Tax Alerts
IRS Temporarily Suspends Foreign Bank Account Reporting for non-US Persons
June 9, 2009
On June 5, 2009, the IRS announced that persons who are not US citizens, US residents or US domestic entities, do not need to file Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), for 2008. This form is due on June 30, 2009.
This is welcome relief for non-residents of the US who are in or conducting business in the US. As we advised you in the 2009-02 edition of The Tax Factor, the US Treasury had expanded who was required to file this form to include "a person in and doing business in the US". This could have caught a Canadian individual or corporation who is conducting business in the US, even if the individual or corporation is not subject to US Federal tax on its business activities because they do not have a permanent establishment in the US.
The filing requirement will still apply to a US person, which is defined as a citizen or resident of the US, a US domestic partnership, a US domestic corporation, or a US domestic estate or trust. The penalties for not filing when required are substantial.
The IRS, in its announcement, stated that they took this action to reduce the compliance burden on non-US persons as concerns and questions were raised regarding the new instructions for the form. There was a great deal of uncertainty with the new requirements - the most troubling which was determining when a non-US person actually had an obligation to make a FBAR filing. Note, however, that the filing suspension for non-US persons is only temporary. The IRS will be following up with additional guidance on FBAR requirements for future years.
Contact your BDO advisor if you have any questions about your US filing obligations
