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Tax Compliance

Foreign Bank Accounts and Tax Filings
31 USC 5314(a)

31 CFR § 1010

US institutions and citizens that have an ownership interest in foreign bank accounts, or US citizens with signature authority over a foreign bank account have to file form TD F 90.22-1 (FBAR). The latter must report the account on an FBAR even if the foreign financial account is reported on an FBAR filed by the owner of the account (or other person that has a financial interest in the account). This form must be filed by April 15  of the year following any year during which they possessed signature or other authority over, or had a $ interest in foreign financial accounts whose value exceeded $10,000 at any time during the calendar year. The IRS FBAR page has an update to reporting deadlines and further clarification and extensions. 

Public Law 114-41 also mandates a maximum six-month extension of the filing deadline. To implement the statute with minimal burden to the public and FinCEN, FinCEN will grant filers failing to meet the FBAR annual due date of April 15 an automatic extension to October 15 each year. Accordingly, specific requests for this extension are not required.

FBAR Final Rule; Amendment to the Bank Secrecy Act Regulations-Reports of Foreign Financial Accounts, 76 Fed. Reg. 10234, Feb. 24, 2011, Effective March 28, 2011

The final rules clarify who has the signature authority over a foreign bank account as follows: 

Signature or other authority means the authority of an individual (alone or in conjunction with another) to control the disposition of money, funds or other assets held in a financial account by direct communication (whether in writing or otherwise) to the person with whom the financial account is maintained.

The reports have to be filed by June 30, 2011, so the first report under the new rules will be due June 30, 2011 (for calendar year 2010) and the reporting is done using the Report of Foreign Bank and Financial Accounts-Form TD-F90-22.1 (FBAR). The rule is applicable if the foreign account exceeds $10,000. The FBAR may be filed electronically. Private colleges and universities are covered by this rule, but state colleges and universities are not. See Notice 2011-31 for guidance on how to answer questions related to foreign financial accounts found on 2010 federal income tax and information returns, e.g., Schedule B of Form 1040, the “Other Information” section of Form 1041, Schedule B of Form 1065, and Schedule N of Form 1120, among others.

The Report of Foreign Bank and Financial Accounts (FBAR) provides necessary information for certain governmental agencies. Information on the FBAR may be used in criminal, tax, or regulatory investigations or proceedings, or in the conduct of intelligence or counterintelligence activities, including analysis, to protect against international terrorism. Note the proposed regulations contain an exception for public entities, includes IHEs. The proposed regulations also state that the IRS must have received the form by June 30th, a postmark by June 30th does not count. 



Top Ten Foreign Bank Account Reporting Mistakes by Latham and Watkins (June 2015)

NACUBO update on final rule (March 2011)

An update on Foreign Financial Account Reporting, By Susanne Holloway, CPA, MBA, and Michael A. Schuldt, CPA, J.D., Ph.D., December 1, 2016, The Tax Adviser

IRS FBAR Reference Guide 

updated 1-2-18 mlo