Below is a list of frequently asked questions addressing several aspects of the foreign bank account reporting (FBAR) filing requirement.
Q. What is an FBAR?
A. An FBAR is a Report of Foreign Bank and Financial Accounts. The form number is TD F 90-22.1 (PDF).
Q. Who must file an FBAR?
A. Any United States person who has a financial interest in or signature authority or other authority over any financial account in a foreign country, if the aggregate value of these accounts exceeds $10,000 at any time during the calendar year. See also Notice 2010-23.
Q. What is a foreign country?
A. A “foreign country” includes all geographical areas outside the United States, the commonwealth of Puerto Rico, the commonwealth of the Northern Mariana Islands, and the territories and possessions of the United States (including Guam, American Samoa, and the United States Virgin Islands).
Q. What is a United States person?
A. “United States person” includes a citizen or resident of the United States, a domestic partnership, a domestic corporation, and a domestic estate or trust. See Announcement 2010-16.
Q. Is a single-member LLC, which is a disregarded entity for U.S. tax purposes, a United States person for FBAR purposes?
A. Yes, the tax rules concerning disregarded entities do not apply with respect to the FBAR reporting requirement. FBARs are required under Title 31, not under any provisions of the Internal Revenue Code.
Q. What constitutes signature or other authority over an account?
A. A person has signature authority over an account if such person can control the disposition of money or other property in it by delivery of a document containing his or her signature (or his or her signature and that of one or more other persons) to the bank or other person with whom the account is maintained.
Other authority exists in a person who can exercise power that is comparable to signature authority over an account by direct communication to the bank or other person with whom the account is maintained, either orally or by some other means.
Q. Is a U.S. resident with power of attorney on his elderly parents’ accounts in Canada required to file an FBAR, even if the resident never exercised the power of attorney?
A. Yes, if the power of attorney gives the U.S. resident signature authority, or other authority comparable to signature authority, over the financial accounts. Whether or not such authority is ever exercised is irrelevant to the FBAR filing requirement. See Notice 2010-23 for information regarding an extended due date to report signature authority over a foreign financial account.
Q. How do filers report their accounts to the IRS?
A. Filers report their foreign accounts by (1) completing boxes 7a and 7b on Form 1040 Schedule B, box 3 on the Form 1041 “Other Information” section, box 10 on Form 1065 Schedule B, or boxes 6a and 6b on Form 1120 Schedule N and (2) completing Form TD F 90-22.1 (PDF).
Q. When is the FBAR due?
A. The FBAR is due by June 30 of the year following the year that the account holder meets the $10,000 threshold. The granting, by IRS, of an extension to file Federal income tax returns does not extend the due date for filing an FBAR. Filers cannot request an extension of the FBAR due date. See also Notice 2010-23.
If a filer does not have all the available information to file the return by June 30, they should file as complete a return as they can and amend the document when the additional or new information becomes available.
Q. Where are FBAR forms available?
A. FBAR forms are available:
Online via IRS.gov in PDF.
Online via Department of the Treasury’s Financial Crimes Enforcement Network Web site in PDF.
By calling the IRS at 800-829-3676.
Q. Does the IRS have an email address to send questions regarding the FBAR?
A. You can send questions concerning the FBAR to FBARquestions@irs.gov. The email system does not accept actual FBAR reports.
Q. Where do I file the FBAR?
A. Send completed forms to:
U.S. Department of the Treasury P.O. Box 32621 Detroit, MI 48232-0621
If an express delivery service is used, send completed forms to:
IRS Enterprise Computing Center ATTN: CTR Operations Mailroom, 4th Floor 985 Michigan Avenue Detroit, MI 48226
The contact phone number for the delivery messenger service is 313-234-1062. The number cannot be used to confirm that your FBAR was received.
The FBAR is not to be filed with the filer’s Federal tax return.
Q. How do I verify that my FBAR was filed?
A. Ninety days after the date of filing, the filer can request verification that the FBAR was received. An FBAR filing verification request may be made by calling 866-270-0733 and selecting option 1. Up to five documents may be verified over the phone. There is no fee for this verification.
