Foreign Bank And Financial Accounts And Form Td F 90-22.1

By Kenneth H. Bridges, CPA, PFS     March 2011

There has for many years been a requirement that any US person with a financial interest in or signature or other authority over a foreign financial account file with the Treasury Department each year by June 30 a Form TD F 90-22.1, disclosing the details with respect to such accounts, if the aggregate balance of such accounts at any time during the prior calendar year exceeded $10,000. Until a few years ago, the only penalties for failure to file a Form TD F 90-22.1 were for a willful failure to file.  However, current law provides for a penalty of up to $10,000 in the case of a nonwillful failure to file, and the civil penalty for a willful failure to file can be up to the greater of $100,000 or 50% of the account balance.

The IRS has recently become increasingly concerned that US taxpayers are using offshore financial accounts to evade US taxes and has stepped up its enforcement in this area. As part of its stepped-up enforcement initiative, the IRS recently provided guidelines for those taxpayers who have failed to report income from foreign accounts to make voluntary disclosure of such in exchange for leniency.  Further, the IRS has recently announced that taxpayers who have properly reported their income but inadvertently failed to file the TD F 90-22.1 have until September 23, 2009 to do so, without penalty.

Kenneth H. Bridges, CPA, PFS is a partner with Bridges & Dunn-Rankin, LLP an Atlanta-based CPA firm.

This article is presented for educational and informational purposes only, and is not intended to constitute legal, tax or accounting advice.  The article provides only a very general summary of complex rules.  For advice on how these rules may apply to your specific situation, contact a professional tax advisor.