NOTE: This headliner is current through the publication date. Since changes may have occurred, no guarantees are made concerning the technical accuracy after the publication date.
Headliner Volume 207
June 20, 2007
This headliner supplements Headliner # 127 (see below), published June 9, 2005 which explained whether the filing exemption found in the instructions to TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), for officers and employees of certain domestic corporations applies to officers and employees of domestic subsidiaries of such corporations as follows:
An officer or employee of a domestic subsidiary of a domestic corporation which has securities listed on national securities exchanges or which has assets exceeding $10 million and 500 or more shareholders of record need not report that he has signature authority over a foreign financial account of the subsidiary if he has no personal financial interest in the account and has been advised in writing by the chief financial officer of the parent corporation that the subsidiary corporation has filed a current report which includes that account.
The exemption also applies for the following officers and employees:
- An officer or employee of a wholly-owned foreign subsidiary has signature authority over a foreign financial account owned by the same foreign subsidiary.
- An officer or employee of a wholly-owned domestic subsidiary has signature authority over a foreign financial account owned by a wholly-owned foreign subsidiary.
- An officer or employee of a wholly-owned domestic subsidiary has signature authority over a foreign financial account owned by another wholly-owned domestic subsidiary of which he is not officer or employee.
For the exemption to apply a company must meet all of the following conditions:
- The parent corporation must either have its equity securities listed upon national securities exchanges or have assets exceeding $10 million and 500 or more shareholders;
- The parent corporation owns (directly or indirectly) more than a 50 percent interest of the domestic or foreign corporation having title to the account, and having a financial interest in the foreign financial account is required to file the FBAR and report the account;
- The officer or employee having signature or other authority over the account is employed by the publicly-traded parent corporation or by its wholly owned domestic or foreign subsidiary and has no personal financial interest in the account; and,
- The chief financial officer of the parent corporation provides written advice to the officer or employee that the parent corporation (for itself or on behalf of its subsidiary) has filed a current report which includes that account.
For purposes of this exemption, “domestic corporation” means a corporation that was incorporated within the United States. Also, for purposes of this exemption, “signature authority” includes any other authority that is comparable to “signature authority.” The FBAR form instructions contain definitions of “signature authority” and “other authority.”
Headliner Volume 127
June 9, 2005
The Internal Revenue Service has been asked whether the filing exception found in the instructions to TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR) (PDF), for officers and employees of certain domestic corporations applies to officers and employees of domestic subsidiaries of such corporations.
While the FBAR instructions do not address whether this exception applies to the officers and employees of subsidiaries, the question was resolved in an interpretive ruling published prior to a 1988 revision of Appendix A in 31 Code of Federal Regulations (CFR) Part 103. In October 1988, the interpretive ruling was removed from Appendix A but was not revoked. The ruling, which is still in effect, states:
An officer or employee of a domestic subsidiary of a domestic corporation which has securities listed on national securities exchanges or which has assets exceeding $10 million and 500 or more shareholders of record need not report that he has signature authority over a foreign financial account of the subsidiary if he has no personal financial interest in the account and has been advised in writing by the chief financial officer of the parent corporation that the subsidiary corporation has filed a current report which includes that account.
References/Related Topics
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