Reporting Required by June 30, 2005 for Foreign Bank or Similar Accounts

Form TD F 90-22.1 must be filed to report certain interests in foreign bank and similar accounts in foreign countries. Reporting is required if a US person (defined to include US citizens and residents, as well as domestic corporations, partnerships, estates and trusts) has a financial interest in, or signature authority over, a foreign bank or similar account. A report is only required where the aggregate value of these accounts exceeds $10,000 at any time during the calendar year. A US person is treated as having a financial interest in each account for which it is the owner of record or has legal title, or where the owner of record or holder of legal title is a person acting in some capacity on behalf of the US person. In addition, a US person is treated as having a financial interest in accounts owned by certain related subsidiaries and partnerships.

Filing may be required both for entities, and for individual employees of an entity. The following are examples of persons required to file:

The US Parent Company of a greater-than-50%-owned foreign subsidiary that has a foreign bank account.
An employee that has signature authority over a foreign bank account of her employer.
An employee of a privately-held company that has authority to direct disbursements from a foreign bank account through oral (or similar) communication with the bank.
A partnership in which the US person owns an interest in more than 50% of the profits (distributive share of income).
A trust in which the US person either has a present beneficial interest in more than 50% of the assets or from which such person receives more than 50% of the current income.

Reporting must be done for any financial account that is located in a foreign country, even if it is held at an affiliate of a US bank or other financial institution. Reporting is not required for accounts maintained with a branch, agency, or other office of a foreign bank or other institution that is located in the US, Guam, Puerto Rico, or the Virgin Islands. Reporting is also not required for accounts held in US Military banking facilities.

Reporting has been required for a number of years. However, the 2004 JOBS ACT significantly increased the penalties for failure to file. Prior rules did not apply a penalty for non-willful failure to file. The new penalties are $10,000 for non-willful failure to file, and up to $500,000 for willful failure to file.

The form is due June 30, regardless of the reporting person's tax year. A corporation which has an interest in one or more other entities is permitted to file a consolidated report provided that a listing of the entities is included in the report. If a corporation has a financial interest in 25 or more foreign financial accounts, the reporting corporation is only required to note that fact on the reporting form and be prepared to provide detailed information concerning each account when requested.