Filing an FBAR
- Are you a US Corporate operating non-US resident bank accounts?
- Are your key people compliant with FBAR?
- Have you advised your US signatories of their risks?
Briars has a simple solution….
Your favourite subject – filing tax returns! What can go wrong??
In 1789, Benjamin Franklin uttered that much repeated excerpt, “but in this world nothing can be said to be certain, except death and taxes.” and his thoughts remain as true today. We will avoid passing comment today on the full quotation…!
Remaining tax compliant is not unlike playing chess. Forethought, planning and swiftness of response can often save the day so, as you approach that time to file your US tax returns, consider whether that planning has been effective, especially when you run a rapidly expanding international US corporation!
So, what is FBAR and why does it affect me?
FBAR = Foreign Bank and Financial Accounts Reporting
A United States taxpayer (be that an individual or a corporate) that has a financial interest in, or signing power 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.
This means that where you are a signatory to a non-US bank account in the name of your employer’s company/subsidiary/branch, you are caught by the regulations.
If You are not compliant… The IRS will impose penalties.
If it is determined that you purposely avoided filing, the fine can be $100,000 or 50% of the balance of the account at the time of the violation – whichever is greater.
If you did not purposely avoid filing, the fine can be $10,000 per violation.
Amnesty programs exist to assist US citizens who fail to file due to a lack of knowledge about their obligations, one of which is the Streamlined Filing Procedures. This will allow you to catch up on your filings with no late filing or FBAR penalties. However, expats are only eligible for this Program if they come forward before the IRS are notified.
But this is not my Bank Account – it belongs to the Corporate!
That does not matter where you have signature authority on the account.
Signature authority relates to the authority of an individual to control the disposition of money, funds, or other assets held in a financial account by direct communication to the institution with which the financial account is maintained.
Other cases for filing an FBAR include:
- Foreign stock or securities held in a financial account at a foreign financial institution (the account itself must be reported, but the contents of the account do not need to be reported separately).
- Financial account held at a foreign branch of a US bank.
- Foreign mutual funds.
- Foreign-issued life insurance or annuity contract with a cash value.
Remember that whilst those filing FBAR do not pay tax on the balance of the accounts – it is a reporting requirement designed to ensure that the IRS maintains awareness of the location of US corporate finances. And failure to report is very expensive!!
So, what should I do?
For all US corporates with overseas bank accounts where you have appointed your US personnel to act as authorised signatories, consider carefully how to address this situation and act now.
One simple solution to remove your reporting requirements and remain fully compliant is to adopt the Briars banking and payments services.
If you want to discuss FBAR further then please feel free to reach out to us at firstname.lastname@example.org and we would be delighted to talk through your options.