on or before June 30 of the succeeding year. This is applicable if the aggregate value of these financial accounts exceeds $10,000 at any time during the calendar year. Where a United States company has a foreign bank account directly or has a financial interest in such an account by virtue of its ownership of a foreign subsidiary which has an account, not only must the U.S. company file the FBAR but any of its U.S. officers or employees who have signatory or other authority over such account must file a FBAR as well.
There is a voluntary disclosure program available for people and companies that may have previously avoided filing the FBAR, reporting earnings, and paying taxes from overseas interests but wish to do so now. The IRS announced a reduced penalty structure under this program and the program expires on September 23, 2009.
It is extremely important that you let your J.H. Cohn professional know of any assets held in a foreign account or any income earned overseas so that it may be properly reported. If for some reason foreign income from a prior year was not reported or the FBAR was not filed in a prior year please contact your J.H. Cohn professional at 877-704-3500 to discuss what the next steps should be.
Circular 230 Notice: In compliance with U.S. Treasury Regulations, the information included herein (or in any attachment) is not intended or written to be used, for the purpose of i) avoiding penalties the IRS and others may impose on the taxpayer or ii) promoting, marketing or recommending to another party any tax related matters.