FATCA – Foreign Account Tax Compliance Act.
For all Americans and Green card holders the annual filing of an FBAR (Fincen114) is MANDATORY if their foreign financial assets exceed US$10,000 at any time during the year.
Banks and Other Financial institutions are required to provide your financial information to the US government under the FATCA rules.
All financial institutions globally are required to report the foreign financial assets of US citizens (as defined below) to the US department of Treasury – Financial Crimes Centre. They must proactively identify US Citizens and report their information. Inter-Governmental agreements also support and enforce this process. Also check out important facts about FATCA for US Expats click here …
With the increasing sophistication of data reporting and management it is becoming increasingly likely that non-compliant people will be identified and “encouraged” to comply.
The team at US Global Tax can assist you achieve full compliance with a minimum of risk of penalty and hassle.
Compliance is not difficult (or costly) to achieve
There is no tax payable, it is simply an information gathering process
The penalties for non-compliance are very serious
Please review the detailed information below and contact the team at US Global Tax if you need assistance or have further questions. www.usglobaltax.com or see contact details below.
FATCA requires compliance (with a limited number of exceptions) from all US citizens. In general US Expats must file FBAR Returns to achieve compliance and avoid serious penalties.
Our team of USA Expatriate Tax Professionals are able to quickly assess whether you are required to submit Financial Bank Account Reports (FBARs).
If you are required to submit an FBAR, we have a team of FBAR specialists who are able to quickly and accurately:
collate your information;
process your FBAR returns;
ensure you are compliant;
eliminate the stress and worry of non-compliance.
The cost of completing this is not significant, however the penalties for non-compliance are potentially financially crippling and/or life changing.
From beginning to end we are able to complete this within one month.
Contact our specialists here to discover whether or not you are required by the IRS to submit an FBAR.
Who Must File an FBAR (Fincen Form114).
A United States person that has a financial interest in or signature authority over foreign financial accounts must file an FBAR if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year.
FinCEN Form 114, Report of Foreign Bank and Financial Accounts, is used to report a financial interest in or signature authority over a foreign financial account. The FBAR must be received by the Department of the Treasury on or before the due date.
A person who is required to file an FBAR and fails to properly file may be subject to a civil penalty not to exceed $10,000 per violation. If there is reasonable cause for the failure and the balance in the account is properly reported, no penalty will be imposed.
A person who wilfully fails to report an account or account identifying information may be subject to a civil monetary penalty equal to the greater of $100,000 or 50 percent of the balance in the account at the time of the violation. See 31 U.S.C. section 5321(a)(5).
Willful violations may also be subject to criminal penalties under 31 U.S.C. section 5322(a), 31 U.S.C. section 5322(b), or 18 U.S.C. section 1001.
A financial account includes, but is not limited to, a securities, brokerage, savings, demand, checking, deposit, time deposit, or other account maintained with a financial institution (or other person performing the services of a financial institution). A financial account also includes a commodity futures or options account, an insurance policy with a cash value (such as a whole life insurance policy), an annuity policy with a cash value, and shares in a mutual fund or similar pooled fund (i.e., a fund that is available to the general public with a regular net asset value determination and regular redemptions).
A financial account type listed above owned jointly by two or more persons.
Foreign Financial Account.
A foreign financial account is a financial account located outside of the United States.
A United States person has a financial interest in a foreign financial account for which:
- the United States person is the owner of record or holder of legal title, regardless of whether the account is maintained for the benefit of the United States person or for the benefit of another person; or
- the owner of record or holder of legal title is one of the following:
- An agent, nominee, attorney, or a person acting in some other capacity on behalf of the United States person with respect to the account;
- A corporation in which the United States person owns directly or indirectly:
- more than 50 percent of the total value of shares of stock or
- more than 50 percent of the voting power of all shares of stock;
- A partnership in which the United States person owns directly or indirectly:
- an interest in more than 50 percent of the partnership’s profits (e.g., distributiveshare of partnership income taking into account any special allocation agreement) or
- an interest in more than 50 percent of the partnership capital;
- A trust of which the United States person:
- is the trust grantor and
- has an ownership interest in the trust for United States federal tax purposes. See 26 U.S.C. sections 671-679 to determine if a grantor has an ownership interest in a trust;
- A trust in which the United States person has a greater than 50 percent present beneficial interest in the assets or income of the trust for the calendar year; or
- Any other entity in which the United States person owns directly or indirectly more than 50 percent of the voting power, total value of equity interest or assets, or interest in profits.
A person means an individual (including a minor child) and legal entities including, but not limited to, a limited liability company, corporation, partnership, trust, and estate.
Signature authority is the authority of an individual (alone or in conjunction with another individual) to control the disposition of assets held in a foreign financial account by direct communication (whether in writing or otherwise) to the bank or other financial institution that maintains the financial account. See Exceptions, Signature Authority.
United States Person.
United States person means United States citizens (including minor children); United States residents; entities, including but not limited to, corporations, partnerships, or limited liability companies created or organized in the United States or under the laws of the United States; and trusts or estates formed under the laws of the United States.
Note. The federal tax treatment of an entity does not determine whether the entity has an FBAR filing requirement.
Responsibility for Child’s FBAR
Generally, a child is responsible for filing his or her own FBAR report. If a child cannot file his or her own FBAR for any reason, such as age, the child’s parent, guardian, or other legally responsible person must file it for the child.
Spouse’s may not be required to file individually
Certain Accounts Jointly Owned by Spouses. The spouse of an individual who files an FBAR is not required to file a separate FBAR if the following conditions are met:
- all the financial accounts that the non-filing spouse is required to report are jointly owned with the filing spouse;
- the filing spouse reports the jointly owned accounts on a timely filed FBAR electronically signed; and
- the filers have completed and signed Form 114a, “Record of
Authorization to Electronically File FBAR’s” (maintained with the filers’ records). Otherwise, both spouses are required to file separate FBARs, and each spouse must report the entire value of the jointly owned accounts
If a United States person that is an entity is named in a consolidated FBAR filed by a greater than 50 percent owner, such entity is not required to file a separate FBAR.
IRA Owners and Beneficiaries.
An owner or beneficiary of an IRA is not required to report a foreign financial account held in the IRA.
Record Keeping Requirements.
Persons required to file an FBAR must retain records that contain the name in which each account is maintained, the number or other designation of the account, the name and address of the foreign financial institution that maintains the account, the type of account, and the maximum account value of each account during the reporting period. The records must be retained for a period of 5 years and must be available for inspection as provided by law. Retaining a copy of the filed FBAR can help to satisfy the record keeping requirements.
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