About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

8 J. Tax'n Fin. Products 25 (2009-2010)
FBAR - Where We Are and How We Got There

handle is hein.journals/jrlfin8 and id is 153 raw text is: Volume 8 Issue 3 2009 FBAR-Where We Are and How We Got There By Eschrat Rahimi-Laridjani Eschrat Rahimi-Laridjani undertakes a thorough review of the requirements to report foreign bank and financial accounts. In recent months there has been a heightened fo- cus on Form TD F 90-22.1, the Report of Foreign Bank and Financial Accounts (FBAR) among tax- payers and tax practitioners who previously may have been relatively unfamiliar with the details of foreign bank and financial account reporting. The issuance of a revised FBAR form and instructions in October 2008, the ever increasing enforcement pressure with respect to offshore activity generally, the specter of severe civil and criminal penalties for FBAR viola- tions, and pronouncements earlier this year by the IRS dramatically expanding the universe of accounts potentially subject to these reporting requirements have sharply increased interest in, and attention paid to, the FBAR. This article aims to familiarize the reader with the current FBAR form and instructions as well as with their history and to highlight some of the areas of greatest uncertainty. History of the FBAR The requirement to report foreign bank and financial accounts dates back to the Currency and Foreign Transactions Reporting Act (Bank Secrecy Act) en- acted in 1970.' The overall purpose of the statutory framework of which the FBAR requirement forms part is to require records and reports with a high degree of usefulness that can assist various government agencies in criminal, tax or regulatory investigations or proceedings and in the conduct of intelligence or counterintelligence activities, including anti-terrorist activities.2 The original aim of the FBAR thus was to aid the U.S. Department of theTreasury in combating money laundering involving international criminal Eschrat Rahimi-Laridjani is Counsel in the New York office of Freshfields Bruckhaus Deringer US LLP'. networks, without, as the statute itself states, burden- ing unreasonably persons who legitimately engage in international financial transactions., In keeping with the focus on money laundering, enforcement author- ity for the FBAR was delegated to the director of the Financial Crimes Enforcement Network (FinCEN), a government-wide financial intelligence and analysis network established within the Treasury.4 In 2003, FinCEN redelegated FBAR-related enforce- ment authority to the IRS.' This redelegation occurred in the context of the IRS's investigations into offshore bank payment cards and its Offshore Voluntary Com- pliance Initiative, and represented a significant step in adapting the FBAR from a tool to combat money laundering to a weapon in the IRS's international tax enforcement arsenal. Granting enforcement authority to the IRS was seen as a natural fit, in particular since the FBAR applies to individuals and is closely related to questions about foreign bank and financial accounts on the individual, trust, estate, tax-exempt, partnership and corporate income tax return forms. It is important to note, however, that unlike tax re- turn information, FBARs can and are shared among government agencies.! The current political climate is marked by the U.S. government's increased efforts to crack down on offshore tax evasion, the controversy surrounding bank secrecy in general and UBS in particular,9 and various proposals by the Obama Administration and members of Congress aimed at combating offshore tax avoidance and evasion.0 Some of these propos- als relate directly to existing FBAR requirements. For example, the Obama Administration's fiscal year 2010 budget proposal (Green Book) includes a provision that would require individual taxpayers to provide the information required by the FBAR on their individual income tax returns in addition to filing the 02009 E. Rahimi-Laridjani JOURNAL OF TAXATION OF FINANCIAL PRODUCTS

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most