Author: Eric M. Chaimowitz, CPA and Kay F. Gotshall, CPA
Do you, your trusts/estate or your company have any direct or indirect access to foreign bank accounts? Beginning in 2013, FATCA will be implemented and the IRS can start penalizing foreign banks in 2014 for non compliance.
As indicated by the name, FATCA, mandates foreign banks to report to the IRS information about financial accounts held by U.S. residents at their institutions. Keep in mind that according to the Foreign Bank Account Reporting (FBAR) rules, U.S. persons (which includes trusts/estates and companies) with financial interests in, or signature authority over, financial accounts maintained in a foreign country are required to file a Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts. The form is required if the aggregate amount maintained in all the foreign accounts during a calendar year exceeds $10,000.
These accounts include, but are not limited to, securities, brokerage, savings, checking, time deposit, and other account maintained with a foreign financial institution. There may also be a filing requirement if you have an indirect interest or only signature authority (no financial interest) over foreign bank or financial account through a greater than 50% ownership in a U.S. company including signature authority for a foreign bank account owned by your employer. Form TD F 90-22.1 for 2012 reportable bank accounts need to be received by the U.S. Treasury no later than June 30, 2013. There are severe penalties ($10,000 per account) for not filing.
In addition to the FBAR filing requirements, there is an individual filing requirement under FATCA to report all foreign financial assets if valued over $100,000 for married filing joint taxpayers or $50,000 for single taxpayers for U.S. residents. As you can see, if you (as a U.S. resident) have direct or indirect ownership in foreign banks and are non filing, FATCA can have a big impact on you if the account is reported to the IRS by the foreign bank.
For more information or if you think you may have a filing requirement, please see Form TD F 90-22.1 instructions at http://www.irs.gov/pub/irs-pdf/f90221.pdf or contact your Keiter professional. If you would like more information on FATCA see Moving Money Offshore – Know FACTA.
The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.