This is a two-part article that looks at some important FBAR terms and information that taxpayers must be aware of. With the aim to curb money laundering in the United States, the Congress passed the Bank Secrecy Act in 1970. As per this act, the taxpayers were required to keep records and file reports of their cash payments, foreign bank account (s) and money services. Of the various BSA requirements, one requirement is the Report of Foreign Bank and Financial Accounts (FBAR). Given below is some important terms and information about FBAR. * What is FBAR? A United States person must file an FBAR report if that person has financial interest in, signature authority or other authority over any financial account (s) in a foreign country and the aggregate value of these account(s) exceeds $10,000 at any time during the calendar year. * Who is a United States Person? A United States person is a citizen or resident of the United States, a domestic partnership, a domestic corporation or a domestic estate or trust. * What is a foreign country? A “foreign country” includes all geographical areas outside the United States, the commonwealth of Puerto Rico, the District of Columbia, the commonwealth of the Northern Mariana Islands, trust territories of the Pacific Islands and the territories and possessions of the United States (including Guam, American Samoa, and the United States Virgin Islands). * What is a financial account? A “financial account” includes any bank, securities, securities derivatives or other financial instruments accounts. The term includes any savings, demand, checking, deposit or any other account maintained with a financial institution or other person engaged in the business of a financial institution. Financial account also generally includes any accounts in which the assets are held in a commingled fund, and the account owner holds an equity interest in the fund (including mutual funds). Individual bonds, notes, or stock certificates held by the filer are not a financial account nor is an unsecured loan to a foreign trade or business that is not a financial institution. * What is financial interest? Financial interest includes accounts for which the U.S. person is the owner of record or has legal title, whether the account is maintained on his or her own benefit or for the benefit of others including non-United States persons. Financial interest also includes accounts where the owner of record or holder of legal title is a person acting as an agent, nominee, or in some other capacity on behalf of a U.S. person. In the second and final part of this article, we will look at the rest of the terms, definitions and information. Read More About: business tax return, IRS Amnesty, 1031
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