Jeffrey M. Verdon Law Group, LLP
Ph: 949-988-0939

ELECTRONIC FILING OF FBARs IS NOW MANDATORY (FORM TD F 90-22.1)

Many of our avid CLIENT ALERT readers have established overseas structures that require the filing of the Foreign Bank and Financial Accounts form, otherwise known as the FBAR. The FBAR would be required if you or your trust is the owner of (or has signature or other authority over) a foreign bank, securities, or other financial account. Moreover, additional reporting may be required as an attachment to your tax return on Form 8938 and, separately, on Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts ("FBAR"), and you may have to check the box on Schedule B Part III, line 7 of your Form 1040 to report the account.

Effective July 1, 2013, those required to file the FBAR must do so electronically. According to the website of the Financial Crimes Enforcement Network of the Department of Treasury (FinCEN), failure to do so may impose civil monetary penalties for noncompliance with their regulations, including $500 for each negligent currency transaction or suspicious activity reporting violation.

Please contact your tax preparer to ensure compliance.

To file the FBAR electronically, you will need to create an account and enroll online at: http://bsaefiling.fincen.treas.gov/Enroll.html. If you choose, you may give your tax preparer the written authority to E-file the FBAR on your behalf.

Please note that the E-filing system currently only allows for one digital signature. Therefore, if you and your spouse hold an account as joint owners, each spouse will have to file a separate FBAR. However, you are able to use one account to file both FBARs, so long as the account is held jointly. Alternatively, if you maintain separate foreign accounts, each of you will have to create your own account. Filers will receive an acknowledgement of each submission.

Please note, the BSA E-Filings only allow users to satisfy selected Federal BSA filings requirements, and do not satisfy any state filing requirements.

For more information about the mandatory electronic filing, please read the FinCEN news release and their Mandatory E-Filing FAQs. Electronic filing technical support help is available at [email protected] or through the BSA E-Filing Help Desk at 866-346-9478. For information pertaining to authorizations for third parties to electronically file and sign FBARs on behalf of an obligated filer, see FinCEN FAQ, Understanding What BSA E-Filing is and What It Offers (June 2013).

***NOTE: SIGNIFICANT PENALTIES FOR A FAILURE TO FILE THE FBAR EXIST AND ARE SUMMARIZED AS FOLLOWS: 1) A civil penalty of $10,000 for a non-willful failure to file; 2) A civil penalty of the greater of $100,000 or 50% of the account balance for a willful failure to file; 3) A criminal penalty of up to $500,000 and/or five years imprisonment for intentional failure to file.

For further information or questions about this, please contact us.

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