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In the first part of this article, we looked at some important FBAR terms and information. In the second and concluding part of this article, we will look at more FBAR terms. Definition of Signature Authority As per the law, if a U.S. person can control the disposition of money or other property in the account by delivery of a document containing his signature to the bank or other person who maintains the account, then he/she is said to have signature authority. Even a person who can exercise power that is comparable to signature authority over an account by direct communication, either orally or by some other means to the bank or other person who maintains the account also comes under this rule. What is the maximum value of accountability? The law defines the maximum value of the account as the largest amount (not the average amount) of currency and nonmonetary assets that appear on any quarterly or more frequent account statements issued for the applicable year. If periodic account statements are not issued, the maximum account value is the largest amount of currency or nonmonetary assets in the account at any time during the year. Exceptions to the FBAR Filing Requirement As per the law, the following need not file FBAR. • Accounts held in a military banking facility operated by a United States financial institution designated by the United States Government to serve U.S. Government installations located abroad. • Officers or employees of a bank under the supervision of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Office of Thrift Supervision, or the Federal Deposit Insurance Corporation is exempt from filing the FBAR, if that officer or employee has NO personal financial interest in the account. • Officers or employees of a domestic corporation whose equity securities are listed on national securities exchanges, or which has assets exceeding $10 million and 500 or more shareholders of record, need not file an FBAR concerning the other signature authority over a foreign financial account of the corporation, if: * The officer or employee has NO personal financial interest in the account * It has been advised in writing by the chief financial officer of the corporation that the corporation has filed a current report, which includes that account. Retaining Records of the Foreign Accounts As per the law, FBAR records must be kept for five years from the due date of the report, which is June 30 of the following calendar year. The records should contain the following: • Non maintained on each of the foreign bank accounts • Number or other designation of the account • Name and address of the foreign bank or other person with whom the account is maintained • Type of account • Maximum value of each account during the reporting period The IRS is very strict with respect to FBAR since it provides leads to track illegal funds and unreported income, which in turn helps to fight money laundering, internal terrorism and other crimes. Hence, taxpayers must have a thorough understanding of the FBAR law to avoid penalties and imprisonment. Read More About: business tax return, IRS Amnesty, 1031
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