Understanding FBAR for U.S. Foreign owned disregarded entity.

[penguin]

I want to make sure I understand the FBAR rules, as there is one minor point that feels ambiguous/unclear to me.

I understand the basic idea of FBAR for a U.S. LLC is that the LLC is a "US Person", and therefore it has to file an FBAR. An LLC therefore reports foreign accounts outside the USA.

But what does that mean for a in the case of (for example) a single member Wyoming LLC, disregarded for tax purposes, owned by a non US citizen non US resident?

• Does it mean the (disregarded) LLC only does FBAR to report accounts that are opened in the name of the LLC?
• Or, Does it mean that the LLC, because it is disregarded for tax purposes, is reporting the personal accounts of the owner of the LLC because the LLC is disregarded for tax purposes?

Or to put it another way, is an LLC disregarded for FBAR purposes as well?

Is there a black and white test for this, or is it an annoying grey area where it depends on an opinion, that considers if the owner is mixing their LLC accounts and their personal accounts?

 

[12345]

I think FBAR applies only to US citizens/residents
From IRS website
"

Who Must File​

A U.S. person, including a citizen, resident, corporation, partnership, limited liability company, trust and estate, must file an FBAR to report:"


Hmm I'm not sure what corporation llc etc they refer to but I think us person owned

 

[penguin]

It literally says in the text you pasted that a LLC must file an FBAR. My understanding is that an LLC is considered a U.S Person, and thus may be required to file an FBAR.

See also, according to this link:

FBAR Filing forDisregard Entities: The IRS does not limit FBAR reporting to individuals. Rather, the U.S. Government requires all U.S. persons (including entities and disregarded entities) to file the FBAR.
A “United States person” means: – A citizen or resident of the United States; – An entity created or organized in the United States or under the laws of the United States. (The term “entity” includes but is not limited to, a corporation, partnership, and limited liability company)

Disregarded Entity & FBAR Filing: Is it Required (New)

FBAR for Disregarded Entities: Is it Required? Summary by International Tax Lawyers, Golding & Golding. Board-Certified Tax Law Specialist Firm.

www.goldinglawyers.com

 

[penguin]

In lieu of it seeming like no one really knows, how does one go about finding out more information about this specifically. I assume a regular US CPA wouldn't know many of the nitty gritty details regarding the special subset of people who are in the LLC category of foreign owned disregarded entity. Im not overly keen on contacting random lawyers on the internet and giving them significant amounts of personal details. Is anyone aware of a place that might have more information about the FBAR for foreign owned sole member disregarded entities.

 

[12345]

I read that you need to report every bank account that had a balance above 10k$ at any point of time
Is it true ?

 

[penguin]

I'll tell you my understanding, from a careful reading of some documents on the FBAR website, and the PDF instructions for completing the LLC FBAR. There are two types of "accounts" that need to be reported.

1. Accounts/resources created in the name of the LLC.
2. Accounts/resources in someone else's name that are operated on behalf of the LLC.

All of the above are reported (again this is just my understanding, not advice) if the total sum of all money inside all of 1 and 2 above is greater than $10k then they all need to be reported. (So having 5 accounts with $2k each, forces the FBAR) So it becomes really important to know which accounts you have to "add up" to get the $10k number.

It is my understanding that they are trying to sweep up information about foreign accounts not in the name of the LLC, but the account is functioning like an account for the LLC, even if the account is not literally in the name of the LLC. So it is my understanding that the LLC doesn't have to report the bank accounts of the owners unless perhaps the owners bank account is being used to operate the LLC. But don't take my word for it, thats just my understanding. Have a look at:

https://www.fincen.gov/sites/default/files/shared/FBAR Line Item Filing Instructions.pdf

So possibly, it might be the case, that (if for example) you have money from Amazon sales going into a personal bank account, that personal bank account might get swept into the LLC's FBAR report. But other personal bank accounts, (including retirement accounts, etc...) not related to operating the LLC aren't relevant to the FBAR.

 

[tyrexoid]

In lieu of it seeming like no one really knows, how does one go about finding out more information about this specifically. I assume a regular US CPA wouldn't know many of the nitty gritty details regarding the special subset of people who are in the LLC category of foreign owned disregarded entity. Im not overly keen on contacting random lawyers on the internet and giving them significant amounts of personal details. Is anyone aware of a place that might have more information about the FBAR for foreign owned sole member disregarded entities.

my CPA who does these returns for me each year (both inside the US and later after I left US and non-citizen non-resident at the moment in last 3 years) said that this is the case -> "Does it mean the (disregarded) LLC only does FBAR to report accounts that are opened in the name of the LLC?"

She said doesn't want to see my list of personal accounts in other countries, only ones that were made by the LLC. Aaaand it needs to be over 10k$ at any time during the year, correct. BUT every year something might change so just use a CPA. (I do mine in GWcarter, they're nice and responsive, but yes every US CPA will charge a lot of money for the 'just making a few forms', that's how it works there. I pay smth like 350-450, not sure because they invoice in 2 parts, one before start of work, and one after forms are filled and reviewed, but it's less than 500$ pretty sure, I can check my latest invoice from this year if you want to know what exact price it was.. but this is different from case to case, you'll fill in a questionnaire first made of like 40-50 questions, so they start working with you already knowing a bunch of important facts so they can do this relatively cheap. and yes 350-450 total, for yearly foreign owned LLC, is cheap).

by the way for the Wyoming one, do you pay franchise tax or state tax etc, like the Delaware yearly 400$ 'franchise tax'? I'm a bit tired of that useless 'franchise tax' and thinking whether to close and open in another state, since I also don't understand why Delaware even charge that, it's just weird. I created my LLC with Stripe Atlas, 3 years ago. btw I can recommend a cheap 'registered agent' for Delaware if you want (they charge only 29$/mo). Do you pay yearly 'registered agent' for Wyoming LLC as well?

lol the tooltip just explained it to me, "There are no fees for filing or obtaining a business license in Wyoming. Those that wish to incorporate in Wyoming have only to pay a state renewal fee, which costs around $50." nice, I should switch one day. Although closing the Delaware one will cost another 500-600 pretty sure, if not more =(

 

[penguin]

Thanks, yea, my reading of the information does suggest personal accounts in other countries are not relevant (unless perhaps the awkward situation where business and personal accounts get accidentally co-mingled, or a third party is operating an account on behalf of the LLC), but I am weary of the whole "You don't know what you don't know" when it comes to US rules.

On the Wyoming vs Delaware, yes, it's so much cheaper. At one point I was spending time trying to work out what "licenses" you need in Wyoming for various things, and I couldn't find any info, and I think thats because, yes, I don't think they have business "licenses" so of course I cant find info on it. In my limited understanding Wyoming is better/cheaper in many cases, but if a businesses is doing IT/Software/Computing type products/services, Delaware is a bit more prudent, because it has more "case law" so if you have a business that has a small potential of being sued, a software company would rather be sued in Delaware. (In other words, your lawyer can probably find comparable law suits that have occurred in Delaware, so they can better advise you on what the courts have declared on various topics). I just went with the absolute cheapest Wyoming LLC place I could find. I kind of regretted it though. They were ok, but they were slow to respond, and I didn't feel comfortable that they were reliable. I am sure they were fine, but in future I'd go with a slightly bigger name/company.