Your Wealth Care Professionals Reports of Foreign Bank and Financial Accounts Each U.S. person who has a financial interest in or signature or other authority over foreign bank accounts, securities accounts or other financial accounts must file a Form TD F 90-22.1 (Report of Foreign Bank and Financial Accounts or FBAR) for each calendar year during any part of which the aggregate value of the accounts exceeds $10,000. This is true even if the account has not earned any income during the year. The FBAR is due by June 30 following the year for which it applies. The penalties for failure to file a FBAR are onerous. The civil penalties for a non-willful violation may not exceed $10,000 per violation. Civil penalties for a willful violation may not exceed the greater of $100,000 or 50% of the amount in the account at the time of the violation. The criminal penalty for willful violations is a fine of not more than $250,000, or imprisionment for not more than five years, or both. Under a temporary relief provision, taxpayers who failed to file a prior year FBAR report on an account for which they had no tax liability can cure the FBAR delinquency without being subject to civil or criminal penalties. This is accomplished by the taxpayer filing a delinquent FBAR report with an explanatory statement by August 31, 2011. This temporary relief provision benefits: )1) taxpayers who have signature authority over a foreign account but no beneficial interest in that account, )2) taxpayers who reported all income from the foreign account to IRS, but failed to a FBAR, or (3) taxpayers who had a non-income producing foreign financial account. However, FBARS for 2010 are due on June 30, 2011 and must be filed by that date. In addition, any individual who, for any tax year beginning after March 18, 2010 holds an interest in a specified foreign financial asset must attach to his or her income tax return for that tax year the required information for each specified foreign financial assets if the aggregate value of all the individual's specified foreign financial assets exceeds $50,000. Specified foreign financial assets include financial accounts maintained by foreign financial institutions and other assets not held in accounts maintained by financial institutions, such as stock or securities issured by non-U.S. persons, financial instruments or contracts with issuers or counter parties that are non-U.S. persons, and interests in certain foreign entities. However, no disclosure is required for interests that are held in a custodial account with a U.S. financial institution. The penalty for failing to report specified foreign financial assets for a tax year is $10,000. However, if this failure continues for more than 90 days after the day on which the IRS mails notice of the failure to the individual, additional penalties of $10,000 for each 30-day period (or fraction of the 30-day period) during which the failure continues after the expiration of the 90-day period, with a maximum penalty of $50,000. IRS has: (1) announced that the annual reports will be filed on Form 8938, which will have to be attached to the individual's income tax return for the tax year and (2) suspended the filing obligaion for individuals who have to file an income tax return for a tax year before IRS releases Form 8938. However, the Form 8938 for the suspended years will have to be attached to the individual's next income tax return that has to be filed with IRS. If you want to file, or are uncertain whether you are, or will be, required to file, a FBAR or a Form 8938 for the current year or for a past year, please give us a call to discuss your situation and the best way to proceed. IRS Announces 2011 Standard
LISTED BELOW ARE A FEW DOCUMENTS THAT PEOPLE COMMONLY WANT TO KNOW HOW LONG TO KEEP: Profit and Loss Statements --- Permanently |
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