Treasurers needs to be prepared to possibly take ownership of company funds during tax season.
The discussion of FBAR reporting was a hot topic at the recent NeuGroup Spring Global Cash and Banking Group (GCBG) meeting. Several members are worried about the guidance they’ve received from external auditors suggesting any US signer on a foreign bank account is required to disclose this information as part of their personal tax return and file the mandatory FBAR report. This personal FBAR reporting is in addition to the FBAR report requirements of the organization.
Although the original premise of FBAR was to force disclosure of offshore accounts that may be used to shield assets or income from the IRS, a potential unintended consequence seems to be the lack of clarity around how an individual employee or officers must report corporate bank accounts for which they are signers. Much of the ongoing debate revolves around the interpretation of the specific language in the ruling that describes who must report and file under FBAR guidelines. According to the ruling, employees or officers who have “financial interest in, or signature or other authority over” a foreign bank account are subject to the FBAR guidelines.
Clearly an employee or officer does not hold a financial interest in the account owned by the corporation so that part of the statement does not apply. It is the rest of the statement that is causing increased concern. The portion of the ruling that states “or signature or other authority over” is now raising concern that not only would the employees and officers who are authorized signers need to report and file a personal FBAR, but so might those employees who are granted “authority” to access the account via the online banking portal for execution of day-to-day operations.
Treasury professionals are encouraged to speak to their auditors for further guidance on this matter as the final answer will vary for each organization depending on legal structure and entity ownership. The GCBG will dedicate a specific session on the fall agenda to this very important topic.