For purposes of the FBAR reporting rules: A “U.S. person” is a citizen or resident of the U.S. or a domestic partnership, corporation, LLC, estate or trust.
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The term “financial account” is defined broadly and includes any bank, securities, securities derivatives, or other financial instrument account. Typically, this would include, but is not confined to, offshore savings, deposit or checking accounts at a bank or offshore brokerage accounts.
- A U.S. person has a “financial interest” in a foreign “financial account” if the account is owned by the U.S. person. A U.S. person also has a “financial interest” in any foreign “financial account” that is owned by: (i) a corporation, partnership, trust or other entity in which the U.S. person has a greater than 50% ownership or beneficial interest; or (ii) a trust established or otherwise controlled by the U.S. person.
- Even if a U.S. person does not have a “financial interest” in a foreign “financial account,” FBAR reporting is required if the U.S. person has signature or comparable authority over the account and the $10,000 threshold is exceeded.
- Foreign financial accounts aggregating over $10,000 at any time during a year are subject to the FBAR annual reporting requirement even if the accounts are owned by tax-exempt U.S. persons or are non-income-producing.
- Foreign financial accounts do not include, however, accounts maintained at a U.S. branch or other U.S. office of a foreign financial institution.
