Per the Bank Secrecy Act, every year you must report certain foreign financial accounts, such as bank accounts, brokerage accounts and mutual funds, to the Treasury Department and keep certain records of those accounts. You report the accounts by filing a Report of Foreign Bank and Financial Accounts (FBAR) on Financial Crimes Enforcement Network (FinCEN) Form 114.
- Who Must File the FBAR?
A United States person that has a financial interest in or signature authority over foreign financial accounts must file an FBAR if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year. Here is the information, how to determine the maximum amount.
- What is a Financial Account?
A financial account includes, a security, brokerage, savings, demand, checking, deposit, time deposit, commodity futures or options account, an insurance policy with a cash value (such as a whole life insurance policy), an annuity policy with a cash value, and shares in a mutual fund or similar pooled fund (i.e., a fund that is available to the general public with a regular net asset value determination and regular redemptions).
- What is a Foreign Financial Account?
A foreign financial account is a financial account located outside of the United States. For example, an account maintained with a branch of a United States bank that is physically located outside of the United States is a foreign financial account. An account maintained with a branch of a foreign bank that is physically located in the United States is not a foreign financial account.
- Who is a United States Person?
United States person means United States citizens (including minor children); United States residents; entities, including but not limited to, corporations, partnerships, or limited liability.
- What is Financial Interest and Signature Authority?
A United States person who has a financial interest in a foreign financial account is the owner of record or holder of legal title regardless of whether the account is maintained for the benefit of the United States person or for the benefit of another person.
Signature authority is the authority of an individual (alone or in conjunction with another individual) to control the disposition of assets held in a foreign financial account by direct communication (whether in writing or otherwise) to the bank or other financial institution that maintains the financial account.
- What are exclusions from FBAR?
Participants in and Beneficiaries of Tax-Qualified Retirement Plans. A participant in or beneficiary of a retirement plan described in Internal Revenue Code section 401(a), 403(a), or 403(b) is not required to report a foreign financial account held by or on behalf of the retirement plan
- When and Where to File?
The FBAR is an annual report and must be filed on or before April 15th of the year following the calendar year being reported. FinCEN will grant filers failing to meet the FBAR annual due date of April 15th an automatic extension to October 15th each year. Accordingly, specific requests for an extension are not required.
The FBAR must be filed electronically through FinCEN’s BSA E-Filing System. The application to file electronically is available at http://bsaefiling.fincen.treas.gov/ . For help in applying, contact the E-Filing Help Desk by calling 1-866-346-9478 (option 1) or via E-mail sent to BSAEFilingHelp@fincen.gov. Note: The FBAR filing deadline will follow the Federal income tax due date guidance, which notes that when the Federal income tax due date falls on a Saturday, Sunday, or legal holiday, a return is considered timely filed if filed on the next succeeding day that is not a Saturday, Sunday, or legal holiday.
- What are the Record Keeping Requirements?
Persons required to file an FBAR must retain records that contain the name in which each account is maintained, the number or other designation of the account, the name and address of the foreign financial institution that maintains the account, the type of account, and the maximum account value of each account during the reporting period. The records must be retained for a period of 5 years from April 15th of the year following the calendar year reported, or the date filed if after April 15th, and must be available for inspection as provided by law. Retaining a copy of the filed FBAR can help to satisfy the record keeping requirements
- What needs to be done to Amended reports?
If you filed your FBAR through the BSA E-Filing website and you need to amend your FBAR to correct any information, please fill out a new FBAR completely and check the Amend box in Item 1. You will need to provide your Prior Report BSA Identifier after selecting the Amend box. Your Prior Report BSA Identifier was provided to you either through email or via the BSA E-Filing System’s secure messaging feature. If your Prior Report BSA Identifier is not known, please enter 00000000000000 in the Prior Report BSA Identifier field. If your FBAR was filed using batch mode, an amended report must be filed whenever errors are discovered in a previously filed FBAR. Please refer to the BSA Electronic Filing Requirements Attachment B – Error Correction Instructions (http://bsaefiling.fincen.treas.gov/docs/FinCENFBARElectronicFilingRequirements.pdf) for information regarding filing amended FBARs
- What Exchange Rate to Convert the Maximum Values to USD?
You must convert the maximum account value for each account into United States dollars using the treasury year end exchange rate. Treasury Reporting Rates of Exchange | U.S. Treasury Fiscal Data
Contact Surya Padhi at Sure Financials for any questions and clarification. Surya Padhi is an expert who keeps current on tax law changes as well as a member of the National Association of Tax Professionals National Association of Tax Professionals (NATP) and New Homepage – National Association of Enrolled Agents (naea.org). Visit Welcome | Sure Financials & Tax Services, LLC (surefintaxsvs.com) for more information and contact us by calling +1.908.955.0696
