Many taxpayers are required annually to report foreign bank and financial accounts to the U.S. government on Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts, (often referred to as FBAR) and are required to pay U.S. tax on income of those foreign accounts, as appropriate. This reporting requirement is contained within the Bank Secrecy Act (BSA) (contained in Title 31 of the U.S. Code). In recent years, government enforcement in this area has increased significantly.
In addition, starting with calendar 2011 for individual taxpayers, there will be an additional annual reporting requirement under IRC Section 6038D (contained in Title 26 of the U.S. Code) for specified foreign financial assets on Form 8938. This new reporting requirement is the result of the Foreign Account Tax Compliance Act (FATCA), which was contained in the Hiring Incentives to Restore Employment (HIRE) Act. Reporting under IRC Section 6038D may be expanded to other types of filers in future years. Other portions of FATCA will require foreign financial institutions to report directly to the IRS certain information about financial accounts held by U.S. taxpayers or held by foreign entities in which U.S. taxpayers hold a substantial ownership interest.
Important News:
- Many calendar 2011 FBARs still due by June 30, 2012. However, FinCEN Notice 2012-1 extends the due date to June 30, 2013 for 2011 and earlier years for certain financial professionals.
- Offshore Voluntary Disclosure Program reopened 01.09.2012 for indefinite period, for those with undisclosed income from offshore accounts to get current with their U.S. federal income taxes. More information to be released by IRS in next month. Indicates procedures being developed for dual citizens.
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