In the wake of soaring budget deficits and testimony of tax evasion by wealthy Americans and large US companies, the US Treasury and Internal Revenue Service have revised their regulations regarding the reporting of foreign bank and financial accounts held by US persons and those doing business in the United States.
The following are the key points of the rules regarding the reporting of non-US bank accounts by US-registered entities:
- All US entities, including US LLCs, corporations, partnerships, and even non-resident persons with a branch or business activity in the United States, must report any non-US bank accounts and financial holdings that have exceeded the equivalent value of over USD 10,000 at any point during a calendar year, by June 30 of the following year, to the Internal Revenue Service office in Detroit, Michigan. There is no extension of the deadline.
- US persons, including LLCs, with signature control over but no financial interest in such a qualifying financial account must report the account.
- US persons with a financial interest in over 25 such accounts need not report the accounts, but file an FBAR account indicating their interest in the accounts, and make the information available to the US government on demand.
- An amnesty for undisclosed accounts ends on September 23, 2009, along with the rest of the amnesty for undisclosed foreign income for US persons.
The FBAR is a Treasury regulation under the Bank Secrecy Act, not a tax law, so the default rules regarding single-member LLCs (treating them as disregarded entities for tax purposes) is ignored. FBARs must be received by the due date at the particular office; penalties cannot be discharged through bankruptcy; and the privacy protections granted to tax returns are not granted to the FBAR.
To learn more about the FBAR, please refer to the Internal Revenue Service website at www.irs.gov, and type in “FBAR” in the search box. The form itself can be found at Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts
Naturally, we here at USA Corporate are concerned about the impact that this change will have on your clients, and are here to assist you in any way we can. If you have any questions regarding FBAR, click here and let us know your questions and concerns.