In the even that a foreign partnership owns foreign bank accounts with aggregate balances over $10,000 (US) on any particular date, the business owner should be aware of FBAR filing requirements. A financial interest in a mutual fund, trust, brokerage account, or any other foreign financial account may require an annual filing known as the Report of Foreign Bank and Financial Accounts through the Internal Revenue Service.
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Some of the stipulations of who meets this requirement include that if the owner of record or the holder of a legal title is a partnership in which a US person owns (either directly or indirectly)
- An interest in more than 50 percent of the partnership’s profits
- An interest in more than 50 percent of the partnership capital.
There are a few exceptions as far as the reporting goes. Those who may be able to avoid filing an FBAR include:
- Correspondent/nostro accounts
- Some foreign financial accounts jointly owned by a spouse
- Foreign financial accounts owned by government entities or international financial institutions
- IRA owners and beneficiaries
- Certain individuals with signature authority but no financial interest in a foreign financial account
- Participants in and beneficiaries of tax-qualified retirement plans
- Trust beneficiaries (so long as a US person reports the account on an FBAR on the trust’s behalf)
- Foreign financial accounts maintained on a United States military banking facility
As you might expect, IRS rules in this category can be highly complex and subject to specific terms. That’s why it’s helpful to meet with your tax law and accounting professional to determine your filing requirements. To learn more, email us at info@lawesq.net or contact us via phone at 732-521-9455