Barron's International Tax Service

« The TaxBarron » Serving the American Expatriate Community

Foreign Financial Reporting

Treasury Department Form 90-22.1 is an annual filing requirement for every U.S. citizen or resident alien, partnership, corporation, estate or trust that maintains a financial interest in or signature authority over financial accounts based in one or more foreign countries, if the aggregate of the account(s) exceeds $10,000 at any time during the calendar year.  Financial interests are deemed to include those in names of nominees, agents and trusts if the beneficial interest in the trust exceeds 50% in corpus or income, account(s) in the name of a foreign corporation where the taxpayer has a 50% or greater ownership; shareholders, officers or directors of foreign corporations; partners in foreign partnerships; grantors of foreign trusts; or beneficiaries of foreign estates or trusts.  

An exception to the filing requirement is in respect to U.S. military banking facilities located in foreign countries or accounts located in Guam, Puerto Rico or the U.S. Virgin Islands.  Another exception is that you were an employee or officer of a domestic corporation with securities listed on national securities exchanges.

The form asks for the individual’s or entity’s name, address and taxpayer identity number; the account number, type of account, name of financial institution, country wherein the account is based, and its highest monetary value in U.S. dollars during the calendar year being reported.

The form is due on 30 June following the taxpayer’s taxable year.  This due date cannot be extended, unlike the filing date of a tax return.  Form TD F 90-22.1 should be sent by registered or certified mail to:

    U.S. DEPARTMENT OF THE TREASURY
P.O. Box 32621
Detroit, MI 48232-0621

Failure to file this form can subject the taxpayer to civil or criminal penalties.  Following the enactment of the American Jobs Creation Act of 2004, Congress imposed a $10,000 penalty for non-willful failure to file.  If the failure to file is willful, the civil penalty is at least $25,000.  And if the failure to supply information or else file a false report is determined, criminal penalties of up to $500,000 and imprisonment up to ten years can be imposed.

Schedule B of Form 1040 asks for a listing of interest and dividend income items in parts I and II.  In Part III, the filer is asked:  ‘At any time during 2007, did you have an interest in or a signature or other authority over a financial account in a foreign country, such as a bank account, securities account or other financial account? See page B2 for exceptions and filing requirements for Form TD F 90-22.1.’  Falsely answering “No” or to this question can expose the taxpayer to criminal prosecution. Failure to answer the question can still lead to prosecution.

Instructions to filing the form provided by Internal Revenue Service are brief.  But owing to the threat of penalties that could result from carelessness in completing and filing Form TD F 90-22.1, we are offering this service to our clients.