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U.S. 'Persons' Required to Report Foreign Financial Accounts by June 30

Every United States person with a financial interest or signature authority over any financial account in a foreign country must report that relationship when the aggregate value exceeds $10,000 at any time during the tax year. This may include accounts for which a taxpayer has the authority to direct funds but lacks ownership of those funds.

What is a United States person?

A United States person is defined as:

• A citizen or resident of the United States;
• A domestic partnership;
• A domestic corporation; or
• A domestic estate or trust.

Which accounts must be reported?

Any financial account located in a foreign country, even if held at an affiliate of a United States bank or other financial institution, is required to be disclosed. This relationship is reported on a TD F 90-22.1 and is due on June 30. Also, Question 7a on the Schedule B Form 1040 might need to be answered "yes."

Are there any exceptions?

The only exception is for foreign bank accounts in a U.S. military banking facility or an American military finance facility operated by a U.S. institution designated by the American government to serve U.S. government installations abroad.

What are the penalties for not reporting?

Penalties up to $100,000 may be assessed for failure to report foreign financial interests. While there are "reasonable cause" exceptions, filing the required form is worth avoiding the potential penalties.

For more information, contact Micah Wheat at 312-980-2949 or your Blackman Kallick representative.

This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.