Monthly Archives: July 2014

FBARs

FBARs are forms prepared for the US Treasury Department showing information on foreign financial accounts for US citizens, US residents, and green card holders. If you are in one of these categories and adding the maximum value of each foreign financial account at the time that it is at a maximum comes to more than US$10000 you have to file FBAR accounts. These consist of form 8938, Statement of Specified Foreign Financial Accounts, and the FINCEN form. Form 8938 goes with the tax return itself, and the FINCEN form must be efiled to the Treasury Department. The FINCEN form replaces the older TD F90 form, which was mailed to the Treasury Department in Detroit. You may ask why it went to Detroit and the most likely explanation is that at the time this was set up Detroit had one of the highest unemployment rates in the US.

There is some delay and red tape involved in getting set up to handle FINCEN accounts. In theory one person in each office becomes the designated FINCEN administrator and efiles all of the forms prepared in that office. I sent off the required forms and it took something like a couple of weeks to get approval as an administrator. The literature clearly states that the forms must be submitted by June 30 of the following year, and that extensions of time to file a tax return do not apply to the FINCEN form. Naturally enough the first or second page of the form asks if the form is being submitted late and if so what is the reason for this late submission.

For taxpayers who have not filed returns for the last few years they ask for financial reporting to be done going back 5 or 6 years. It appears that the intention is that the taxpayer will file forms TD F 90 in Detroit for previous years and FINCEN forms for 2013 and following years.

Beginning July 1, 2014 foreign financial firms are required to file FATCA forms, giving the US Treasury Department details on accounts of all US citizens who have accounts there. Many firms responded by simply closing all of these accounts. This is a special problem in Canada, where estimates are that as many as a million US citizens are living. Except on the fourth of July they look very much like Canadians so this is a big problem for the financial institutions there. I have no idea how they can determine citizenship.

The time and effort required to fill in and submit these forms is often more than is required to prepare and submit tax forms.