FBAR For Non-interest Bearing or Dormant Accounts
FBAR For Non-interest Bearing or Dormant Accounts: The FBAR form is not used to report income or tax per se — rather, the form is an international reporting form used to report foreign financial accounts. The form is filed with FinCEN and enforced by the IRS. When a U.S. person meets the threshold filing requirements for reporting the FBAR, they have to file the form even if they have no tax return filing requirement. In addition, all different types of foreign financial accounts are required to be disclosed on the annual FBAR. While there are some exceptions and limitations for reporting, for the most part, all offshore and foreign financial accounts must be included on the FBAR.
A common question we receive is whether the filer must also include non-interest bearing accounts or dormant accounts on their FBAR filing.
FBAR For Non-Interest Bearing Account
Since the FBAR is not a tax form,the tax aspect of the account is not important for FBAR filing. In other words, whether or not a foreign financial account generates any income is immaterial to the reporting requirement for the account. Stated another way, the FBAR is used to report foreign financial accounts to FinCEN. The only aspect of tax related to the FBAR is that the IRS is tasked with enforcing compliance with filing the form — and you can’t dispute the penalties in Tax Court (Since it is not a tax).
Therefore, even if you have non-interest bearing accounts, you must include those accounts on your annual FBAR filing.
FBAR For Dormant Accounts
The U.S. government also doesn’t care whether or not you have been actively using or managing the accounts. In some countries such as India, accounts will lay dormant for several years and may never close even if the account holder wants it to close — and never accesses the account.
Therefore, even if you have dormant or sleeping accounts which you do not access — but are still considered open — you will include these accounts on your FBAR as well.
Trouble Locating Dormant Accounts?
Try not to get persuaded and scared by all the garbage fear mongering you will inevitably find as you surf the World Wide Web about offshore accounts.
Filing the FBAR is not a test — and there is no requirement that your filing is absolutely perfect.
In other words — give it your best shot.
If you have a couple of zero balance accounts or account with a few dollars in it but you can’t locate the specific account number, then try your best to at least recall the name of the institution so that you can include the institution name on your FBAR.
In conclusion, the FBAR is not used to report tax, but rather is used to disclose the maximum value of your foreign accounts for U.S. person account holders who meet the threshold requirement for filing. Whether or not the account generates income and/or if the account is dormant or active does not impact your requirement to file the FBAR and include these types of accounts.
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