Who Has to File an FBAR?
You have to file an FBAR if you are a U.S. citizen or legal entity who has money or financial interests, or control over such interests overseas in a value exceeding $10,000 at any point during the calendar year. The types of people and legal entities with FBAR (Foreign Bank Account Reporting) obligations include:
- U.S. citizens
- U.S. residents
- Limited Liability Company
The types of financial interests that count in considering who must file an FBAR include:
- Signatory to a bank account located outside the U.S. that held at least $10,000 during the year (even if it now no longer holds such an amount)
- Citizen or legal entity with authority over at least one bank account located outside the U.S. that held at least $10,000 during the year (even if it no longer holds such an amount)
- Citizen or legal entity with financial interest in at least one account located outside the U.S. that held at least $10,000 during the year (even if it no longer holds such an amount)
- Citizen or legal entity with control over a business account with such interests in a value exceeding $10,000 at any point in the year
If I “Spread the Wealth Around” to Many Accounts, Do I Still Have to File an FBAR?”
Yes, you do. The Bank Secrecy Act of 1970 requires foreign banks to report information to the U.S. government about accounts owned by American interests. An important IRS rule to enforce the Bank Secrecy Act says that if you have foreign accounts which, added together (or, “in the aggregate”), held $10,000 or more during the calendar year, you must file an FBAR.
You may wonder: how does the IRS know about the money? The IRS gained more power to enforce the Bank Secrecy Act in 2010 when Congress passed the Fair and Accurate Credit Transactions Act. This is the law that give rise to stricter reporting requirements for foreign banks.
The IRS issued rules under FACTA to make the Bank Secrecy Act Stronger. Foreign financial institutions must register with the IRS and report information about U.S. account holders and their assets—or be punished with heavy sanctions by the U.S. government. FACTA lifted the veil of secrecy from foreign bank accounts.
What If I’ve Fallen Behind on FBAR Filing?
If you have questions or concerns about FBAR compliance or penalties, the experienced Michigan FBAR lawyers at Ayar Law are here to help. The most important thing about FBAR is to act now to stop penalties from growing. We can determine your FBAR requirements and develop a plan for your individual situation to minimize or avoid fines and penalties. Ignoring FBAR won’t make it go away. Calling Ayar Law is a better way to solve your FBAR problem. Contact us here.