Individuals abroad aren’t the only ones who need file the Foreign Bank Account Reporting (FBAR). US businesses have to file as well, which can be complex for larger entities. Luckily, the consolidated FBAR simplifies things.
What Is the Consolidated FBAR?
Just like individuals, US corporations have to file the FBAR to report on financial assets overseas. Occasionally, both a parent and its subsidiary entities may have FBAR filing requirements – which can become quite complicated when there are multiple subsidiaries or levels of ownership. Because of this, the IRS will allow consolidated FBAR filing, which means the parent company’s filing covers its own as well as the subsidiary’s filing obligation.
When it comes to filing the consolidated FBAR, keep in mind the basic requirements for Foreign Bank Account Reporting. These requirements include:
1) You’re a US person who held a financial interest in or signatory authority in at least one foreign account AND
2) The cumulative balance of the foreign accounts exceeded $10,000 at any point during the calendar year
Who Qualifies for the Consolidated FBAR?
If the entity that files the FBAR has over 50% ownership over other entities, the parent entity is considered to have a financial interest in the accounts of the subsidiary entities. The voting share, percentage of profits or capital – or a combination – may represent 50% ownership.
In order to qualify for the consolidated FBAR, the subsidiary must actually be owner of one of the foreign accounts (not just having a filing requirement as a pass-through). This could create an overlap of having accounts being reported twice, and should be noted on the actual form.
What Do You Need to Report on the Consolidated FBAR?
For most businesses, the foreign accounts that must be reported include bank accounts, depository accounts, insurance policies or annuities with cash value, securities and brokerage accounts.
What Do I Need to Know About Filing?
All of the requirements for FBAR are the same, whether filing as an individual or a business entity. You’ll file the FBAR form, also known as FinCEN Form 114, and the informational filing will be submitted to the US Department of the Treasury. The form will capture information regarding the financial institution, maximum balances, type of account, account numbers, and whether you have a financial interest or signatory rights over the account.
The filing deadline will be the same as Tax Day (April 15th) – but US expats living abroad on this day will receive an automatic two-month extension until June 15th. Additionally, you’ll also be able to request an extension until October 15th.
It’s important to note that the penalties for late filing or failing to file can be quite steep, so making sure you adhere to the deadline is very important. If you didn’t know you needed to file and you’re far behind, the IRS’ Streamlined Filing Procedures program is a great way to catch up without being penalized – as long as your failure to file was non-willful and you come forward before the IRS realizes you haven’t been filing and needed to!
Need Help With Your FBAR Reporting?
Get started with us today! Our team of expat-expert CPAs and IRS Enrolled Agents can help you finalize your FBAR reporting ahead of the deadline – or help you get caught up on past FBAR filings.