Alternatively, an FBAR filing verification request may be made in writing and must include the filer’s name, taxpayer identification number and the filing period. There is a $5 fee for verifying five or fewer FBARs and a $1 fee for each additional FBAR. A copy of the filed FBAR can be obtained at a cost of $0.15 per page. Check or money order should be made payable to the United States Treasury.
The request and payment should be mailed to:
IRS Enterprise Computing Center/Detroit ATTN: Verification P.O. Box 32063 Detroit, MI 48232
Q. How does an FBAR filer amend a previously filed FBAR?
A. FBAR filers can amend a previously filed FBAR by:
- Checking the Amended box in the upper right-hand corner of the first page of the form;
- Making the needed additions or corrections;
- Stapling it to a copy of the original FBAR; and
- Attaching a statement explaining the additions or corrections.
Q. What happens if an account holder is required to file an FBAR and fails to do so?
A. Failure to file an FBAR when required to do so may potentially result in civil penalties, criminal penalties or both. If you learn you were required to file FBARs for earlier years, you should file the delinquent FBAR reports and attach a statement explaining why the reports are filed late. No penalty will be asserted if the IRS determines that the late filings were due to reasonable cause. Keep copies of what you send for your records.
A. Yes, under the penalty provisions found in 31 U.S.C. 5314(a)(5), it is possible to assert civil penalties for FBAR violations in amounts that exceed the balance in the foreign financial account.
Q. How long should account holders retain records of the foreign accounts?
A. Records of accounts required to be reported on an FBAR must be retained for a period of five years. Failure to maintain required records may result in civil penalties, criminal penalties or both.
Q. For filing FBARs for prior years, should the current FBAR form be used or should the previous version of the form be used?
A. The current FBAR form (revised in October 2008) may be used to report a financial interest in, or signature or other authority over, financial accounts that were maintained in years prior to 2008. However, since the changes to the current FBAR form reflect a change in the reporting requirements, the instructions for the prior version of the FBAR form (revised in July 2000) may be relied upon for the purpose of determining the filing requirements for properly reporting financial accounts maintained in calendar years prior to 2008.
Q. Does more than one form need to be filed for a husband and wife owning a joint account?
A. No, provided that the names and Social Security numbers of the joint owners are fully disclosed on the filed FBAR. A spouse having a joint financial interest in an account with the filing spouse should be included as a joint account owner in Part III of the FBAR. The filer should write “(spouse)” on line 26 after the last name of the joint spousal owner. If the only reportable accounts of the filer’s spouse are those reported as joint owners, the filer’s spouse need not file a separate report. If the accounts are owned jointly by both spouses, the filer’s spouse should also sign the report. It should be noted that if the filer’s spouse has a financial interest in other accounts that are not jointly owned with the filer or has signature or other authority over other accounts, the filer’s spouse should file a separate report for all accounts including those owned jointly with the other spouse.
Q. Are UBS account holders still eligible for the Voluntary Disclosure Practice? The income earned on my client’s foreign account has not been reported on his Form 1040, nor have FBARs been filed.
A. The Voluntary Disclosure Practice is a longstanding practice of IRS Criminal Investigation of taking timely, accurate, and complete voluntary disclosures into account in deciding whether to recommend to the Department of Justice that a taxpayer be criminally prosecuted. It enables noncompliant taxpayers to resolve their tax liabilities and minimize their chances of criminal prosecution. When a taxpayer truthfully, timely and completely complies with all provisions of the Voluntary Disclosure Practice, the IRS will not recommend criminal prosecution to the Department of Justice.
Although the use of special voluntary disclosures by taxpayers with unreported income from offshore accounts expired on Oct. 15, 2009, noncompliant taxpayers can still use the VDP to resolve their tax liabilities. A voluntary disclosure is made by following the procedures described in I.R.M. 126.96.36.199. Tax professionals or individuals who want to initiate a voluntary disclosure should call their local CI office. Taxpayers with questions may call the IRS Voluntary Disclosure Hotline at 215-516-4777, visit www.irs.gov or contact their nearest CI office.
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