Michael Gray, CPA's Tax and Business Insight

June 24, 2008

© 2008 by Michael C. Gray

ISSN 1539-395X

A monthly report to help you prepare for your financial future, keep more of what you earn by minimizing your taxes, and build an extraordinary business!

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Report of Foreign Bank and Financial Accounts

Remember the 2007 Treasury Report of Foreign Bank and Financial Accounts (FBAR), Form TD F 90-22.1 is due on June 30, 2008.

The report must be filed even if you only have signature authority or other authority for bank, securities or other types of financial accounts in a foreign country if the aggegate value of the accounts was more than $10,000 during 2007. Of course, the accounts you own or otherwise have a financial interest in must be reported.

See the instructions for the form for details.

Let us know if you would like our assistance to prepare the form.

The IRS is aggressively looking for income earned from offshore sources that isn’t being reported on federal income tax returns of US residents. For example, with the cooperation of Bradley Birkenfeld, formerly a banker with Swiss bank UBS A.G., the IRS is prosecuting American billionaire Igor Olenicoff. Olenicoff has already plead guilty to filing a false 2002 income tax return. Birkenfeld says he helped Mr. Olenicoff conceal $200 million offshore.

There are severe penalties for failing to file the FBAR. Civil penalties for non-willful failure to file can be up to $10,000 per violation. There are civil penalties of up to the greater of $100,000 or 50% of the unreported amount. Criminal penalties can be up to a $500,000 fine or 10 years imprisonment, or both.

The IRS says it will waive penalties when late forms are filed with an explanation of a reasonable cause.

(IR-2008-79, June 27, 2008.)

IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained in this communication was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.

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