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US taxpayers-reporting foreign bank accounts

Some hotels may go dry

US taxpayers-reporting foreign bank accounts

Joseph Krebs, CPA
American taxpayers living abroad often fail to report their “foreign country” financial accounts. Nevertheless, all taxpayers are required to complete and file Form TD F 90-22.1 if the aggregate value of such financial accounts exceeded $10,000 anytime during a calendar year no matter where they reside worldwide. Although there is no separate tax for having one or more foreign accounts, the Treasury Department requires that taxpayers report such relationships annually by filing this Form on or before June 30th of the succeeding year. The report, normally a simple half-page Form, is sent to a Department of the Treasury address in Detroit, Michigan, and should NOT be filed as an attachment to an individual’s Federal income tax return. This Form along with instructions can be accessed for downloading at: www.irs.gov/ pub/irs-pdf/f90221.pdf
Further, taxpayers, who file their tax returns on Form 1040, are specifically asked on “Schedule B – Interest and Dividend Income” if they have any foreign financial accounts. In the absence of filing Form 1040 and Schedule B, taxpayers using either 1040A or 1040EZ as alternative means to file their Federal income tax returns are still subject to comply with the requirements of Public Law 91-508 and Public Law 93-579 for filing this Treasury Department report nevertheless.
The term “foreign country” includes all geographical areas located outside the United States, Guam, Puerto Rico, and the Virgin Islands. Thus, all of the foreign nations located in Southeast Asia including Thailand and Malaysia are identified as foreign countries within the meaning of this requirement.
Foreign financial accounts include any bank, securities, securities derivatives or other financial instruments accounts. Such investments generally encompass any accounts in which the assets are held individually or in a commingled fund, and the account owner holds an equity interest. The term also means any saving, demand checking, deposit, time deposit, or any other account maintained with a financial institution, whether individually or jointly held. In addition, if an account is maintained in the name of two persons jointly, or if several persons each own a partial interest in an account, each of the U.S. taxpayers are deemed to have a reportable financial interest in that account.
There are two noteworthy exceptions that exempt U.S. taxpayers living abroad from requirements to file Form TD F 90.22.1. There is no need to report any financial accounts held in a facility known as a “United States military banking facility” operated by the U.S. financial institution designated to serve U.S. Government installations abroad, even if the facility is located in a foreign country. Secondly, there is no need to report any account maintained with a branch, agency, or other office of a foreign bank located within the United States or one of its territories.
The principal purpose for reporting this information is to ensure the reporting of activities that have a high degree of abuse in criminal, tax, or regulatory investigations or proceedings. Disclosure of this information is mandatory. Thus, civil and criminal penalties, including a fine of not more than $500,000 and imprisonment of not more than five years, are provided for failure to file this report, supply information, or for filing a false or fraudulent report. Moreover, Social Security numbers are used as a means to identify individuals who file or fail to file this report. Consequently, taxpayers living abroad are encouraged to take heed of these requirements, and file Form TD F 90.22.1 if appropriate.
Joseph “Joe” Krebs, CPA is a U.S. tax practitioner living in Thailand. Send questions about this Advisory to: [email protected]


Some hotels may go dry

Clamp down on drinking gone too far?

Many hotels in Chiang Mai pride themselves with being within walking distance to the city’s temples. Soon these hotels may have wished different if a government bill banning the sale of alcoholic drinks is endorsed by the National Legislative Assembly.
Though the bill is aimed at curbing alcoholic drinks to the Thai youth, the prohibition will mostly affect tourists who want to enjoy a cocktail in the hotel bars.
The government’s proposed alcohol consumption-control bill may hurt the country’s tourism industry due to its restrictions over the sales and advertisements of alcoholic beverages, the Thai Hotels Association (THA) says.
THA president, Mr Chanin Donavanik, was quoted in a Bangkok newspaper as saying: “The law would clobber the tourism industry, especially hotels, restaurants and bars. Almost 4,000 hotels have huge investments at stake.”
THA is in the process of pleading for hotels and resorts to be exempt from the terms of the bill, which has already been approved by the Cabinet. The bill, aimed at tightening control over the consumption of alcoholic beverages by Thai youth nationwide, is waiting for endorsement by the National Legislative Assembly.
Under the bill, sales of alcoholic beverages are not allowed on premises that are located within 200m of schools and temples. Neither are advertisements for alcoholic beverages allowed at all times and places. Sales of alcoholic beverages to youth aged below 20 are prohibited.
According to THA, several hotels in Bangkok and Chiang Mai are located near schools or temples. THA said around 30 per cent of hotel revenues were from the sales of all types of beverages. (CMM Reporters/TTG)