A basic guide to understanding your 2013 FBAR filing requirements
Form TD F 90-22.1 Report of Foreign Bank and Financial Accounts, aka “The FBAR” is a complicated form with complicated instructions. Making the problem worse is that the penalties for failing to follow the 2013 FBAR filing requirements are severe. This article will discuss the basics: the who, what, where, and when of FBAR Filing Requirements.
Who has 2013 FBAR Filing Requirements?
People such as: US citizens, US resident aliens and any visa holders (H1-B, etc., or expatriates abroad.) A “resident” of the United States is a permanent resident. “Permanent resident” is not defined in the FBAR instructions, regulations, or statute. The definition of “resident alien” found in IRC § 7701(b) is not applicable for FBAR purposes. The plain meaning of the term “resident” (in this context, someone who is living in the U.S. and not planning to permanently leave the U.S.) should be used for FBAR examination purposes. Although IRC § 7701(b) is not applicable, an individual can establish that he is not a resident for FBAR purposes if he can show that none of the following three criteria apply:
- The green-card test – Individuals who at any time during the calendar year have been lawfully granted the privilege of residing permanently in the U.S. under the immigration laws automatically meet the definition of resident alien under the green-card test; or
- Individuals who are not lawful permanent residents are defined as resident aliens under the substantial-presence test if they are physically present in the U.S. for at least 183 days during the current year, or they are physically present in the U.S. for at least 31 days during the current year and meet the specifications contained in IRC § 7701(b)(3); or
- The person files a first year election on his income tax return to be treated as a resident alien under IRC §7701(b)(4).
Therefore, if none of the three criteria listed above apply, then the person is not a resident for FBAR purposes and does not have FBAR filing requirements. Entities such as: A domestic partnership, a domestic corporation, any estate (other than a foreign estate), and any trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust, and (ii) one or more United States persons have the authority to control all substantial decisions of the trust. A legal guardian is responsible for FBAR filing requirements for minors with interests in foreign accounts.
What are the 2013 FBAR filing requirements?
There are FBAR filing requirements when a US person or entity has a financial interest or signatory authority in financial accounts that total over $10,000 at any point in the year, Form TD F 90-22.1 is required to be filed. At least one court (McBride) has interpreted “financial interest” and “signatory authority” very broadly. We tend to tell our clients, if in doubt, report.
When is the FBAR Form required to be filed?
The FBAR form is required to be filed by June 30th of the following year. For example the 2012 FBAR form is required to be filed on June 30, 2013 Unlike a tax return, the date of filing is considered to be the date the IRS received the FBAR form, not the date postmarked.
Where is the FBAR form required to be sent?
Do not include with your 1040. An FBAR Form is required to be sent separately, to a different address.
If by regular mail:
Department of the Treasury Post Office Box 32621 Detroit, MI 48232-0621
IRS Enterprise Computing Center ATTN: CTS Operations Mailroom, 4th Floor 985 Michigan Avenue Detroit, MI 48226
The FBAR may also be a local IRS service office for forwarding to Detroit (hint: the person at the service office is probably not familiar with this, so bring a copy of the FBAR instructions with you.)
If overseas, the FBAR form may also be hand delivered to the IRS’ tax attaches located in the US embassies and consulates.
What if I have delinquent FBARs?
If you have not filed FBARs, or have delinquent FBARs, we advise consulting with an FBAR attorney. The basic rule is that if there is no reported income, an Offshore Voluntary Disclosure is not required. IF there is unreported income, there is a likelihood that entry into one of the Offshore Initiatives is required. For various reasons stay away from the misnamed “quiet” or “soft” disclosure schemes.