Accounting & DisclosureTalking Shop

Talking Shop: FBAR Annual Reporting Requirements

By June 2, 2022No Comments

Editor’s note: NeuGroup’s online communities provide members a forum to pose questions and give answers. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected].

Member question: “Do you know if companies need to report all ‘signers’ of foreign bank accounts or all ‘payment approvers’ to the IRS each year for FBAR (Report of Foreign Bank and Financial Accounts) purposes?”

Peer answer 1: “We interpret the FBAR authorized individual to be any employee known to the bank that can direct the bank to take action (including payments). As such, we report signers as well as the payment approvers in our bank portals.”

Peer answer 2: “We have the same interpretation as Peer 1. We report any individual with the ability to directly remit funds from a foreign bank account at his or her discretion where the individual is recognized by the bank as the remitter of the funds.

  • “We interpret being recognized by the bank as your individual name or username (including password or signature) being attached to the payment. This includes those listed in banking resolutions, bank signature cards, and having approve/release capability in the banking portal.”

Peer answer 3: “We report all signers (US persons) and not electronic payment approvers to the IRS. I won’t comment on its correctness, but that is what we do.”

Peer answer 4: “We report both signers and approvers (viewed as a more conservative approach/interpretation of the guidance).”

Peer answer 5: “I’ve seen both. I think the guidance is to add those who have ‘authority’ on the account, so it’s open to interpretation. I suggest aligning with your tax team. We include payment approvers and signers.”

Peer answer 6: “We only report all US passport holders or people living in the US that are signers on any bank account.”

Peer answer 7: “We only report signers on foreign bank accounts.”

An IRS tax law specialist told NeuGroup Insights that anyone listed on an account, including all signers, must be reported on the company’s FBAR. She advised consulting the IRS FBAR Reference Guide, which states, “A US person must file an FBAR if they have a financial interest in or signature or other authority over any financial account(s) outside the US and the aggregate amount(s) in the account(s) exceeds $10,000 at any time during the calendar year.”

Peter Larson, a principal at Deloitte told NeuGroup Insights:

  • “Whether a person has ‘signature authority’ for FBAR purposes is fact specific, especially since each company will have different controls, systems and protocols for how their employees interact with the company bank accounts, and different banks will use different protocols as well.
  • “Basically, the rule is that a person must be able to communicate directly with a bank or other financial institution to dispose of funds for that person to be seen as having signature authority (even if it requires multiple people to communicate with the bank).”
Justin Jones

Author Justin Jones

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