In its most recent version of its “FBAR Reference Guide”, the IRS indicates that an individual will be deemed to have “signature authority” over a foreign financial account if the individual is named as agent under a power of attorney which includes the power to exercise signature authority of a foreign account owned by the principal. The IRS indicates this is true regardless of whether the power has actually been exercised.
Following the updated guidance, it is imperative for agents under powers of attorney to inquire as to whether the principal has signature authority over a foreign financial account subject to FBAR reporting. Failure by the agent to report the agent’s signature authority over the principal’s account can result in imposition of the extreme civil and criminal penalties that may be imposed due to the failure to comply with the FBAR requirements.
The FBAR reference guide is available at: http://www.irs.gov/pub/irs-utl/IRS_FBAR_Reference_Guide.pdf. The power of attorney example is found at page 5.
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