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Wednesday, May 22, 2013

Time to get your FBARs ready!

The deadline to file the 2012 year FBAR (Report of Foreign Bank and Financial Accounts) is fast approaching. The FBAR for 2012 must be received on or before June 30, 2013. This reporting requirement is not to be confused with the foreign financial assets reporting requirement under FATCA - IRS Form 8938.
U.S. persons with interests in or control with respect to foreign financial accounts (e.g., securities, brokerage, savings, demand, checking, deposit, time deposit, etc.) with values that exceed a certain threshold balance are required to file a report commonly referred to as an “FBAR,” i.e., the Report of Foreign Bank and Financial Accounts (Form TD F 90.22). Specifically, any U.S. person who has a financial interest in, or signatory or other authority over, one or more financial accounts in foreign countries with an aggregate value greater than $10,000 at any point in the calendar year is required to report that interest to the Internal Revenue Service. This requirement is met through the filing of an FBAR. A taxpayer is also required to report any interests in overseas financial accounts on his or her federal income tax return where indicated on the applicable schedule. The FBAR is not filed with the federal income tax return.
The consequences of failing to file a required FBAR can be significant. Willful and nonwillful penalties are civil penalties that can apply to individuals. A nonwillful violation can result in imposition of a penalty of up to $10,000. A willful violation can result in imposition of a penalty of the greater of $100,000 or 50 percent of the balance in the subject account. In some instances, violations can result in criminal sanctions.
To read more or to get more information on how to file, contact LaVonne Lawson or visit LawsonTax.
Mauricio Leon de la Barra is an international law attorney licensed to practice law in Mexico and California, and has more than 15 years of experience representing clients in cross-border business and real estate transactions and litigation involving international, U.S. and Mexican laws.