If you or your entity is subject to the jurisdiction of the U.S. and has financial interests in or signature authority, or other authority over any financial accounts including bank, securities, or other types of financial accounts in a foreign country; and if the aggregate value of these financial accounts exceeds $10,000 at any time during the calendar year, you must report that relationship. If the aggregate value of accounts does not exceed $10,000, no report is required.

The government is cracking down on U.S. citizens who neglect to report these relationships and the penalties are severe. Failure to disclose the required information to the U.S. Department of the Treasury may result in substantial civil and/or criminal penalties.

If a person willfully fails to file a Foreign Bank Account Report (FBAR), the civil penalty will be equal to a minimum penalty of $25,000 or the greatest of 50% of the balance in the account at the time of the violation or $100,000. The criminal penalty for willful failure to file a FBAR is a fine of not greater than $250,000 and/or imprisonment for not more than five years.

If you or your entity has financial interests in a foreign country, you are responsible for providing Spector & Associates with the information necessary to prepare the required return if you want us to file the report for you. Otherwise, you are responsible for filing Form TDF 90-22.1 which has its own filing deadline (June 30th) and filing address. This form is not submitted with your regular income tax returns.

What information do we need to complete this form? Generally, we need a statement showing the name of the financial institution, the account number, name of the account holder and country in which the funds are held. The form does not ask for a specific dollar amount, but rather has a box to check for the maximum value of the account: Under $10,000, $10,000 to $99,999, $100,000 to $1,000,000, or Over $1,000,000. A separate form is required for each foreign financial institution.

If you are interested in viewing the form and instructions, they are available on the Internal Revenue Service’s website.