Foreign Bank Account Reporting (FBAR) – Control and Types of Accounts to Consider

Taxpayers in Columbus, Ohio are increasingly subject to FBAR reporting as the city grows and hosts international business connections around the world. Contact the McGuire Law Firm in Columbus, Ohio to learn more about our services for taxpayers and for help filing documents related to foreign accounts. 

Are you required to file an FBAR? 

We’ve already addressed the filing thresholds for FBAR filing obligations in our article “Comprehensive Review of FBAR Filing Requirements”. This article takes a deeper dive into who is required to file an FBAR. Sometimes determining if you are required to file an FBAR is easier to answer than others. Generally, if you have some sort of control over any financial assets outside of the U.S., you should be analyzing the need to report an FBAR.

Control – What does having control over a financial asset mean?

For FBAR reporting, having any sort of control over a financial asset could lead to a reporting obligation. 

Accounts You Own:

The most obvious instance is where you own a foreign account. This means you established the account in your name and funded the account. 

In some instances we see situations where the US person has a foreign account and no knowledge of that account. One day their parent or relative lets them know they opened an account in the US persons name some years ago in a foreign country. This is certainly a difficult situation to ensure you are aware of, but we suggest checking with the non-US relations to see if that fact pattern exists.

You may have a non-US business and that business has a foreign bank account. If you control the business, you are deemed to control the foreign bank account of that business and may have an FBAR filing obligation.

Jointly Owned Accounts:

Less obvious are the accounts of which you are a joint owner and accounts for which you have signature authority over. If you are a joint owner of a foreign financial account, you may have an FBAR filing obligation related to that account. We see joint account ownership come up most often in the following scenarios:

• Your spouse has foreign account and has added you as a joint owner.
• Your parents have a foreign account and have added you as a joint owner.
• Your sibling has a foreign account and has added you as a joint owner at some point.

Most often, you know that you’re a joint owner of an account as you generally had to do something proactive to be included as a joint owner. Although, it is often an afterthought when it comes to thinking about which foreign accounts apply for FBAR filing purposes.

Signature Authority over Accounts:

If you have mere signature authority over a non-US account, you may have an FBAR filing obligation with respect to that account. We see signature authority arise most often in the following situations:

• Your parents have non-US accounts and have added you as signature authority in case of emergency.
• Your US or non-US resident spouse has foreign accounts and you are put on the account as signature authority in case of emergency.
• You own and non-US business. The business has a foreign bank account. You likely have signature authority over that account.

What type of non-US accounts do I need to consider for FBAR filing requirements?

While some non-US accounts required to be reported on an FBAR are easier understand than others, sometimes it isn’t so clear which accounts need to be considered for FBAR filing.

The primary accounts to think about for FBAR reporting purposes are:

• Bank accounts with a foreign bank (includes accounts at a foreign branches of US banks),
  • Includes both checking and savings accounts. Consider time deposits like CDs and CD equivalents.
• Savings accounts with a non-US bank,
• Investment accounts with a non-US entity,
• Life insurance contracts with a non-US institution that have a cash surrender value,
• Private and employer pension accounts with non-US institutions, and
• Accounts held by a foreign or domestic trust for which you are the grantor.

There may be accounts not contemplated by this list, but this should cover most accounts in question.

If you have questions related to your reporting of foreign bank accounts and assets, it is highly recommended you speak with a tax attorney.  The McGuire Law Firm, servicing the Columbus, OH area, is available to help you with all tax compliance issues. Contact us today.