UPDATE: Effective with the 2013 tax year, the Form TD F 90-22.1 has been replaced with an updated form, FinCEN Form 114. You can read more about FBAR and Form 114 here and here.
If you have a nice chunk of change in a foreign account, you've got a week to tell the Treasury Department about it.
Next Saturday, June 30, is the deadline to submit Treasury Department Form 90-22.1 (TD F 90-22.1), Report of Foreign Bank and Financial Accounts (FBAR).
This annual report is required if you have foreign bank accounts or offshore financial accounts or signature authority over such accounts that, in the aggregate — that's financial speak for the total of all account amounts — are $10,000 or more at any time during the calendar year.
TD F 90-22.1 isn't a tax form. It's a reporting document filed separately and annually with the Treasury Department. And Treasury wants the info even if the foreign-held funds didn't generate any taxable income.
Who must file? FBAR filing was created because foreign financial institutions may not be subject to the same reporting requirements as their U.S. counterparts. The filing of TD F 90-22.1 helps Uncle Sam identify folks who might be using foreign financial accounts to avoid paying U.S. taxes.
Don't freak out if you own an international stock fund from a U.S. based money management company. That's not covered under FBAR rules because in this situation you can't directly get to the foreign-based money; you have to redeem it via your U.S. account.
Accounts in U.S. military banking facilities, operated by a United States financial institution to serve U.S. government installations abroad, also are not considered as accounts in a foreign country.
Hedge and private equity funds generally don't count either.
The IRS has a FAQs page with what holdings could trigger FBAR. And the Houston accounting firm Gainer, Donnelly & Desroches has created a flowchart of the major decision points you need to consider to determine if there is a need to report your accounts.
Don't ignore the deadline: Now about that June 30 FBAR due date, which this year falls on a Saturday.
That weekend day collision with a tax-related deadline doesn't matter when it comes to FBAR.
Form TD F 90-22.1 is a reporting document, not a tax form. That means there is no timely delivered provision. You can't just have the envelope postmarked by June 30. The Treasury expects to have your Form TD F 90-22.1 in hand on June 30.
The first paragraph of TD F 9022.1's instructions specifically states (bold text by the IRS):
The FBAR must be received by the Department of the Treasury on or before June 30th of the year immediately following the calendar year being reported. The June 30th filing date may not be extended.
And the IRS sent tax professionals an email on Friday reminding them:
If one of your clients has a bank or other financial account in a foreign country, or has signature authority over such an account, that client may be required to report the account using Form TD F 90-22.1 to the Treasury Department by June 30. … Requests for an extension of time to file this form cannot be granted.
Practically speaking, if you plan to deliver a paper form, your safest move is to mail it early next week to ensure arrival at Treasury by Friday, June 29.
Forms sent via the U.S. Postal Service should be mailed to:
Department of the Treasury
Post Office Box 32621
Detroit, MI 48232-0621
If you opt for an express delivery service, the address is:
IRS Enterprise Computing Center
ATTN: CTR Operations Mailroom, 4th Floor
985 Michigan Avenue
Detroit, MI 48226
You also can hand deliver your FBAR.
FBAR filers in the United Sates can take their form to any local IRS office, which then will forward it to the Treasury office in Detroit.
If you're living abroad (a good explanation of why you have a foreign account), take your TD F 90-22.1 to any of the IRS tax attaches located in U.S. embassies and consulates for forwarding to the Detroit Treasury office.
FBAR e-filing available: And yes, FBAR filing has entered the 21st century. Last July, Treasury's Financial Crimes Enforcement Network (FinCEN) developed an electronic method to file Form TD F 90-22.1.
The FBAR e-filing capability is not part of any current tax software. Instead, FinCEN has created an online fill-in form that can be transmitted. But as with the usual tax e-filings, those submitting a FBAR report electronically will receive an acknowledgement of each report filed.
Regardless of which way you choose to comply with FBAR, just make sure you do so and by the deadline.
If you should file the form and don't, you could face a penalty of up to 50 percent of the funds in the account. An unreported $100,000 FBAR account, for example, can cost the owner $50,000.
In extreme cases, there's also the possibility of jail time. A person who willfully ignores FBAR requirements can face up to five years in prison and a $250,000 fine.
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