United States citizens and "green card" holders who
live abroad have long been subject to U.S. tax reporting
obligations. In recent years, most have also become aware of an
additional obligation under U.S. banking law to report certain
interests in foreign financial accounts on the Report of Foreign
Bank and Financial Accounts, commonly known as the
Very generally, the Bank Secrecy Act requires U.S. persons who
have financial interests in or signature authority over financial
accounts located outside the United States to report certain
information regarding these accounts. The purpose is to prevent
U.S. persons from circumventing U.S. law. In particular, the FBAR
helps the U.S. government trace funds used for illicit activity and
discover unreported income. But foreign financial accounts used for
legitimate purposes must also be reported. For example, a U.S.
citizen working in Canada must report a financial interest in a
Registered Retirement Savings Plan whose value exceeds a minimum
Although the general requirements of the FBAR may be familiar,
less well known are the reporting requirements for U.S. persons who
acquire "signature authority" over foreign financial
accounts of their employers. Signature authority is the
authority to control the disposition of money or other assets in a
financial account by directly communicating with the person
maintaining the account, such as the bank or broker.
For example, a U.S. citizen who is an officer of a Canadian
company and who has signature authority over a foreign financial
account of the company generally must report this account on the
FBAR, even though the company itself is not required to file the
FBAR. Moreover, the officer must file the FBAR even if she or he
has no financial interest in the account and never exercises the
authority to control assets in the account.
Exceptions are available for some U.S. executives, depending on
the status of the employer. For example, an officer or employee of
a corporation whose shares are listed on a U.S. national securities
exchange is not required to report signature authority over a
foreign financial account of the corporation, assuming that the
executive has no financial interest in the account.
The deadline for filing the FBAR for the 2013 calendar year is
June 30, 2014. Because penalties for failing to file the FBAR can
be severe, U.S. persons working in Canada are encouraged to consult
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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