US Foreign Bank Account Reporting — The US Treasury Expands Their Reach
The US has some of the most complicated filing requirements in the world. Canadian businesses who carry on business in the US have to pay particular attention to these requirements in order to avoid substantial penalties for failure to file. A recent change to the instructions to a US Treasury financial reporting form may require certain Canadian residents and Canadian corporations to disclose the existence of their Canadian financial accounts.
The filing is Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR). The US Treasury requires a US person to file a FBAR to report any financial interest in, or signature or other authority over, foreign financial accounts, such as Canadian bank accounts, in which the aggregate value of these financial accounts exceeds $10,000 US at any time during the calendar year. The form is completed on a calendar year basis and is due on June 30th — therefore the filing deadline for 2008 is June 30, 2009.
The change, which applies to all FBAR filings made after 2008 (and therefore would apply to the 2008 calendar year), is with respect to who has to file a FBAR. Previously, a FBAR had to be filed by 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.
Effective for filings made after 2008, the US Treasury has expanded who has to file a FBAR to include “a person in and doing business in the United States”. This could include 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 penalties for not filing when required are substantial.
If you or your corporation is conducting business in the US, talk to your BDO advisor about whether you need to file a FBAR.
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