The filing deadline for foreign bank accounts that meet certain monetary thresholds is only a few weeks away. As in past years, the deadline is June 30.
The form used for filing is now called FinCEN Form 114, but it is still often referred to as the FBAR. In this two-part post, we will discuss two basic questions that often arise in connection the FBAR filing requirement.
In part one of the post, we will address the question of who must file an FBAR. In the second part, we will inform you about FBAR penalties.
The first point to realize is that it isn’t only persons with a financial interest in foreign accounts worth more than $10,000 in the aggregate at some point during the year who have FBAR filing obligations. As a Forbes article on FBAR pointed out this week, the filing requirement also generally applies to those who have only signatory authority over an account.
It is also important to realize that the “persons” to whom the filing requirement applies include entities, not only live human beings. This means that limited liability companies, partnerships, corporations and even trusts or estates can have FBAR reporting obligations.
There are, however, several exceptions that affect FBAR reporting. For example, signatory authority over an account does not always trigger the reporting requirement. For certain individuals, it does not.
If you have signatory authority over a foreign account, it therefore makes sense to clarify your FBAR filing obligations by getting counsel from a knowledgeable tax lawyer. Indeed, this is true of FBAR reporting in general.
This is particularly true because the penalties for failing to file a required FBAR can be so heavy. We will discuss these penalties in part two of this post.