Report of Foreign Bank and Financial Accounts (FBAR)

1. Since Non-Resident Indian (NRI) Dr. Arvind Ahuja's ; Mr. Ashwin Desai's and others indictments for conspiracy to defraud the IRS and not filing Report of Foreign Bank and Financial Accounts (FBARs) for non-disclosure of income arising from deposits held with HSBC Bank, India and also non-filing of FBAR  for said investments, the issue of non-filing of FBAR has been hovering on almost every NRI's mind and attention.

2. Brief details and links of IRS websites as regards FBARs are :-

.01 A US citizen or resident of USA as also a USA partnership firm ; a Limited Liability Company (LLC) or trust who has financial interest and signatory authority in overseas financial investments valued at  US $ 10,000  more during a calendar year is required to file FBAR. This would include erstwhile investments in India retained prior to migration to USA as also any assets received by way of inheritance or partition of family assets.

.02 Financial investments are defined to  include mutual funds; bank deposits; bank accounts; equity investments , other listed securities; stocks and  debentures;  deposits and like.

.03 Financial interest in foreign accounts will include ownership as a holder or joint-holder ; proprietorship ; overseas partnership having profit sharing exceeding 50% or more ; 50% of the capital ; overseas corporation wherein more than 50% of stock value or voting power is held ; trust wherein more than 50% beneficial interest is held or any other entity wherein more than 50% interest or investment or voting power is held or wherein one holds the signing authority of say bank accounts or a power of attorney.

.04 Appropriate prescribed information regarding foreign financial accounts is to be filed in Form FinCEN 114 on or before 15th April or 15th October if extension is filed for preceding calendar year ended on 31st December.

3. Investment in private equity funds and hedge funds are excluded

4. Penalty for failure to report is $10,000 per violation. However penalty for willful violation is minimum $ 100,000 or 50% of account balance, whichever is higher.

5. IRS weblink : https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-accounts-fbar.

alttag