The United States Financial Crimes Enforcement Network (FinCEN) has issued a final rule that amends the Bank Secrecy Act (BSA) implementing regulations regarding the Report of Foreign Bank and Financial Accounts (FBAR) to the Internal Revenue Service (IRS).
The BSA authorizes the US Treasury to issue regulations requiring persons to keep records and file reports in criminal, tax, regulatory and counter-terrorism matters. The FBAR filing requirements, authorized by one of the original provisions of the BSA, have been in place since 1972.
Any US person who has a financial interest in or signature authority, or other authority, over any financial account in a foreign country, if the aggregate value of these accounts exceeds USD10,000 at any time during the calendar year, is required to file an FBAR form to be provided to the IRS. The form must be filed regardless of whether the foreign account generates any income.
The new rule re-addresses the scope of the persons that are required to file reports of foreign financial accounts. It further specifies the types of accounts that are reportable, and provides filing relief in the form of exemptions for certain persons with signature or other authority over foreign financial accounts. Finally, the rule adopts provisions intended to prevent persons subject to the rule from avoiding their reporting requirement.
FinCEN's approach to the rule has been formulated in response to issues raised in comments submitted from tax professionals and industry experts. The preamble to the final rule, for example, explains whether an account is foreign and therefore reportable as a foreign financial account and addresses the treatment of custodial accounts in this context.
It also revises the definition of signature or other authority to more clearly apply to individuals who have the authority to control the disposition of assets in the account by direct communication (whether in writing or otherwise) to the foreign financial institution; and explains that an officer or employee who files an FBAR because of signature or other authority over the foreign financial account of their employer is not expected to personally maintain the records of the foreign financial accounts of their employer.
The rule is effective from March 28, 2011, and applies to reports required to be filed by June 30, 2011, with regard to foreign financial accounts maintained in the 2010 calendar year. It is also confirmed that filers may rely on its provisions in order to determine their filing obligation for FBARs in those cases where filing was properly deferred under prior IRS guidance.
In addition, the IRS, in conjunction with FinCEN, has also revised the FBAR form and instructions and has conducted education and outreach efforts on the filing of FBARs. The IRS is soon to publish instructions for completing the changed form.
The BSA authorizes the US Treasury to issue regulations requiring persons to keep records and file reports in criminal, tax, regulatory and counter-terrorism matters. The FBAR filing requirements, authorized by one of the original provisions of the BSA, have been in place since 1972.
Any US person who has a financial interest in or signature authority, or other authority, over any financial account in a foreign country, if the aggregate value of these accounts exceeds USD10,000 at any time during the calendar year, is required to file an FBAR form to be provided to the IRS. The form must be filed regardless of whether the foreign account generates any income.
The new rule re-addresses the scope of the persons that are required to file reports of foreign financial accounts. It further specifies the types of accounts that are reportable, and provides filing relief in the form of exemptions for certain persons with signature or other authority over foreign financial accounts. Finally, the rule adopts provisions intended to prevent persons subject to the rule from avoiding their reporting requirement.
FinCEN's approach to the rule has been formulated in response to issues raised in comments submitted from tax professionals and industry experts. The preamble to the final rule, for example, explains whether an account is foreign and therefore reportable as a foreign financial account and addresses the treatment of custodial accounts in this context.
It also revises the definition of signature or other authority to more clearly apply to individuals who have the authority to control the disposition of assets in the account by direct communication (whether in writing or otherwise) to the foreign financial institution; and explains that an officer or employee who files an FBAR because of signature or other authority over the foreign financial account of their employer is not expected to personally maintain the records of the foreign financial accounts of their employer.
The rule is effective from March 28, 2011, and applies to reports required to be filed by June 30, 2011, with regard to foreign financial accounts maintained in the 2010 calendar year. It is also confirmed that filers may rely on its provisions in order to determine their filing obligation for FBARs in those cases where filing was properly deferred under prior IRS guidance.
In addition, the IRS, in conjunction with FinCEN, has also revised the FBAR form and instructions and has conducted education and outreach efforts on the filing of FBARs. The IRS is soon to publish instructions for completing the changed form.
