FBAR Filing Requirements: Alienating US Expatriates

What sense does it make to have US expatriates living abroad to file an FBAR form? They aren't attempting to shield income by hiding it overseas. But rather, overseas is where they live and make their money. The truth is most expatriates are in compliance with their local tax authorities, but this compliance comes with a cost. Or so says University of Connecticut Law School candidate and a firm summer intern, Ryan Downing.

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Click here to learn why now could be the best time to disclose foreign bank accounts to the IRS



By Ryan Downing, UConn Law '14, Summer Intern, Parent & Parent LLP


Taxpayers with foreign bank accounts must report the existence of those accounts using Form TD F 90-22.1 by June 30th** of the following year.1 The name of this law is the Report of Foreign Bank and Financial Accounts, or FBAR for short.2 FBAR underwent substantial change since its inception, and my note will deal with how FBAR must undergo further changes before it can hope to adequately tackle the issues which spurred its legislation. In relation to these issues, it is also important to understand the legislation of FATCA and its potential impact on U.S. residents with foreign bank accounts. This note will cover the relevant background and mechanics of both FBAR and FATCA, discuss several recent cases illustrative of current problems with these disclosure requirements, and suggest ways in which the IRS should improve FBAR and FATCA. These issues will be covered with the goal of highlighting how the IRS is alienating American residents living abroad.31 The form itself is a treasury form, whereas the enforcement of filing and penalties are managed by the IRS. The Foreign bank Acct Bomb and How to Defuse It, at 9.

See generally Barry McKenna, Watchdog Slams IRS for Alienating Expats, The Globe and Mail (April 8, 2013) http://www.theglobeandmail.com/report-on-business/watchdog-slams-irs-for-alienating-expats/article2308778/ (an article illustrating how FBAR, as a part of the American international tax regime, scares some Americans living abroad).


**As of the 2017 filing season, the FBAR is now due when your tax return is due.