Who Is Required to File an FBAR?Tax Professionals' Resource
June 26, 2012 — 1,643 views
An FBAR or form number TD F 90-22.1 is a Report of Foreign Bank and Financial Accounts. As a federal tax form, all United States citizens or residents must file the appropriate paperwork if they have any financial interest, signature authority or other authority over any financial account in a foreign country and if the value is more than $10,000 at any given time during a calendar year. These monetary interests may include having the signature authority of a parent’s retirement accounts, a mutual fund trust and even simple savings accounts.
The individual is required to report all financial accounts to the International Revenue Service (IRS) by filling the appropriate boxes on an annual tax form. The FBAR form is due on June 30 of the year after the account exceeded the $10,000 limit.
The Treasury Department amended the FBAR regulations on February 24, 2011. Changes were made to the Bank Secrecy Act (BSA) regarding the scope of persons required to file an FBAR. These alterations, referred to as Final Rule, were effective May 31, 2012. Outlined in FinCEN Notice 2011-1 FBAR Filing Requirement - Extended Filing Date Related to Exceptions Described in 31 CFR 1010.350(f)(2)(Revised), the Final Rule provided certain individuals with authority over financial accounts a filing exception.
Those meeting the following characteristics are not required to file:
• Certain financial accounts filed jointly by spouses
• U.S. residents included in a consolidated FBAR, correspondent/nostro accounts
• Foreign financial accounts owned by a government entity or financial institution
• IRA owners and beneficiaries
• Participants in and beneficiaries of tax-qualified retirement plans
• Trust beneficiaries
• Foreign bank accounts maintained on a U.S. military banking facility
• Certain individuals with signature authority of a foreign account but no financial interest such as employees.
If a person required to file an FBAR fails to do so they may receive civil penalties, criminal penalties or both. A person may file a delinquent report after noticing they failed to follow tax regulations and attach a document explaining why the mistake was made to avoid punishment. Cumulative FBAR penalties may exceed the amount in the taxpayer’s foreign accounts. For more information about reporting foreign financial accounts correctly, visit the IRS website.