Does your company have a foreign financial account?

• Position: Recent Activities

(The following article is derived from information provided by the Internal Revenue Service.)

If your company owns a foreign bank account, brokerage account, mutual fund, unit trust, or other financial account, then it may be required to report the account yearly to the Internal Revenue Service. Under the Bank Secrecy Act, each United States person must file a Report of Foreign Bank and Financial Accounts (FBAR), if

1. The person has financial interest in, signature authority or other authority over one or more accounts in a foreign country, and

2. The value of the account exceeds $10,000 at any time during the calendar year.

   A United States person is not prohibited from owning foreign accounts. The FBAR is required because foreign financial institutions may not be subject to the same reporting requirements as domestic financial institutions. The FBAR is a tool to help the United States government identify persons who may be using foreign financial accounts to circumvent United States law. Investigators use FBARs to help identify or trace funds used for illicit purposes or to identify unreported income maintained or generated abroad.

   Definition of Terms

   A "United States person" is a citizen or resident of the United States, a domestic partnership, a domestic corporation, or a domestic estate or trust. A foreign country includes all geographical areas outside the United States, including the the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, and the territories and possessions of the

   United States (such as Guam, American Samoa, and the United States Virgin Islands).

   Reporting and Filing Information

   A person who holds a foreign account may have a reporting obligation even though the account produces no taxable income. Checking the appropriate block on Form 1040 Schedule B, and filing Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts, satisfies the account holder's reporting obligation.

   A foreign account holder must mail the Form TD F 90-22.1 on or before June 30 of the following year to:

   U.S. Department of the Treasury P.O. Box 32621 Detroit, MI 48232-0621 The FBAR is not to be filed with the filer's federal income tax return. The granting, by IRS, of an extension to file federal income tax returns does not extend the due date for filing an FBAR. There is no extension available for...