Disclosure of Indian Financial Accounts to U.S. Government
Posted on: July 16, 2016 | By: Stephen Dunn | Disclosure of Indian Financial Accounts to the U.S. Government, Foreign Assets Compliance
The U.S. Bank Secrecy Act requires a U.S. person who has interests in foreign financial account aggregating more than $10,000 at any time during a calendar year to report the person’s interest in foreign financial account on a FinCEN Form 114, Report of Foreign Bank and Financial Accounts (“FBAR”) filed for that year. A U.S. person is subject to a penalty of $10,000 for failure to file an FBAR or, if the failure is willful, a penalty equal to the greater of $100,000 or 50% of the high balance in the U.S. person’s foreign financial accounts during the calendar year (this is sometimes called the “draconian” FBAR penalty). A U.S. person may also be criminally prosecuted for failing to file an FBAR.
“U.S. person” for this purpose includes:
a U.S. citizen;
- a permanent resident of the U.S. (“greencard” holder; and
- an individual who meets the “substantial presence” test.
- the account number (or functional equivalent in the absence of an account number);
- the name and identifying number of the reporting Indian financial institution;
- the account balance or value (including, in the case of a cash value insurance contract or annuity contract, the cash value or surrender value) as of the end of the relevant calendar year or other appropriate reporting period or, if the account was closed during such year, immediately before closure;
- in the case of any custodial account (a)the total gross amount of interest, the total gross amount of dividends, and the total gross amount of other income generated with respect to the assets held in the account, in each case paid or credited to the account (or with respect to the account) during the calendar year or other appropriate reporting period; and(b) the total gross proceeds from the sale or redemption of property paid or credited to the account during the calendar year or other appropriate reporting period with repect to which the reporting Indian financial institution acted as a custodian, broker, nominee, or otherwise as an agent for the account holder;
- in the case of any depository account, the total gross amount of interest paid or credited to the account during the calendar year or other appropriate reporting period; and
- in the case of any account not described in subparagraph 2(a)(5) or2(a)(6) of this Article, the total gross amount paid or credited to the Account Holder with respect to the account during the calendar year other appropriate reporting period with respect to which the Reporting Indian Financial Institution is the obligor or debtor; including the aggregate amount of any redemption payments made to the account holder during the calendar year or other appropriate reporting period.
- A John Doe summons issued to a person with whom the U.S. person has done business knowingly, such as UPS, FedEx, or a U.S. bank, or unknowlingly, such as a Federal Reserve Bank.
- An informant.
The common current running through the above disclosure means is that the U.S. person accountholder lacks control over them. Nondisclosure is perilous. The risks of nondisclosure are great. The U.S. accountholder should take control of the situation, diffuse the situation, and disclose his foreign financial accounts to the U.S. government by an appropriate route to compliance, discussed above. And the U.S. accountholder should do so as soon as possible, as a voluntary disclosure cannot be made once the U.S. government is aware of the noncompliance. Compliance is the best policy.
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