6. Form TD F 90-22.1- Report of Foreign Bank and Financial Accounts (FBAR)
The Bank Secrecy Act gave the Department of Treasury authority to establish recordkeeping and filing requirements for U.S. persons with financial interests in or signature authority, or other authority over financial accounts maintained with financial institutions in foreign countries.
This provision of the law requires that a Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR) be filed if the aggregate balances of such foreign accounts exceed $10,000 at any time during the year. This form is used as part of the IRS' enforcement initiative against abusive offshore transactions and attempts by U.S. persons to avoid taxes by hiding money offshore.
The FBAR covers a calendar year and must be filed no later than June 30th of the following year and includes any interest a U.S. person has in:
- Offshore bank accounts
- Offshore mutual funds
- Offshore hedge funds
- Offshore variable universal life insurance policies
- Offshore variable annuities a/k/a Swiss Annuities
- Debit card and prepaid credit card offshore accounts
The penalties for noncompliance which the government may impose include a fine of not more than $500,000 and imprisonment of not more than five years, for failure to file a report, supply information, and for filing a false or fraudulent report.