2014 FBARs Must Be Received by Treasury by June 30, 2015 and Other Important Information 

The U.S. government has become increasingly concerned about, and focused on, offshore tax evasion.  One tool the government has to combat tax evasion is the Report of Foreign Bank and Financial Accounts (FinCEN Report 114, commonly referred to as FBAR). There are strict rules and severe penalties for failure to timely file FBARs. We have communicated about FBAR requirements with most of our clients who filed their 2014 income tax returns on or before April 15, 2015, as well as many of our clients whose 2014 income tax returns have been extended.

Please read the filing requirements below. If you have any questions about whether or not you have a requirement to file an FBAR, please contact your Huselton, Morgan & Maultsby tax advisor as soon as possible.

The due date for the 2014 FBAR is June 30, 2015.  Under the law, the FBAR must be received by Treasury by June 30.  However, unlike income tax filings, the FBAR due date is not extended to the next business day when the deadline falls over a weekend.  Electronic filing of FBARs became mandatory on July 1, 2013.

The FBAR is required to be filed by two categories of U.S. filers:

1.  owners of foreign financial accounts; or,

2.  those U.S. persons with signature or other authority over foreign financial accounts, but no financial interest in the accounts.

The threshold for filing an FBAR is only $10,000 in aggregate for all foreign financial accounts.  The amount per account is measured at the highest point during the year.  The $10,000 threshold has not been indexed for inflation by Treasury since the early 1970s.

Owned Accounts

Foreign financial accounts include, but are not limited to, non-U.S. bank and brokerage accounts and foreign mutual funds.  In addition, many foreign pension accounts, such as Canadian Registered Retirement Savings Plans (RRSPs) and Australian Superannuation funds (Supers) are required to be disclosed on the FBAR.

Owners of foreign financial accounts subject to the filing requirements include, but are not limited to, individuals, corporations, partnerships, limited liability companies, estates and trusts.

Importantly, non-U.S. financial accounts that are indirectly owned must also be disclosed on the FBAR.  A typical example of indirect ownership is a U.S. company that owns a foreign subsidiary.  If the U.S. company owns more than 50% of the foreign company, then the foreign company’s bank account is considered to be “owned” by the U.S. company and the U.S. company must then disclose the foreign company’s account on its own FBAR.  The foreign financial account is required to be disclosed by the U.S. company on an FBAR even though the U.S. company does not have its name on the account in this situation.

Unfortunately, in the case of owned accounts, duplicative filings are frequently required.  A U.S. shareholder who owns more than 50% of the U.S. company discussed above would also have to report on his own FBAR the foreign subsidiary’s bank account even though the U.S. company files its own FBAR.  The indirect ownership percentage is more than 50% for the individual U.S. shareholder.  The one bright spot is that attribution for FBAR purposes is limited to situations where there is control.  There is no family attribution, even between spouses.

Once past the $10,000 threshold, all accounts that were open for even one day during calendar 2014 must be reported even if the value of the account was zero.

Signature or Other Authority

As for signature or other authority over foreign financial accounts in which the signatory has no financial interest, there is a narrow exception in the case of accounts owned by a U.S. public company.  If a U.S. public company files its own FBAR, then the U.S. employees and officers who are signatories on foreign financial accounts that are directly owned by the U.S. public company do not have to also file their own FBARs if they have no financial interest in the company-owned account(s).  Employees and officers of U.S. companies who have signature or other authority over accounts owned by foreign subsidiaries are not covered by the above exception.

Accordingly, it is vital that U.S. company employees and officers determine whether or not they have signature or other authority over any foreign accounts.  Also, be sure that the external signature cards maintained by the financial institution reflect only the names of currently authorized persons.

Only in the case of accounts owned directly by a U.S. public company, which are already disclosed by the U.S. public company on an FBAR, is there an exception from filing for employees and officers who are signatories.

FinCEN Notice 2014-1 extended the filing date for the FBAR for certain individuals with signature authority over, but no financial interest in, one or more foreign financial accounts to June 30, 2016. If you believe that this extension may apply to you, please consult FinCEN Notice 2014-1 for details or contact your HM&M tax advisor.


The FBAR is required by the Bank Secrecy Act of 1970 (BSA).  The BSA is a law enforcement statute and is not part of the Internal Revenue Code.  Instead, the BSA is part of the general Treasury Department laws and regulations.  Because of this, the Departments of Treasury and Justice have the ability to impose both monetary civil as well as criminalpenalties for the failure to timely file an FBAR.

The FBAR rules are highly complex and far-reaching.  Frequently accounts may be subject to duplicative reporting.  Signature authority is broadly defined and includes more than persons identified as legal signatories on the foreign account and only limited filing exceptions exist for signatories.

* * * * *

Please contact your HM&M advisor soon if you believe that you may need to file an FBAR on or before June 30, 2015.

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