The regulations apply to individuals, businesses or "Foreign Persons doing business in the US". If you or your business have foreign bank accounts, investments, ownership in corporations, partnerships .....etc. you need to report the account or investment to the US Government.

The penalties for failure to report foreign accounts and investments can be as severe as $ 10,000 per year or 30% to 40% of the value in the account. These penalties are much more severe them Income tax penalties. It is also very likely that penalties that accumulate over years can easily exceed the total value of the foreign account or investment.

The rules are somewhat complex here and there are various reporting requirements for different types of foreign ownership, i.e. bank accounts, investment accounts, corporations, partnerships etc. And sometimes more than one information return needs to be filed under the new regulations, so there needs to be a duplicate filing.

If you have any foreign accounts or ownership of foreign investments or companies etc., please contact our office and we can go over the reporting requirements with you. Many of the requirements are new. Last year we left it up to our clients to complete the filings themselves, but due to the significant penalties involved, we recommend that we review with you, your foreign accounts in detail to make sure all of the necessary forms are filed on time.

The deadline for Year 2010 reporting is 06/30/11, and there are no extensions and the returns have to filed and not postmarked by 06/30/11. Therefore, if this applies to you, and you want us to review the requirements with you, we should have you foreign account and investment details by 05/01/11.

The new requirements not only applies if you have ownership in foreign bank accounts or investments, but also if you have signature authority over an account as well. See the link below to the IRS web site which discusses some of the filing requirements for individuals which is referred as FBAR.

http://www.irs.gov/businesses/small/article/0,,id=148849,00.html

Much of the new regulations have tough penalties because they are aimed at tax evaders and terrorists, but unfortunately anyone with foreign accounts is swept up into the reporting requirements and penalties.

Also some of the recent changes to Estates and Trusts that were enacted in December 2010, do not extend specific benefits to foreign accounts and foreign investments. If you have significant foreign assets in your estate, we recommend you contact your estate attorney to review the new laws.

Let us know if you have any questions.

Wendell DeLano, CPA

DeLano Consulting, CPA LLP