Today the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) released a proposed new Form TD F 90-22.1 (commonly known as the FBAR form) and requested comments. The Notice and Request for Comments was published in today’s Federal Register and is available here. The FBAR form is used by U.S. taxpayers to report a financial interest in, or signature or other authority over, foreign bank accounts and is required to be filed annually by June 30.
The primary change to the new FBAR form is to permit the filing of the form by third-party preparers. A new section is added to the first page of the FBAR form to identify the third-party preparer in a manner similar to income tax returns. The new form also adds a check box entitled “unknown” if the maximum value of the bank account being reported is unknown. Comments on the new form are due by May 6, 2013.
The addition of a section on the FBAR form identifying the third party preparer raises issues regarding the professional responsibilities of return preparers. The IRS Office of Professional Responsiblity previously issued guidance entitled “Professional Responsibility and the Report of Foreign Bank and Financial Accounts” which is available here. In that guidance, OPR has stated that a tax return preparer has no obligation to prepare the FBAR form “unless the practitioner feels competent to do so and the client has agreed to this additional service.” The guidance further provides that a practitioner has “an affirmative obligation to advise the client of the need to file the FBAR form and the consequences of failing to do so.” The penalties for failing to file the FBAR form can be substantial, and in the case of a willful failure to file, can be criminally prosecuted and subject the taxpayer to a civil penalty of up to 50 percent of the highest balance in the unreported bank account.
Finally, the Federal Register Notice reveals some interesting statistics. FinCEN reports that 780,000 FBARs were filed during calendar year 2012. This is almost certainly the highest number of FBARs ever filed in one year, as the FBAR compliance rate is gradually increasing every year. FinCEN also estimates that the recordkeeping and reporting burden is 1 hour and fifteen minutes per FBAR.