U.S. Form TD F 90-22.1 Report of Foreign Bank and Financial Accounts
Who Must Use This Form?
This is a brief one page form that is used to disclose the identity of and location of any foreign financial accounts with a balance (for all accounts combined) of more than $10,000 at any time during the prior calendar year.
What Information Is Required?
The form requires taxpayer identification information (name, address, TIN, etc.) and the number of foreign financial accounts. For each financial account, the form requests a description of the type of account, the range of value in the account, the account number, the name of the institution, the country where the account is located and the name of the organization (corporation, partnership, trust or estate).
When Is It Due?
This form is due on June 30th of the year following the taxable year of the taxpayer. There is no procedure available for an extension and an extension of time to file a personal or corporate tax return does not affect the filing date for this form.
Where Should It Be Filed?
The form should be sent to the U.S. Department of the Treasury, P.O. Box 32621, Detroit, MI 48232-0621
How Long Does It Take To Prepare?
For those with a single foreign financial account, it may take less than 15 minutes to complete the form. A few minutes of additional time may be required for each additional financial account.
Why Comply ? (Penalties)
According to the instructions to the form, "Civil and criminal penalties, including in certain circumstances a fine of not more than $500,000 and imprisonment of not more than five years, are provided for failure to file a report, supply information, and for filing a false or fraudulent report". (31 CFR 103) However, these extreme penalties have rarely been imposed due to the time and cost of proving willfulness. In the American Jobs Creation Act of 2004, the Congress added a new penalty of up to $10,000 for a non-willfull failure to file this form. That penalty can be waived at the discretion of the IRS for reasonable cause, but the law and instructions are silent as to whether the penalty can be imposed for filing the report after the due date.
The exact filing requirements are provided in the brief instructions to the form, but in general, the form must be filed if you had any combination of "foreign accounts" in the prior tax year with an aggregate value of $10,000 or more at any time during the prior year. Generally, a foreign financial account includes a bank account, savings account, money market fund, demand deposit, securities account or similar account. There are a few exceptions, but any US person who may have any possible obligation to file this form should carefully read the instructions to the form. Or, given the severity of the potential penalties, taxpayers may elect to file the form in any case where it is not clear as to whether it must be filed.
Generally, a "financial interest" includes interests in foreign accounts titled in the names of nominees, agents, and trusts if the beneficial interest in the trust exceeds 50% in corpus or income or if the account is in the name of a foreign corporation in which the taxpayer has a 50% or greater ownership. "Signature authority" includes control of the disposition of the Foreign Account by oral or written instructions to the signatory or titleholder on the account.
This form may also be required by those who are shareholders, officers or directors of foreign corporations, partners in foreign partnerships, grantors of foreign trusts or beneficiaries of foreign estates or trusts. In some arrangements, a trust account is set up offshore, requiring the signature of both the trustee and a trust protector to facilitate withdrawals. In such instances, the trust protector may have an obligation to file the Form TD F 90-22.1.
The law is not explicit as to whether ownership of foreign securities in the name of the taxpayer constitutes a financial account, but it appears that the report is only required where assets are held and/or managed by a foreign institution. It does not appear that a minority ownership in a foreign corporation must be reported, but it does appear that an investment in a foreign mutual fund or hedge fund should be reported.
Policy owners of foreign fixed return annuity or life insurance contracts will not have any authority over, or beneficial interest in, the management of the cash values in the policy. However, even though a policy owner of a variable annuity or variable life policy may not have any direct authority over the investments in the segregated account, the policy owner has a beneficial interest in the segregated account and should file this form to disclose such an interest.
A mere transfer to a foreign bank or financial account may not be subject to disclosure if the amount is less than $10,000 at all times during the year for all accounts - combined.
Can tangible assets in the U.S. be transferred offshore without reporting? Such transfers by a transferor may not be required to be reported; however, if these assets are gifted to another person, or if the transferor dies with those assets, he is subject to gift tax or estate tax, respectively, since domiciliaries in the U.S. are taxed on worldwide assets (transfers during lifetime or transfers at death).
Can one buy certificates of precious metals and transfer the certificates offshore without reporting? A certificate (of ownership) of precious metals is personal property, not the underlying hard metal. If certificates are transferred offshore, this appears to be the same as the transfer of any other intangible asset, such as a share of stock, partnership interest, membership interest in a limited liability company, etc. If certificates of precious metals are transferred to a safe deposit box in a foreign bank, this safe deposit box appears to be classified as a "foreign account" because the safe deposit box is registered in the name of the certificate holder. Valuables or documents purchased outside the U.S. and placed directly into a non-U.S. safe deposit box or private vault apparently do not constitute a foreign account since private vaults are not private institutions.
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