FBAR reporting for self-directed IRA LLC investors with a foreign bank account is due by June 30th
IRA Financial Group, the leading provider of “checkbook control” self-directed IRA LLC structures has seen an increase number of self directed IRA investors with foreign investments and bank accounts seeking information on foreign bank reporting (FBAR) requirements.
According to Adam Bergman, a tax attorney with the IRA Financial Group, “If your retirement account has a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, the Bank Secrecy Act may require you to report the account yearly to the Internal Revenue Service by filing Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR) by June 30, 2013.” The FBAR is required because foreign financial institutions may not be subject to the same reporting requirements as domestic financial institutions. The FBAR is a tool to help the United States government identify persons who may be using foreign financial accounts to circumvent United States law. Investigators use FBARs to help identify or trace funds used for illicit purposes or to identify unreported income maintained or generated abroad.
In general, unless an exception applies, all United States persons are required to file an FBAR if: (i) The United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; and (ii) The aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year to be reported. According to the Internal revenue Service, a financial interest arises when the owner of record or holder of legal title; the owner of record or holder of legal title is the agent or representative; or the U.S. person would have a sufficient interest in the entity that is the owner of record or holder of legal title.
According to Mr. Bergman, an IRA and 401(k) Plan would generally exempt from filing the FBAR form. However, it is unclear whether a Self-Directed real estate IRA LLC would be exempt from the FBAR requirement since the exception only states “IRA owners and beneficiaries” and there is no guidance as to whether the IRS would view the LLC as separate and distinct from the IRA. As a result, we are advising all our self-directed IRA LLC clients with foreign bank accounts to contact their tax accountant for additional information. “The scope of FBAR rules are so far reaching that a self-directed IRA investor who bought foreign real estate with a IRA LLC would likely be required to file the FBAR by June 30th, ” stated Mr. Bergman,
In addition, taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS on Form 8938, Statement of Specified Foreign Financial Assets. The new Form 8938 filing requirement does not replace or otherwise affect a taxpayers requirement to file FBAR. The Form 8938 is due when the taxpayer’s income tax return is filed, including extensions.
The IRA Financial Group was founded by a group of top law firm tax and ERISA lawyers who have worked at some of the largest law firms in the United States, such as White & Case LLP, Dewey & LeBoeuf LLP, and Thelen LLP.
IRA Financial Group is the market’s leading provider of self-directed IRA LLC “checkbook control” solutions. IRA Financial Group has helped thousands of clients take back control over their retirement funds while gaining the ability to invest in almost any type of investment, including real estate without custodian consent.
To learn more about the IRA Financial Group please visit our website at http://www.irafinancialgroup.com or call 800-472-0646.