Faculty & Departments

Additional Reporting to the US Treasury

Occasionally Required Reporting

 

What follows is NOT required of everyone.  It is required only of those that qualify.  It is an information return about holdings in foreign financial accounts.  This is not a tax return.  There is no money that must be paid, unless you are required to file the report and you do not.  In that case there are penalties.  Read below to find out if this applies to you.  

 

What is required?  

 

The US Treasury manages all monies of the US government.  It empowers the Internal Revenue Service to administer the laws connected with administering the imposition and collection of income taxes from all US persons obliged to pay income taxes.

Along with that charge is the right to manage disclosure of assets held in other countries so that persons do not hide assets that are subject to taxation.  This effort has found that it is important for the US Treasury to know who in the US manages assets held in banks outside the US.  For that reason the Treasury has created a requirement for those who qualify to disclose the degree of financial interest in or signature authority over foreign financial accounts. 

The required information is reported on Treasury form "TD F 90-22.1", Report of Foreign Bank and Financial Accounts (FBAR).  The FBAR must  be received by the Department of the Treasury (not the IRS) on or before June 30 of the year immediately following the calendar year being reported.  The June 30 filing date cannot be extended.  The form and related instructions can be found on this web page by entering its form number (including spaces shown, but without quotes).

 

Who Must File an FBAR?

 

A United States person that has a financial interest in or signature authority over foreign financial accounts must file an FBAR if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year.  No report is required if the aggregate value of the accounts did not exceed $10,000.

A foreign financial account is a financial account located outside the United States.  An account maintained with a branch of a US bank that is physically located outside the United States is a foreign financial account.  An account maintained with a branch of a foreign bank that is physically located in the US is not a foreign financial account. 

A United States person means US citizens, US residents, various entities.  A US resident is an alien residing in the United States.  See the instructions to determine if a filer is a resident.  The determination process relies on the residency tests given in 26 United States Code, Section 7701(b).  Section 7701(b) defines who is a resident and who a nonresident.  These rules spell out that those passing the substantial presence test (SPT) are residents and those not passing are nonresidents.  Since those rules are complex and intricate recognizing special circumstances, it is best to discuss this with a representative of the Tax Assistance Program (TAP).  Request such help by emailing taptax@nd.edu.     

See the instructions to learn the several categories of financial interest that are possible.

Signature authority is the authority of an individual (alone or with others) to control the disposition of assets held in a foreign financial account by direct communication to the bank or other financial institution that maintains the financial account.  Several signature authority exceptions are listed in the instructions.

An explanation for late filing must accompany the form when filed late.

The form is NOT to be mailed with the US tax return.  The IRS form 4868, that extends the time to file a US tax return, does not apply to the FBAR report.  There is no extension of the filing date.

The form when completed should be mailed to Department of the Treasury, P.O.  Box 32621, Detroit, MI 48232-0621.  See instructions for other form delivery options.

 

PENALTIES

 

A person who is required to file an FBAR and fails to file properly may be subject to a civil penalty not to exceed $10,000.  If there is reasonable cause for the failure and the balance in the account is properly reported, no penalty will be imposed.

A person who willfully fails to report an account or account identifying information may be subject to a civil monetary penalty equal to the greater of $100,000 or 50 percent of the balance in the account at the time of the violation.  Willful violations may also be subject to criminal penalties.