Foreign Bank Account Problem

[Kram BergGold]

My client is just now getting around to filing for 2006. For three days in 2006 she had signature authority on a foreign account wiht more than 10k in it. I see two options

1. Check the box Yes on Schedule B for a foreign account and tell her to skip filing the Treasury Form (the late filing penalty will be enormous, like $15 to 20k) and hope the left hand does not know what the right hand is doing.

2. Check the box and file the Treasury Form and hope I can get the penalty dropped as this was the first and probably the last time she will need to file the Treasury Form.

Any suggestions or experiences?

[Roland Slugg]

If you're preparing her 2006 return, you have no choice. As preparer you must check the correct boxes on Schedule B. You should also advise your client of her responsibility to file the TD F 90-22.1 form.

You may also wish to read the general information on this link ....

http://taxes.about.com/od/preparingyourtaxes/a/TDF90221.htm

.... especially under the heading "When to File."

Based on my reading of the above link I would think the penalty would be waived in your client's case, especially if she only had signature authority over the account for just three days, and if all interest belonging to her is/was reported on her 2006 tax return.