Kamal Butala, CPA

Foregin Account

Report of Foreign Bank and Financial Accounts
Foreign Bank Account Report regulations finalized this year make it clear that the scope of reportable accounts is very broad, and the recent Internal Revenue Service focus on undisclosed foreign accounts has raised the importance of proper reporting.
Montage Services Inc. has put together some FAQs for your review. Given the severe financial and civil penalties for failing to file a Foreign Bank Account Report, please contact us if you need more information or think you may need to file a report. 


Who must file a Foreign Bank Account Report?
Any United States person (including any entity organized under US law) who has a financial interest, signature authority or other authority over a financial account in a foreign country if the aggregate value of all foreign accounts exceeds $10,000 at any time during the calendar year.
What is a United States person?
A citizen, green card holder, or resident of the United States, or any entity formed under US law (corporation, partnership, trust, LLC, LLP, etc.).
What constitutes a financial interest? 
A US person has a financial interest in a foreign account if they are the owner of the account, have legal title on the account, or if they hold a majority (greater than 50%) interest in an entity that has a foreign account.
What constitutes signature or other authority?
A person, who controls by signature or direct communication, alone or in conjunction with others, the disposition of assets in a foreign financial account, has 'signatory control' or 'other control'. 
This standard requires reporting by any US person serving as a corporate officer or employee, who for any reason has signatory authority or control over a foreign bank account - even if the company itself is foreign. 
What is a reportable financial account in a foreign country?
Accounts of any kind - bank, securities, mutual funds, non-cash assets - held anywhere outside the territorial boundaries of the US. 
What is the filing deadline?
The Foreign Bank Account Report for the 2010 calendar year must be received by the IRS by June 30, 2011.There are no extensions available.
What are the penalties for non-compliance?
A penalty of up to $10,000 may be imposed for a non-willful (unintentional) failure to file an FBAR. Penalties increase for willful and criminal failures to file.