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Reporting foreign bank account information.

The AICPA reminds tax advisers to ask clients about the existence of foreign bank accounts and to disclose such information on Form 1040, Schedule B, Part III, Question 7. Tax advisers should also consider notifying clients of their responsibility to file Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts, by June 30, 2003.

This form is required to be filed by U.S. citizens and residents who have a financial interest in or signature or other authority over any financial accounts (including bank, securities or other types of financial accounts in a foreign country), if the aggregate value of such accounts exceeded $10,000 during 2002.

In recent testimony, Treasury clarified that addressing the lack of disclosure of foreign financial accounts has become a priority The IRS's Offshore Voluntary Compliance Initiative allows partial amnesty until April 15, 2003 (see Tax Practice & Procedures, "Amnesty for OffShore Tax Evaders," p. 226, this issue.) Congress is likely to add new, easier-to-impose penalties this year for not filing Form TD F 90-22.1.

Treasury can impose on any person who willfully violates this reporting requirement a civil penalty, in the amount of the transaction or the value of the account, up to a $100,000 maximum (the minimum penalty is $25,000). In addition, any person who willfully violates this reporting requirement is subject to a criminal penalty--a fine of not more than $250,000 or imprisonment for up to five years, or both; if the violation is part of a pattern of illegal activity, the maximum fine increases to $500,000 and the maximum length of imprisonment increases to 10 years.
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Author:Sherr, Eileen
Publication:The Tax Adviser
Date:Apr 1, 2003
Words:272
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