Which India Account Reported on FBAR
Contents
- 1 Which Accounts in India are Reported for FBAR
- 2 US Person Definition
- 3 FBAR Reporting Basics
- 4 Largest Banks in India
- 5 Term Deposits, Fixed Deposits, and CDs
- 6 Stock Investment Accounts in India
- 8 Foreign Business and FBAR
- 9 India FBAR Amnesty Program Summary
- 10 Can I Just Start Filing FBAR This Year Instead?
- 11 Our FBAR Lawyers Represent Clients Worldwide
Which Accounts in India are Reported for FBAR
What Accounts in India are Reported for FBAR: With India seeking to continue to develop their burgeoning economy— many US Persons have made investments into India’s infrastructure. As a result, it is important that US Taxpayers consider that if they are a US person and have accounts overseas — they may be subject to Foreign Bank and Financial Account (FBAR) Reporting to FinCEN, which is enforced by the IRS. The failure to be in compliance for FBAR reporting may result in fines and penalties although those penalties can oftentimes be minimized or abated with offshore voluntary disclosure/FBAR Amnesty. Let’s go to some of the basics of FBAR and Foreign Accounts in India.
US Person Definition
US Persons includes more than just individuals — it also includes entities — but the focus of this article is for individuals.
US persons with accounts in India who may have to file FBAR, include:
- U.S. Citizen
- Lawful Permanent Resident
- Foreign Nationals who meet the Substantial Presence Test
FBAR Reporting Basics
When a US Person has accounts in India, they have to report the accounts, when the annual aggregate total of all accounts combined exceeds more than $10,000. The due date is April 15 but is on automatic extension until October (this rule is subject to change).
Largest Banks in India
There are many different banks and other Foreign Financial Institutions located in India. Here are some of the more common institutions.
- State Bank of India
- ICICI Bank
- Bank of Baroda
- HDFC Bank
Term Deposits, Fixed Deposits, and CDs
Most all types of bank accounts are reportable on the FBAR. This includes ancillary types of accounts at Banks such as term deposit accounts, fixed deposit accounts and CDs. In addition, the interest generated on these accounts are generally taxable in the US.
Stock Investment Accounts in India
There are various different types of stock investment accounts in India. And, even though certain Taxpayers with residence or citizenship in India may receive tax related benefits under foreign tax laws — whether or not there taxable — they are still reportable on the FBAR.
In addition, unless the PFIC rules apply — accrued but non-distributed income in a Stock Investment Accounts is taxable.
India & Mutual Funds, ETF, SICAVs
When a US Person Taxpayer has foreign investment accounts in India such as Mutual Funds, ETFs and SICAVs — they may have an FBAR reporting requirement when the threshold is met. The value of the investment accounts are aggregated with the value of the other accounts to determine the annual threshold value for reporting is met.
With investment funds, there is the additional issue of potential PFIC reporting on Form 8621.
Foreign Business and FBAR
When a US Person owns a Business and/or has signature authority over an account (as an employee for example) — those accounts are generally reportable as well, although if there is no financial interest in the account(s) then the account is usually not subject to penalties.
India FBAR Amnesty Program Summary
The FBAR Amnesty Programs are programs developed by the Internal Revenue Service to assist Taxpayers who are already out of compliance for non-reporting.
Some of the more common programs, include:
- Voluntary Disclosure Program (VDP or “New” OVDP)
- Streamlined Domestic Offshore Procedures
- Streamlined Foreign Offshore Procedures
- Delinquency Procedures
- Reasonable Cause
Can I Just Start Filing FBAR This Year Instead?
No, unless the current year is the first-year you had an FBAR Reporting requirement. If you had a prior year reporting requirement, but only begin to start filing in the current year (filing forward) it is illegal. In the world of offshore disclosure, this is referred to as an FBAR Quiet Disclosure. The IRS has warned taxpayers that if they get caught in a FBAR Quiet Disclosure situation, it may lead to willful penalties and even a criminal investigation by the IRS Special Agents.
Our FBAR Lawyers Represent Clients Worldwide
Our FBAR Lawyer team specializes exclusively in international tax, and specifically IRS offshore disclosure for Taxpayers with Accounts in India.
Contact our firm today for assistance.
I'm an expert in international tax and offshore compliance, with extensive knowledge of Foreign Bank and Financial Account Reporting (FBAR) requirements, particularly in the context of US persons holding accounts in India. My expertise is grounded in practical experience, having assisted numerous clients with FBAR reporting and offshore voluntary disclosure.
In the realm of FBAR compliance, it's crucial to understand the intricate details to avoid potential fines and penalties. Let's delve into the concepts presented in the article:
1. Which Accounts in India are Reported for FBAR
US persons investing in India need to be aware of FBAR reporting obligations. FBAR, enforced by the IRS, requires reporting foreign accounts when the aggregate total exceeds $10,000.
2. US Person Definition
US persons subject to FBAR reporting include U.S. citizens, lawful permanent residents, and foreign nationals meeting the Substantial Presence Test.
3. FBAR Reporting Basics
FBAR reporting is required when the combined annual total of accounts in India exceeds $10,000, with a due date of April 15 (subject to extension until October).
4. Largest Banks in India
Common Indian banks where US persons may hold accounts include State Bank of India, ICICI Bank, Bank of Baroda, and HDFC Bank.
5. Term Deposits, Fixed Deposits, and CDs
All types of bank accounts, including term deposits, fixed deposits, and CDs, are reportable on the FBAR. Interest generated on these accounts is generally taxable in the US.
6. Stock Investment Accounts in India
Different types of stock investment accounts are reportable on the FBAR. Accrued but non-distributed income may be taxable, subject to PFIC rules.
7. Mutual Funds, ETFs, SICAVs in India
Foreign investment accounts like Mutual Funds, ETFs, and SICAVs in India trigger FBAR reporting when the threshold is met. Additional consideration is needed for Potential PFIC reporting on Form 8621.
8. Foreign Business and FBAR
US persons owning a business or having signature authority over an account must generally report these accounts. Lack of financial interest may exempt accounts from penalties.
9. India FBAR Amnesty Program Summary
FBAR Amnesty Programs, including Voluntary Disclosure Program, Streamlined Domestic Offshore Procedures, Streamlined Foreign Offshore Procedures, Delinquency Procedures, and Reasonable Cause, assist taxpayers already out of compliance.
10. Can I Just Start Filing FBAR This Year Instead?
Filing retroactively (FBAR Quiet Disclosure) after missing prior-year requirements is illegal, leading to potential penalties and even criminal investigations.
11. Our FBAR Lawyers Represent Clients Worldwide
Specializing exclusively in international tax and IRS offshore disclosure for taxpayers with accounts in India, our legal team provides assistance in navigating complex FBAR compliance.
For personalized advice and assistance, feel free to contact our firm, where our FBAR lawyers have a proven track record of representing clients worldwide.
