The June 30, 2012, deadline for filing a Report of Foreign Bank And Financial Accounts ("FBAR") with the Department of the Treasury is rapidly approaching. (Form TD-F 90-22.1). The government established the FBAR reporting requirement following the terrorist attacks of September 11, 2001, as a way to combat financing of terrorism through foreign accounts. The government has vigorously enforced FBAR rules and regulations and instituted substantial penalties. However, individuals and entities who failed to file required FBAR forms for past reporting years have a new opportunity to reduce applicable penalties.

Under the current regulations, United States citizens, resident aliens of the United States, and entities formed under the laws of the United States or any State must file an FBAR on or before June 30 of each year identifying each "bank, securities, or other financial account in a foreign country" held during the previous year, in which the taxpayer has "a financial interest in, or signature or other authority over" that has an aggregate value of $10,000. Where multiple United States persons have a financial interest or signature or other authority over the same account, each must file an FBAR. Failure to comply with FBAR reporting requirements can have serious consequences. A willful violation of the requirements can result in a civil penalty ranging from $25,000 to $100,000, for each account not reported, and/or criminal prosecution.

Fortunately for United States citizens, resident aliens, or entities who failed to file FBAR forms for prior reporting years, on January 9, 2012, the Internal Revenue Service indefinitely reopened the Offshore Voluntary Disclosure Program ("OVDP"). The OVDP allows delinquent FBAR filers to come forward and pay reduced penalties. This is the third iteration of the OVDP, and the IRS received more than 33,000 voluntary disclosures as a result of its 2009 and 2011 offshore initiatives.

Any individual or entity with a financial interest in or authority over any accounts located outside the United States would be wise to consult with an attorney or accountant prior to the FBAR deadline on June 30, 2012, or regarding the OVDP.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.