Most US Expats Need To File Bank Account Info Or Face Fine

By Robert Duncan

A tax change in the United States means that many American citizens living abroad must file a statement by June 30 registering their foreign bank accounts with the U.S. Department of Treasury.

Many expatriates are unaware that failure to do so could lead to a minimum $10,000 fine.

This change is the result of U.S. president George W. Bush signing The American Jobs Creation Act. While that Tax Act was billed as saving U.S. jobs and allowing corporate America significant tax breaks, a side-effect is that it significantly increases penalties for U.S. expat citizens for late and non-filing of Treasury Department Form TD F 90-22.1 by June 30 of the following year (i.e. June 30, 2006 for calendar year 2005).

That side-effect is an intentional one. The tax change is a convenient mechanism for the U.S. government to track money flows in its war on terrorism, as noted in a report to Congress in compliance with 361b of the USA Patriot Act written in 2002 and which called for last year's revision.

Treasury Department Form TD F 90-22.1, also known as FBAR, takes around 15 minutes to fill out, and consists in providing the U.S. government information regarding all the U.S. citizen’s bank accounts. Under the Tax Act a $10,000 fine may be assessed for late filing of the form after June 30, and in addition a penalty of up to the greater of $100,000 or 50% of the account value may be assessed for failure to file the form. The minimum penalty for a willful non-file is $25,000 and is classified as a misdameanor, however it can be elevated to a felony if the person fails to file the form while violating another law of the United States or as part of illegal activity involving transactions of more than $100,000 in a 12 month period, according to a report by the firm Grant Thorton.

When first informed of this change in tax law, I contacted the Internal Revenue Service. At first the IRS employee told me that this was impossible. She insisted the U.S. government “surely would not require such personal information.” Eventually, the employee sought further information. After a few minutes, she came back to the telephone, and informed me that yes, I did have to file the form.

Specifically, any person who has an interest in or signature authority over a foreign financial account must file FBAR if:

1) they are a U.S. person (citizen or US resident at any time during the year) AND

2) during the calendar year, had a financial interest in (or signature or other authority over) a bank, securities or other financial account (including a trust) located in a foreign country AND

3) on any day during the calendar year, the aggregate value of all accounts exceeded $10,000.

The $10,000 threshold is sufficiently low such that most U.S. expats will need to fill out the form to avoid paying the fine: a mortgage, or personal loan, or a coinciding salary payment, or bonus, could trigger the need for filing the form. In other words, everyday banking transactions on the part of U.S. expats triggers the requirement of filing the form informing the government of personal banking information.

The IRS employee and I jokingly commented about how this new requirement seems to be a form of discrimination against U.S. citizens living abroad.

On further questioning, I was told that– at least in theory – in the past U.S. citizens living abroad were required to file the form. However, none of the accounting firms that have prepared my tax forms in previous years had once requested that I fill out a similar form. Furthermore, on further checking did I did not find any other U.S. citizen living abroad who had been asked to provide personal banking information.

According to a recent statement from my accountants, "in the past, the Treasury Department imposed penalties only for willful violations of the reporting requirements. However in an effort to increase voluntary compliance, the new Tax Act has removed the willful condition. As a result, the penalties (including the new $10,000 penalty) may now be imposed for any violation of the reporting requirements set forth under this section."

I note in the abovementioned Treasury 2002 report to Congress the following:

"Certainly there appear to be a number of taxpayers who fail to file because of a lack of knowledge or confusion about the filing requirements....However, there also appear to be taxpayers who fail to file because they are concealing income or are engaged in some kind of criminal activity, such as money laundering. No amount of education and outreach will will result in increased FBAR filings from this latter group. To achieve deterrence here will require a series of highly publicized criminal actions against intentional violators in order to raise the cost of being a FBAR scofflaw. Ideally, such cases would be brought not only as adjuncts to other types of criminal conduct such as tax evasion and bankruptcy fraud, but also as stand-alone cases."

That report continued: "The IRS is engaged in a large-scale initiative to seek taxpayers who have undisclosed accounts overseas."


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Robert Duncan is a journalist and ombudsman for foreign press in Spain. He is an Executive Board Member and Vice-President for the Organización de Periodismo y Comunicación Ibero-Americana, and Vice-President of the energy and telecommunications association, APSCE. He is News Editor for Spero News, and Editor-In-Chief of EnerPub and Santificarnos.

He has also been published in World Catholic News, National Catholic Register, Renew America, Lifesite.net, as well as Capital Hill Coffee House, Common Conservative, The Conservative Voice, Enter Stage Right, News By Us, Conservative Crusader, World Net Daily, Mens News Daily and others. Robert was the bureau chief for an international news agency in Madrid for many years, and was published regularly in Dow Jones Newswires, with articles appearing in The Wall Street Journal.