In case you haven't noticed, there has been an unprecedented amount of publicity in the financial media about tomorrow's date, June 30, 2009. Forbes, The Wall Street Journal, and many other financial publications have devoted a surprising amount of coverage of this date.
What's the fuss? Well, it turns out that June 30 is the deadline for filing the Treasury's annual foreign bank account reporting form (FBAR), Form TD F 90-22.1.
The IRS has issued numerous warnings to taxpayers and their advisors letting them know it's "really serious" about enforcing this report filing obligation. It's even announced a sort of "amnesty" to encourage people who haven't previously filed the FBAR to become compliant. (The IRS calls this "voluntary disclosure," as if we really voluntarily bare our souls to the tax man). But unfortunately, the IRS keeps changing its mind over who has to file the form, and when it's really due.
First, a little background: Back in the "good old days," i.e., before 2009, the IRS defined U.S. persons subject to filing the FBAR as:
- A citizen or resident of the United States
- A domestic partnership,
- A domestic corporation, or
- A domestic estate or trust.
Those of us fortunate enough to be "U.S. persons" 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. Failing to do so may result in a fine up to US$250,000, imprisonment up to five years, or both.
Anyway, these were the filing requirements in the good old days. Then, in October 2008, the Treasury Department unveiled a new FBAR form that significantly expanded the reporting requirements for foreign accounts. It also helpfully extended the definition of a "U.S. person" to foreign persons "in and doing business in the United States."
Not surprisingly, this change led to consternation among some foreigners. They were, to put it mildly, nonplussed by the new requirement to reveal the name, address, account number, and highest value in the preceding year of each non-U.S. account over which they had signature or "other" authority.
"We hear your pain," said the Treasury. And so a few weeks ago, the IRS announced that it would revert back to the previous definition of "U.S. person." You could almost hear an audible sigh from those foreigners "in or doing business" in the United States.
Now, in its latest missive, the IRS has issued a new "frequently asked questions" explanation of its latest offshore voluntary disclosure initiative. Among other changes, it extended the June 30 deadline to Sept. 23, 2009 for the FBAR form for "…taxpayers who reported and paid tax on all their 2008 taxable income but only recently learned of their FBAR filing obligation and have insufficient time to gather the necessary information to complete the FBAR."
If you're in this situation, the IRS says you should file the delinquent FBAR report according to the instructions and attach a statement explaining why the report is filed late. (How about, "I had no f___ing idea I needed to file it?" But then again, that might not be the best choice of words.)
Then you send a copy of the delinquent FBAR, together with a copy of your 2008 tax return, by September 23, 2009, to what the IRS calls its "Philadelphia Offshore Identification Unit." Under these circumstances, says the IRS, you won't have to pay a penalty for failing to file the FBAR on time.
This story has more twists and turns than a mountain road in my home state of West Virginia. And here's the last one: if you're not eligible for an extension of the June 30 deadline, make sure the Treasury office in Detroit designated in the FBAR instructions receives your FBAR by tomorrow. Unlike most tax forms, you can be penalized if the Treasury doesn't receive your FBAR by the deadline. It's not sufficient that it's postmarked June 30.
Copyright © 2009 by Mark Nestmann
Comments