Reports required under Foreign Bank Account Reporting or “FBAR” laws and regulations must be submitted to the U.S. Department of the Treasury on or before June 30, 2011. Individuals with a financial interest in foreign financial accounts (including foreign bank accounts, securities and certain insurance and annuities) or with signatory or other authority over such accounts must submit a Form TD-F 90-22.1 to the Treasury Department. Individuals that fail to file the form would face civil penalties of up to 50% of the foreign accounts’ value and criminal penalties, including imprisonment of up to five years.
The types of individuals that possess FBAR reporting obligations probably will surprise many. FBAR reporting is required of trustees and plan committee members of pension plans that hold direct foreign investments, officers and employees of corporations who have signatory or investment direction authority over the corporation’s accounts, and expatriates returning to the U.S. who leave (even temporarily) bank accounts in the country where they were working.
FBAR reporting is not required of participants and beneficiaries of pension plans that hold foreign investments.
A foreign financial account or aggregate of accounts that exceeds $10,000 in value at any time during the previous year must be reported by individuals who have a financial interest in the accounts, signatory authority over the accounts, or authority to direct deposits, distributions or investments with respect to the account.
The FBAR reporting requirements do not apply to foreign investments or financial accounts that are sold or maintained in the U.S. through a domestic bank or securities firm. To avoid the substantial penalties associated with non-disclosure, an individual who is unsure about whether he or she has an FBAR reporting obligation should make a protective submission of the Form TD-F 90-22.1.