Jun 17, 2008

Swiss Bank Account Unknown to the IRS...I don't think so...

--At least if you are going to comply with the IRS and the Department of Treasury rules for foreign bank accounts.

According to the Treasury Department, if you have more than $10,000 in a foreign bank account, you must disclose this account (yes, the countries with "bank secrecy" protection also) on the Treasury Form TD F 90-22.1. This is an annual filing requirement (called Foreign Bank Account Registration or "FBAR") due on June 30th of the following year. A foreign bank account consists of any account they have a financial interest in or signature authority or other authority over any financial accounts, including bank, securities or other types of financial accounts, in a foreign country. The IRS publishes its "annual reminder" in the middle of every June (or thereabouts) for the filing requirement.

Interestingly enough, the IRS has you send this to the same place that it accumulates the Currency Transaction Reports ("CTR"s - and Form 8300 that are filed when you have a cash transaction of $10,000 or more). The IRS has an interest in your funds overseas and the penalties for not reporting these are severe: Civil and criminal penalties for non-compliance with the FBAR filing requirements are severe. Civil penalties for a non-willful violation can range up to $10,000 per violation. Civil penalties for a willful violation can range up to the greater of $100,000 or 50 percent of the amount in the account at the time of the violation. Criminal penalties for violating the FBAR requirements while also violating certain other laws can range up to a $500,000 fine or 10 years imprisonment or both. And to make matters worse, civil and criminal penalties may be imposed together. The IRS believes there is substantial non-compliance in this area as they have highlight an 85% increase in the number of registrations since the inception of the program in 2000.

What comes to mind about missing your filing requirement here is not the acronym the IRS uses for this registration: FBAR; but the acronym that the military uses for a very bad situation: FUBAR!!

In any event, non-compliance, close and continual surveillance, and the ultimate resentful indignation of the IRS requires competent representation. Representation must include the internal knowledge of how the IRS operates to be able to identify the risks of non-compliance.

1 responses:

Joshua D. Jones June 22, 2008 at 7:03 PM  

haha... so if you have an account over 10,000, you're supposed to tell the government. But if you don't you can get into trouble- is that at all sticky with the 5th amendment of self incrimination?

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