FBAR Deadline

06/03/11 11:04 Filed in: FBAR

The FBAR filing deadline is June 30 every year for the preceding year.  It is important that the FBAR forms be filed on time as there is no provision for extension.  Also the forms must be received by the deadline, not just postmarked.

Anyone with foreign accounts or foreign assets should know about the Offshore Voluntary Initiative Disclosure and the new Foreign Account Tax Compliance Act requirements.  Both of these are summarized below.

Please feel free to contact me if more information is needed.



1. OVDI-Offshore Voluntary Disclosure Initiative is a program to allow anyone who has not complied with the FBAR requirements in prior years to catch up at reduced penalties.  The penalties are still significant --usually 12.5% or more of the highest balance in the account starting in 2003.   The program expires Aug 31, 2011 and requires amended tax returns and FBAR forms for every year from 2003-2009.  If you want to pursue this, you would need to start ASAP as everything has to be complete and submitted by the Aug 31 deadline.  That means you would need all your bank statements and tax returns for 7 years (2003-2009).  

There is one significant point re OVDI:  If you have reported all your taxable income  but haven't been filing FBARs, you can file delinquent FBARs without penalty.  See the 2011 OVDI link below, Q&A number 17).  This is a fantastic opportunity for people who qualify.  It probably won't be repeated.

2. FATCA (Foreign Account Tax Compliance Act)- starting in 2011  Foreign Financial Assets over $50,000 must be reported on your tax return.  This reporting requirement is in addition to FBAR.  Foreign Financial Assets (FATCA)  and Foreign Financial Accounts (FBAR) are not always the same thing.  For example, if you have stock in a foreign company not held in a brokerage account, that would be reported under FATCA but not FBAR.


The FATCA report will be  filed with your tax return as compared to FBAR which is filed separately.   FATCA information  will be required on IRS Form 8938.

Beginning on January 1, 2013, FATCA  requires all foreign financial institutions to identify and report their US account holders (i.e., US citizens, residents, and green card holders) to the US government or face 30% withholding tax on their US investments including, but not limited to, US source dividends and interest and gross sales proceeds.  



3.FBAR Examples:  
Here are some examples which may help clarify the FBAR requirements:

  • You had $6000 in one account and $5000 in another, FBAR is required.  Aggregate value exceeds $10,000.  You use the highest balance in the foreign currency and convert it to US dollars using the Dec. 31 exchange rate.

  • You are buying a condo a foreign country  and transfer $100,000 to a foreign bank account and few minutes later transferred out to the seller/ escrow holder.  FBAR is required even if the money is only in the account for a few minutes at any time during the year.

  • You have a joint account with another person, both of you have to report the full value of the account(s).  Multiple filings of the same account are common with FBAR.  So it usually doesn't work to say: "I didn't file because someone else did."  Spouses may sometimes be allowed to file a joint FBAR report but not always.

  • Signature authority--example:  You have an elderly parent living in another country and you can sign checks on his/her account.  FBAR is required as you have signature authority over the account even though it is not your money.

  • You are a US greencard holder living abroad and don't file US taxes under a treaty based exception.  You still have to file FBAR.  FBAR is filed under US banking regulations, not tax regulations, so the tax-based treaty exceptions  don't apply.

  • You are neither a US citizen or greencard holder but file a US resident tax return based on "substantial presence".  FBAR is required.

  • You own a controlling interest in a business (partnership, corporation) and the business has foreign accounts.  FBAR is required even if you don't sign the checks or directly control the funds.  Example: The company treasurer signs all the checks.  You still have to file under FBAR.  If you have an interest in a foreign corporation, partnership, trust or LLC, income tax filings may also be required separate from your personal taxes forms or FBAR filing.

  • You have an account with Bank of America at its office in Paris.  FBAR is required.  Even though B of A is a US bank, the account is at a foreign office or branch.  What controls is the location of the office or branch where you have a relationship.  

  • You have a pension or IRA type account that is not IRS qualified, you may have an FBAR requirement even though the funds are held by a trustee or by your employer.  It depends on whether you can control disposition of the funds.  This usually happens when you work for a foreign employer overseas or are self employed overseas and have an IRA/401k type account at foreign bank or broker.  

  • Cash value of life insurance with a foreign insurer, gold or gold certificates held  outside the US are also subject to FBAR  (so it's not always just bank/broker type accounts).

  • If you have an interest in foreign accounts or trusts, the disclosure information at the bottom of Schedule B of your tax return must also be completed.  This is in addition to the FBAR or FATCA requirements.



For more information see the links below:

http://www.fincen.gov/news_room/nr/pdf/20110224.pdf 

FAQs Regarding Report of Foreign Bank and Financial Accounts (FBAR)

http://www.irs.gov/pub/irs-pdf/f90221.pdf

2011 Offshore Voluntary Disclosure Initiative Frequently Asked Questions and Answers