A few weeks ago, I described a new requirement from the IRS that requires foreigners "in or doing business" in the United States to report details of all their non-U.S. financial accounts to the U.S. Treasury.
I also described the downside of this obligation as it relates to foreign persons, especially if the information they provide finds its way to organized crime syndicates in their own countries. This is hardly an unforeseeable consequence, as data from the Treasury's "Foreign Bank Account Report" form (FBAR) is widely shared with authorities in other countries. And in some of these countries, government corruption is rife.
Not surprisingly, this new obligation led to an outcry by those affected by it. And some of those persons hired the requisite legal talent in Washington, D.C. to persuade the IRS to temporarily suspend the reporting requirement for foreigners "in or doing business" in the United States. As a result, the IRS has reverted to the narrower filing obligation that existed prior to the October 2008 revision of the FBAR.
Under those prior requirements, now reinstated, a "U.S. person" subject to filing the FBAR is defined as
(1) A citizen or resident of the United States
(2) A domestic partnership,
(3) A domestic corporation, or
(4) A domestic estate or trust.
Just as a reminder, if you or your partnership, corporation, estate, or trust is a "U.S. person," you must report the existence of all “foreign bank, securities or ‘other’ financial accounts” if the aggregate value of those accounts exceeded US$10,000 at any time during the preceding year. Those failing to do so face a fine up to US$250,000, imprisonment up to five years, or both.
The report for 2008 is due June 30, 2009. You can download the FBAR here.
Copyright © 2009 by Mark Nestmann
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