Thursday, October 09, 2008

SURPRISE! NEW FBAR EXPANDS OFFSHORE ACCOUNT REPORTING

There are three certainties in life - death, taxes, and increases in U.S. information reporting requirements. In compliance with the third of these certainties, the U.S. Treasury Department has issued a new FBAR form that expands reporting of foreign accounts beyond those previously required.

The Form TD F 90-22.1 (known as the "FBAR") is a reporting form required of U.S. persons that have interests in non-U.S. accounts. It is a Treasury Department form, not an IRS form. It is not filed with a tax return, but is due on a different day and location than income tax returns. The Form is problematic, since many persons that are required to file it do not know about it, and the penalties for noncompliance can be severe. The extension of the reporting requirements will only exacerbate these problems.

Some of the expansions in reporting include the inclusion of interests in foreign mutual funds, and the inclusion of reporting by foreign entities (such as the extension of reporting to U.S. unincorporated branches of foreign entities).

The new Form must be used after 12/31/08. Click on the following link to view a summary of who is subject to the reporting requirements under the instructions to the new Form - http://tinyurl.com/3es5jx.

A copy of the Form and instructions is available at http://www.irs.gov/pub/irs-pdf/f90221.pdf.

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