• New FBAR Rules on the Way (Maybe)

    By Virginia La Torre Jeker J.D.

    23-03-2016

    On March 1, the Financial Crimes Enforcement Network (FinCEN) issued a Notice of Proposed Rulemaking (NPRM) intended to revise and clarify certain provisions in the rules regarding the filing of Reports of Foreign Bank and Financial Accounts (FBAR) under the Bank Secrecy Act. The revisions would mainly apply to financial professionals who file FBARs due to their employment responsibilities and persons having 25 or more foreign financial accounts.

    The full text of the NPRM is available here.

    Broadly speaking, the NPRM proposes to:

    • Remove the provisions that limit the information reported with respect to situations when a filer has 25 or more foreign financial accounts, and instead require all U.S. persons obligated to file an FBAR to report detailed account information on all foreign financial accounts for which they are required to file an FBAR. Currently, when a person or entity has a financial interest in, or signature authority over, 25 or more foreign financial accounts, the filer is required to report the number of accounts and the filer’s identifying information (name, address, taxpayer identification number, and for individual filers date of birth). However, these filers are exempted from providing detailed account information on each of their foreign financial accounts. For instance, filers submitting FBARs covered by the special rules are not required to provide the account number, the name of the foreign financial institution, the address of the foreign financial institution, the maximum value of the account during the calendar year, or the type of account. FinCen has determined that the provisions limiting the information to be reported when a filer has 25 or more foreign financial accounts has created a significant gap in FinCEN’s and law enforcement’s ability to investigate potential criminal and civil violations of the Bank Secrecy Act.
    • Amend the FBAR regulation by eliminating the requirement for officers and employees of institutions to report on institutional accounts for which they have signature authority, but no financial interest, due solely to their employment, so long as their employer has an FBAR filing obligation. This will be a relief for Americans having signature authority over their US employers accounts - no more filing would be required with regard to the signature authority. In the world of expats, however, relief will not be available to many because what this means in the real world is that the employer must be a US entity or be a foreign subsidiary of a US entity that is included by the parent’s FBAR filing. The exemption will not apply to the American working for a foreign entity when that entity has no duty to file an FBAR. The following example is given in the preamble to the proposed Regulations: “For example, in instances in which a U.S. person is employed by a non-U.S. entity with no obligation to report its foreign financial accounts, and the foreign entity is not included as a subsidiary of a U.S. entity that is filing, the U.S. person would have an obligation to report his or her signature authority over the non-U.S. entity’s foreign financial accounts. In this regard the scope of the reporting obligation remains unchanged.
    • Require institutions to maintain a list of all officers and employees with signature authority over those same accounts; this list would be made available to FinCEN and law enforcement upon request. To maintain transparency with respect to U.S. persons eligible for the exemption for officers, employees, or agents of U.S. entities, employers would be required to maintain information identifying all officers, employees, or agents with signature authority over, but no financial interest in, those same accounts. FinCEN proposes to require that this information be made available to FinCEN upon request and that such records be maintained for a period of 5 years.

    Remember, the FBAR is a calendar year report ending December 31 of the reportable year. Beginning with the 2016 tax year, as changed by recent legislation, the due date for FBAR reporting will be April 15 of the year following the December 31 report ending date. Under the new legislation, extensions of time to file FBAR will be permitted in certain cases of Americans residing abroad. You can read more here. The due date for the FBAR this year (i.e., your 2015 FBAR) remains June 30, 2016.

    Filers can now choose between the current method of filing using an Adobe PDF or use the new online form that only requires an Internet browser to file. These options can be accessed here.

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  • The information provided in this article is for general information purposes only. The information is not intended to be comprehensive or to include advice on which you may rely. You should always consult a suitably qualified professional on any specific matter.

Virginia La Torre Jeker J.D.

Virginia La Torre Jeker J.D., is based in Dubai. Virginia has been a member of the New York Bar since 1984 and is also admitted to practice before the United States Tax Court. She has over 30 years of experience specializing in the international aspects of US tax, including FATCA. She has been quoted in the New York Times and Newsweek, and is regularly quoted in many local news articles and publications."

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