The FBAR Penalty
The IRS has authority to assert FBAR civil penalties. Before delving any deeper into the FBAR abyss, an important point must be made in order to avoid any confusion or misunderstanding. The FBAR penalty only exists outside of the OVDP and streamlined framework. There is no such thing as an FBAR penalty within OVDP or the streamlined procedures. […]
Does gold (or cash notes) stored inside a vault in a foreign financial institution – but leased to a private company – trigger an FBAR-reporting requirement?
This blog provides guidance to U.S. taxpayers who store gold and currency cash notes abroad in private vaults – a popular investment these days considering the uncertain global economy and the sharp decline in currency values. The narrow question is whether a private vault located in a foreign financial institution is a “financial account?” If […]
Common Pitfalls to Avoid When It Comes to FBAR Reporting
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Treasury Regulations Definition of “Financial Account”
According to Treasury Regulation 31 C.F.R. § 1010.350, a “financial account” includes securities, brokerage, savings, demand, checking, deposit, time-deposit or other accounts maintained with a person engaged in banking. In 2011, the regulations expanded the term “other financial accounts” to include commodities, futures, or options accounts, insurance policies with cash value, and mutual funds or […]
How is the maximum account value of a foreign account determined for FBAR purposes?
The maximum account value is defined as “a reasonable approximation of the greatest value of currency or nonmonetary assets in the account during the calendar year.” How is the maximum account value determined? It can be reduced to a two-step process. First, determine the maximum value of the account during the year. Second, convert the […]
What does it mean for the taxpayer to have “signature authority” over a financial account for FBAR purposes?
A person has a “financial interest” in a foreign account not only if he is the owner of record or holder of legal title, but also if he has signatory authority of the account or maintains it jointly with another person. Signature authority is the authority of an individual to control the disposition of assets […]
What does it mean for the taxpayer to have a “financial interest” in a foreign account for FBAR purposes?
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What does a financial account include for FBAR-reporting purposes?
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Deconstructing the FBAR Filing Requirements
i. Overview Who must file an FBAR? A person must file an FBAR informational return if all of the following conditions are met: (1) a “U.S. person”; (2) had a “financial interest” in, or “signature authority” over, or “other authority” over; (3) one or more “financial accounts”; (4) located in a “foreign country”; (5) the […]
Everything You Never Wanted to Know About the FBAR But Must: Part II
History of FBAR FBAR stands for “Foreign Bank Account Report.” The FBAR is a tool used by the U.S. government to identify persons who may be using foreign financial accounts to break U.S. law. Contrary to popular belief, the FBAR is not technically required by the tax code. Instead, it is a creature of the […]