For 2010, the IRS has continued its strict
enforcement efforts that culminated in the Voluntary Disclosure Program
(ended on October 15, 2009) regarding the obligation of a United
States person to file the Report of Foreign Bank and Financial
Accounts (the “FBAR”). The term “United States person” means: (1) a
citizen or resident of the United States, (2) a domestic partnership,
(3) a domestic corporation, or (4) a domestic estate or trust, which is
used to determine an individual’s FBAR filing obligation for the 2009
and earlier calendar years.
Penalties. While it is certainly legal to have an account outside
the U.S. and there are many everyday situations where it makes sense,
the critical point is to disclose the account on your U.S. income tax
return and, when applicable, on the FBAR. Willful failure to file the
FBAR can result in substantial civil and criminal penalties, including
up to 5 years in prison or both, and the total penalties imposed could
far exceed the balance in the foreign financial account.
For calendar year 2009, the FBAR is due on June 30, 2010, with two
exceptions. Click here to read about exceptions to the law and for
further details regarding FBAR filings enforcement. For more
information, please contact Mitch
Horowitz, Richard Jacobson, or Jason Liu.
Foreign Bank Account Disclosure Forms Due June 30, 2010
