Foreign Bank Account Returns

September 2009

These news items have been placed here as a courtesy to you. Please use this information wisely and at your own risk. Feel free to contact us if you have any further questions. Below is an e-mail sent to all our taxpayers in September 2009.

Subject: Foreign Bank Account Returns (FBAR) Form TDF90-22.1

I am writing to advise you of the IRS intentions to seek out individuals that have failed to file their Foreign Bank Account Returns (Form TDF 90-22.1).

Likely this is a non-issue for you because GEMMS’ Tax Notebook asks for your foreign bank account information. If you notified us of the bank account(s), we prepared and provided to you the completed Foreign Bank Account Return. However, since the penalties for failure to file are so steep, we thought it prudent to follow up with you.

Form TD F 90-22.1 (FBAR). Generally, each U.S. person must file Form TD F 90-22.1, The Report of Foreign Bank and Financial Accounts (FBAR), with the Department of the Treasury if:

1) the person has a financial interest in OR signature or other authority over any foreign financial accounts, including bank, securities, or other types of financial accounts, in a foreign country, and

2) the aggregate value of these financial accounts exceeds $10,000 at any time during the calendar year.

Generally, the FBAR must be filed with the Department of the Treasury on or before June 30 of the succeeding year. However, see the following segments for extensions of time to file the FBAR in certain circumstances. The FBAR is not an income tax return and should not be mailed with any income tax returns.

Penalties for Failing to File FBAR. In IRS News Release 2008-79, the IRS outlines the penalties for failing to file a Report of Foreign Bank and Financial Accounts (FBAR). The civil and criminal penalties for non-compliance with the FBAR filing requirements are severe.

Civil Penalties. IRS says that civil penalties for a non-willful violation can range up to $10,000 per violation. Civil penalties for a willful violation can range up to the greater of $100,000 or 50 percent of the amount in the account at the time of the violation.

Criminal Penalties. The criminal penalties for violating the FBAR requirements while also violating certain other laws can range up to a $500,000 fine or 10 years imprisonment or both. Note! The civil and criminal penalties may be imposed together.

Reasonable Cause Waiver. IRS says in News Release 2008-79 that if a holder of a foreign account was required to file FBARs for prior years, he or she should file the delinquent FBAR reports and attach a statement explaining why the reports are filed late. IRS says that no penalty will be assessed if IRS determines that the late filings were due to reasonable cause.

Additional Information. For additional information, please go to the IRS web site ( and type “FBAR” in the “search” box.

Since a failure to file could result in up to 10 years in prison, we suggest you discuss the situation with an attorney familiar with the FBAR rules. Remember, a willful failure to file the FBAR is a felony. We have identified an attorney familiar with all these rules. His information is copied below. Additionally, he has provided additional information about the FBARs attached to this e-mail.

Best regards,

Chuck Heyde

(O) (678) 625-7641

From: Sheppard, Hale [mailto:Hale.Sheppard@CHAMBERLAINLAW.COM]
Sent: Thursday, October 01, 2009 7:08 PM
Subject: Foreign Account Issues – October 15 Deadline


In furtherance of our call today, I am writing to confirm the significance of October 15. As you know, the IRS recently announced a one-time extension of the deadline for participating in the current voluntary disclosure program. Our firm is currently representing multiple taxpayers in the disclosure process. The official IRS position, which has been confirmed by the IRS Special Agents (criminal division) and IRS Revenue Agents (civil division) with whom we are dealing in the program, is that the IRS will aggressively pursue those who do not participate in the program, asserting severe criminal and/or civil penalties. I am attaching for your review one of the first IRS memos on this topic. It indicates that the IRS plans to make offshore cases one of its “highest priorities.” High-ranking IRS officials have made many subsequent public statements confirming this stance. Our firm, of course, will be representing many taxpayers who failed to participate in the disclosure program.

I am attaching two articles that I have published on foreign account issues. If you need anything else, please let me know.

Hale E. Sheppard, Esq.

Chamberlain, Hrdlicka, White, Williams & Martin
191 Peachtree Street, N.E.

34th Floor

Atlanta, Georgia 30303-1747

Phone: (404) 658-5441
Fax: (404) 658-5541