What Are The Reporting Requirements If You Have A Foreign Bank Account?

There are risks associated with owning or having ownership interest in a foreign account (which includes being signatories) and failing to disclose its existence to the IRS. The Foreign Account Tax Compliance Act ("FATCA") was passed requiring foreign banks to disclose information about accounts that are associated with or owned by United States citizens.

As part of the Bank Secrecy Act (Title 31), qualifying individuals must file Form TD F 90-22.1, Report of Foreign Bank Account and Financial Accounts ("FBAR") which was recently revised in March 2011. This Form is separate and in addition to other filing requirements by the IRS.

Form TD F 90-22.1 must be received by the U.S. Department of Treasury by June 30, 2011. Because the FBAR technically is part of the Bank Secrecy Act (Title 31) rather than the Income Tax Code (Title 26), it contains traps for the unwary. Unlike the filing income tax forms which follow the mailbox rule, FBAR forms must be received by June 30, 2011, the due date, not just mailed by it. There is no electronic filing option for the FBAR. The FBAR must be mailed to a special address in Detroit rather than a taxpayer's usual IRS service center.

Another critical distinction is that the due date for filing cannot be extended. As a result, any extensions a taxpayer receives for filing an income tax return are not applicable to the FBAR. Unless Congress changes the law, the FBAR due date will remain June 30, which is out of sync with the normal tax deadlines of April 15 and October 15 (for those on extension).

Therefore, the taxpayer should be aware that in addition to disclosing foreign accounts on Form 1040, Schedule B, Part III, Form TD F 90-22.1 must be timely filed, i.e. received by the U.S Department of Treasury in Detroit Michigan no later than June 30, 2011.