Speaking recently with various Non-profits it was conveyed to me that they weren’t aware of the filing requirement for the FinCen Form 114 – Report of Foreign Bank and Financial Accounts. Non-profit organizations are required to file the Form 114 if they have a financial interest in or signature authority over foreign financial accounts must file a Report of Foreign Bank and Financial Accounts (FBAR) if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year.
There are three different types of accounts that should be recognized on the FBAR. The following definitions come directly from the instructions for the FBAR:
- A Financial Account – A financial account includes, but is not limited to, securities, brokerage, savings, demand, checking, deposit, time deposit, or other account maintained with a financial institution (or other person performing the services of a financial institution). A financial account also includes a commodity futures or options account, an insurance policy with a cash value (such as a whole life insurance policy), an annuity policy with a cash value, and shares in a mutual fund or similar pooled fund. A foreign financial account is a financial account located outside of the United States.
- A Joint Account – A financial account type listed above owned jointly by two or more persons.
- A Signature Authority – Signature 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 (whether in writing or otherwise) to the bank or other financial institution that maintains the financial account.
The FBAR requires the filer to disclose the maximum value of the account during the year, the type of account, name of the financial institution, account number, and address. The main reason for this form is to shrink the gap between what is paid in taxes and what should be paid in taxes. Obviously, this does not apply to non-profits because they do not pay taxes, but as a non-profit you do not want to see a notice for failing to disclose the foreign account. Non-profits filing the Form 990 are meant to be as transparent as possible and filing the FBAR is just another way to be transparent.
If you have any questions about requirements to file the FBAR or any other questions feel free to contact me.
Will Stevens, CPA
Work Phone: (803) 799-0555 ext. 38
Cell Phone (803) 960-5075