The deadline for U.S. expatriates to file their FBAR is rapidly approaching and all American citizens who are currently living overseas and hold foreign financial accounts that have an aggregate value of $10,000 or more are reminded to submit their return by the 30th June.
Form TDF 90-22.1 (FBAR) is separate from expatriate’s tax returns and must be in the hands of the Department of Treasury in Detroit by the 30th June 2012 at the latest. Despite the fact that this deadline falls on a weekend, the date will not be extended to the following Monday.
All American citizens who live overseas and hold bank accounts that hold a combined value equal to or greater than $10,000 USD in value within one calendar year are required to file the FBAR. Accounts that are relevant for FBAR filing purposes include bank account, brokerage account, mutual fund, unit trust, or other types of monetary accounts. The form is used to collate information about the wealth of U.S. citizens living abroad
Expatriates are reminded that receipt is by due date not “mailing is filing”, which means that the deadline of the 30th June is not the date upon which their submission is postmarked, but the date by which the completed form must be received by the Department of Treasury in Detroit.
Failure to meet this deadline could result in civil or criminal penalties. While the IRS has implemented amnesties in the past and have demonstrated a forgiving track record when it came to late and failed submissions, the reality is that they do have the authority to apply severe penalties and the increased focus on the overseas wealth of Americans abroad may mean that this year they take a different tact. The penalty for failing to file an FBAR is $10,000 for each non-willful violation. If willful, the penalty is the greater of $100,000 or 50% of the amount in the account for each violation. Furthermore, if the IRS suspects that your failure to submit the FBAR was a conscious attempt to evade tax then you could be sentenced to a prison term of
up to five years and a fine of up to $250,000. Filing a false return can mean up to three years in prison and a fine of up to $250,000. Failing to file FBARs can result in monetary penalties up to $500,000 and prison for up to ten years. See IRS May Find “Innocent” FBAR Violation Willful.
Many expatriates in the past have mistakenly confused the IRS Form 8938, Statement of Specified Foreign Financial Accounts with IRS Form TDF 90-22.1 (FBAR). While much of the information requested on each of these forms is similar, Form 8938 has a higher disclosure threshold and is designed to identify those who have significant amounts of overseas wealth and ensure that they pay appropriate amounts of tax. While IRS Form 8938 should be filed with your annual tax return, the FBAR is a separate document and should be submitted by the 30th June deadline.
U.S. expatriates can submit their FBAR in two ways:
- Submit their return electronically through the Financial Crimes Enforcement Network (FinCEN), which offers an electronic filing option here.
- Submit their return via post to the following address: United States Department of the Treasury P.O. Box 32621 Detroit, MI 48232-062.
If you need expert guidance on the FBAR and submission requirements, take a look at our expat directory, which contains a list of qualified financial advisors that can offer practical advice and assistance in helping you to navigate the U.S. tax laws.