Recent headlines announced the “piercing” of Swiss banking secrecy laws to reveal many Americans owning huge, unreported income offshore.
But it’s not just the big guys who are subject to reporting: Any US citizen with ownership or control over an account or accounts worth more than $10,000 during the year must report them to the IRS. The purpose of these reports is to help the government identify folks who may have income from foreign sources that they are not reporting, as well as tracking money used or produced in illegal acts.
One customer of ours didn’t realize that since she and her brother had inherited an apartment building in Italy, and they had control of the bank account for the management of the building, that she was subject to the requirements even though the brother was an Italian citizen and she was only a “silent partner” in the business.
The deadline for filing the 2009 “Report of Foreign Bank and Financial Accounts” (FBAR) is June 30th. The penalty for not reporting can be very heavy, including criminal penalties – so see a tax professional right away to determine if you need to file, and for help in correctly submitting the forms, or read more at http://www.irs.gov. Penalties range from a $10,000 fine to $100,000 or half the value of the account(s) and criminal penalties of up to $500,000 and 10 years in Federal prison — so make sure you are in compliance.
(originally posted at http://www.dennyllp.com)