U.S. Filing Requirement on Foreign Bank and Financial Accounts

Dear Clients and Friends:

Each U.S. person (individuals and business entities) who has a financial interest in or signature or other authority over foreign bank accounts, securities accounts or other financial accounts must file a Form TDF 90-22.1 (Report of Foreign Bank and Financial Accounts or FBAR) if the aggregate value of the accounts exceeds $10,000 at any time during the calendar year.  A foreign financial account is a financial account located outside the U.S.  An account maintained with a branch of a U.S. bank that is physically located outside of the U.S. is a foreign financial account.

A financial account includes a securities, brokerage, savings, checking, deposit, or other account maintained with a financial institution.  A financial account also includes a commodity futures or options account, an insurance policy or annuity policy with a cash value, and shares in a mutual fund or similar pooled fund.  However, the FBAR is not required for interests that are held in a custodial account with a U.S. financial institution.

The FBAR is due by June 30 following the calendar year for which it applies. This form must be received by the IRS on June 30.

The penalties for failure to file an FBAR are onerous.  The civil penalties for a non-willful violation may not exceed $10,000 per violation.  Civil penalties for a willful violation may not exceed the greater of $100,000 or 50% of the amount in the account at the time of the violation.  The criminal penalty for willful violations is a fine of not more than $250,000, or imprisonment for not more than five years, or both.

If  you want to file, or are uncertain whether you are, or will be, required to file, an FBAR for the current year or for a past year, please give us a call to discuss your situation and the best way to proceed.

Very truly yours,


Certified Public Accountants and Consultants, Inc.

Please note that any tax laws or regulations discussed in this memo may not necessarily be effective after the date of drafting this article.

To ensure compliance with the requirements imposed by the Treasury Department Regulations (Internal Revenue Service), Wright Ford Young & Co. is required to inform you that any tax advice in this written or electronic communication was not intended or written to be used, and it cannot be used, by a client or any other person or entity for the purpose of avoiding penalties that may be imposed on any taxpayer.