Definition of FBAR ‘Signature or Other Authority’
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Definition of FBAR ‘Signature or Other Authority’
For most types of international information reporting forms — such as Form 8938 – a taxpayer must have an interest in the account or other foreign asset in order to require that Taxpayer to report it to the Internal Revenue Service. The FBAR, which is used to report foreign bank and financial accounts to the Internal Revenue Service/FinCEN, is different. Unlike many other reporting forms, a taxpayer does not need to have actually ownership or interest in a foreign account to have to report it for FBAR purposes. Rather, a taxpayer can merely have signature other authority in order to require disclosure on the annual FinCEN Form 114. Two common examples of one a US person may have to file the FBAR even though they do not have ownership of the foreign money is when they are identified as a signatory on the account owned by another person –– such as an elderly parent abroad — and when they may have a signature authority over a company account, for example when they have to issue checks from the account on behalf of the company. Let’s see what the IRS says about the definition of signature other authority for FBAR purposes.
Signature or Other Authority
As provided by the IRS:
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Signature or other authority is the authority of an individual (alone or in conjunction with another individual) to control the disposition of assets held in a foreign financial account by direct communication (written or otherwise) to the bank or other financial institution that maintains the account.
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Example: Megan, a U.S. resident, has power of attorney for her elderly parents’ accounts in Canada, but she has never exercised the power of attorney.
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Megan must file an FBAR if the power of attorney gives her signature authority over the financial accounts.
- Whether or not Megan ever exercised the authority is irrelevant to the FBAR filing requirement.
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