IRS Tells Foreign Financial Account Holders They Must File

The IRS has released new guidance for clients who need to answer questions about foreign financial accounts (FFAs) for their 2010 federal income tax filing. The questions are on Form 1040, Schedule B, according to an announcement on Wednesday.

This affects clients who "have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, the Bank Secrecy Act may require you to report the account yearly to the Internal Revenue Service by filing Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR)"

The IRS says U.S. "persons" must file an FBAR, with few exceptions, if:

1. The United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; and
2. The aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year to be reported.

The IRS also said in its notice that U.S. "citizens; United States residents; entities, including but not limited to, corporations, partnerships, or limited liability companies created or organized in the United States or under the laws of the United States; and trusts or estates formed under the laws of the United States," must complete the FBAR filing.