It's FBAR Time Again with June 29 Deadline Looming!

Report on Foreign Financial Accounts for 2011

June 29, 2012 is the deadline for reporting about Foreign Financial Accounts for the 2011 calendar year on TDF 90-22.1 (Report of Foreign Bank and Financial Accounts or "FBAR").

Foreign Financial Accounts

A U.S. person whose foreign accounts aggregated more than $10,000 at any time in 2011 will need to file the FBAR. While the FBAR is typically associated with foreign bank accounts, a reportable account is any foreign financial account including, for example, brokerage accounts, mutual funds and similar pooled funds (if available to the general public with a regular net asset value determination and regular redemptions). Also included are certain PFICs (Passive Foreign Investment Company) as well as insurance policies and annuities with cash surrender values. Even if the account generates no income, it is still required to be reported if the aggregate of all accounts for 2011 exceeded $10,000.

U.S. Persons

The FBAR does not just apply to U.S. individuals owning a bank account at a financial institution in a foreign country. "Person" includes legal entities such as LLCs, corporations, partnerships, trusts and estates. Tax definitions do not necessarily carry over to the FBAR. For example, a "U.S. person" includes an LLC organized under state law even if it is a "disregarded entity" for U.S. tax purposes. U.S. individuals include all U.S. Citizens, no matter where you are residing within U.S. or overseas; as well as U.S. green card holders and any foreigners who met substantial presence testing, residing in U.S. more than 183 days in the last 3 years.

Interest in Accounts

A U.S. person is considered to have a reportable ownership interest in a foreign financial account held directly as well as those owned indirectly, for example, through a corporation (if more than 50% of voting power or value is owned directly or indirectly) or a partnership (if more than 50% of profits or capital interest is owned directly or indirectly).

Signature Authority

U.S. persons with signature authority but no financial interest in a foreign financial account must also report. This includes authority with respect to foreign accounts of U.S. corporations as well as foreign legal entities, if controlled directly or indirectly by a U.S. person.

Received by June 29

The official due date for the FBAR forms is June 30 each year with no extension available. With June 30 falling on a Saturday this year-the due date is Friday, June 29. The due date for FBAR means "received" at the Department of the Treasury in Detroit rather than merely postmarked by June 29.

Penalty for Failure to Report

Failure to report a foreign bank or financial account can lead to civil or criminal penalties, as summarized on the FBAR. The minimum penalty is $10,000 per year.

For additional information regarding the FBAR filing, please contact your professional at UHP LLP in Farmington Hills (248) 355-1040 or Sterling Heights (586) 254-1040, or visit us on the Web at uhy-us.com.

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