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Who Must File an FBAR Form

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Who Must File an FBAR

United States persons are required to file an FBAR if:

1.   The United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; and

2.   The aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year reported.

United States person includes U.S. citizens; U.S. residents; entities, including but not limited to, corporations, partnerships, or limited liability companies, created or organized in the United States or under the laws of the United States; and trusts or estates formed under the laws of the United States.

Exceptions to the Reporting Requirement

Exceptions to the FBAR reporting requirements can be found in the FBAR instructions. There are filing exceptions for the following United States persons or foreign financial accounts:

·         Certain foreign financial accounts jointly owned by spouses

·         United States persons included in a consolidated FBAR

·         Correspondent/Nostro accounts

·         Foreign financial accounts owned by a governmental entity

·         Foreign financial accounts owned by an international financial institution

·         Owners and beneficiaries of U.S. IRAs

·         Participants in and beneficiaries of tax-qualified retirement plans

·         Certain individuals with signature authority over, but no financial interest in, a foreign financial account

·         Trust beneficiaries (but only if a U.S. person reports the account on an FBAR filed on behalf of the trust)

·         Foreign financial accounts maintained on a United States military banking facility.

Review the FBAR instructions for more information on the reporting requirement and on the exceptions to the reporting requirement.

Reporting and Filing Information

A person who holds a foreign financial account may have a reporting obligation even when the account produces no taxable income. The reporting obligation is met by answering questions on a tax return about foreign accounts (for example, the questions about foreign accounts on Form 1040 Schedule B) and by filing an FBAR.

The FBAR is a calendar year report and must be filed on or before June 30 of the year following the calendar year being reported. Effective July 1, 2013, the FBAR must be filed electronically through FinCEN’s BSA E-Filing System. The FBAR is not filed with a federal tax return. When the IRS grants a filing extension for a taxpayer’s income tax return, it does not extend the time to file an FBAR. There is no provision for requesting an extension of time to file an FBAR.

Those required to file an FBAR who fail to properly file a complete and correct FBAR may be subject to a civil penalty not to exceed $10,000 per violation for nonwillful violations that are not due to reasonable cause. For willful violations, the penalty may be the greater of $100,000 or 50 percent of the balance in the account at the time of the violation, for each violation. For guidance on circumstances including natural disasters that prevent timely filing of an FBAR, see FIN-2013-G002 (June 24, 2013).

U.S. Taxpayers Holding Foreign Financial Assets May Also Need to File Form 8938

Taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS on Form 8938, Statement of Specified Foreign Financial Assets, which is filed with an income tax return. Those foreign financial assets could include foreign accounts reported on an FBAR. The Form 8938 filing requirement is in addition to the FBAR filing requirement. A chart providing a comparison of Form 8938 and FBAR requirements may be accessed on the IRS Foreign Account Tax Compliance Act web page.

Types of Foreign Assets and Whether They are Reportable on Form 8938

Financial (deposit and custodial) accounts held at foreign financial institutions

Yes

Financial account held at a foreign branch of a U.S. financial institution

No

Financial account held at a
U.S. branch of a foreign financial  institution

No

Foreign financial account or asset for which you have signature authority

No. unless any  income. gains, losses, deductions , credits, gross proceeds, or distributions from holding or disposing of the account or asset are or would be required to be reported, included, or otherwise reflected on your income tax return

Foreign stock or securities held in a financial account at a foreign financial institution

The account itself is subject to reporting, but the contents of the account do not have to be separately reported

Foreign stock or securities not held in a financial account

Yes

Foreign partnership interests

Yes

Indirect interests in foreign financial assets through an entity

No

Foreign mutual funds

Yes

Domestic mutual fund investing in foreign stocks and securities

No

Foreign accounts and foreign non-account investment assets held by foreign or domestic grantor trust for which you are the grantor

Yes, as to both foreign accounts and foreign non-account investment assets

Foreign-issued life insurance or annuity contract with a cash-value

Yes

Foreign hedge funds and foreign private equity funds

Yes

Foreign real estate held directly

No

Foreign real estate held through a foreign entity

No, but the foreign entity itself is a specified foreign financial asset and its maximum value includes the value of the real estate

Foreign currency held directly

No

Precious Metals held directly

No

Personal property, held directly, such as art, antiques, jewelry, cars and other collectibles

No

'Social Security'- type program benefits provided by a foreign government

No