Signature authority is the power to tell a bank what to do with money that is not yours. A US citizen or green card holder who holds that power over a UK employer's accounts reports it on the FBAR, the report filed with FinCEN and not with the IRS. Nothing in the rule depends on owning the money.
This post is for US persons employed in Britain as finance directors, treasurers, office managers, company directors and charity trustees. It extends our guide to FBAR and FATCA for UK residents: what the definition covers, how an employer's accounts are tested and reported, which exceptions exist, where the deadline differs, and why Form 8938 is not involved.
What does FBAR signature authority mean?
It means an individual's authority, alone or together with someone else, to control what happens to the assets in a foreign financial account by communicating directly with the bank that holds it, in writing or otherwise. That is the definition in FinCEN's FBAR instructions (opens the official FinCEN page in a new tab). Ownership plays no part in it.
The authority belongs to an individual and not to the company. It can be shared, so needing a second signatory does not remove it. And it runs directly to the institution: the test is whether the bank will act on an instruction that comes from you. An ordinary sterling business account in Britain is a foreign account for this purpose, because foreign means outside the United States.
The definition looks at the authority and not at how often it is used. A person named on the bank mandate as a signatory holds the authority whether they sign every week or have never signed at all. The roles below most often carry it, though the answer depends on the bank mandate and not on the job title.
- Finance directors and financial controllers who can release payments from company accounts
- Treasurers and trustees of charities, clubs and schools named as signatories
- Office managers and bookkeepers set up to make payments through business online banking
- Directors of UK companies in which they hold a minority stake or no shares
- Attorneys and executors who operate another person's accounts
Do online banking and dual signatories count as signature authority?
The official instructions do not mention online banking, view-only access or dual authorisation by name, so each is tested against the definition. Access that lets you send the bank an instruction to pay money away meets it. Authority shared with a second person meets it too, because the definition covers authority held with another individual.
Dual-signatory arrangements are common in UK companies and charities. One person sets up a payment and another releases it, or two signatures are needed on any instruction. Each of those people is communicating with the bank, and the need for a partner does not take either of them outside the rule.
The IRS examination manual marks two limits. A person who can only buy and sell investments inside an account, with no power to withdraw or transfer the assets, does not have signature authority. Nor does someone who only supervises the people who deal with the bank: approving internally a payment that a colleague then instructs is not a communication to the institution. On a plain reading, view-only access falls on the same side of the line, since seeing balances controls nothing.
How are an employer's accounts counted and reported on the FBAR?
They count towards the same aggregate test as your own accounts. The highest values of every foreign account you own or can sign on are added together, and if the total exceeded $10,000 at any time in the calendar year, an FBAR is due.
Accounts of this kind go in Part IV of FinCEN Form 114, the part for signature authority with no financial interest. In full, Part IV asks for the same account details as an account you own, plus the owner's name, address and taxpayer identification number, and the title of the position that gives you the authority. Sterling values are converted at the Treasury year-end rate (opens the official US Treasury page in a new tab), as our post on the FBAR maximum value and exchange rate explains.
Most employees in the UK do not need to complete all of that. The line-by-line instructions provide a shortened report for a US person who lives outside the United States, is an officer or employee of an employer physically located outside the United States, and has signature authority over an account owned or maintained by that employer. That filer completes the filer section and only the owner items of Part IV, once, with the employer's details and their own title. A separate summary rule applies to anyone with signature authority over a large number of accounts.
Take a US citizen employed as finance director of an unlisted trading company in Leeds, in which she holds no shares. She and the managing director can each release payments from the company's accounts. Her own current account and cash ISA are under the threshold, but the company accounts take the total over it, so she files. The company appears once in Part IV with its name, address and her title, and we also list her personal accounts in the parts for accounts she owns.
Do the officer and employee exceptions help a UK employee?
Rarely. The regulations excuse certain officers and employees from reporting signature authority, but only for accounts of employers that are regulated or listed in the United States, and only where the individual has no financial interest in the account. An employee of an unlisted UK company or charity is outside all of them.
The listed-entity exception covers the accounts of the listed entity itself. A subsidiary's officers and employees are covered by the regulation only where the subsidiary is a United States subsidiary of a US-listed parent and is included in the parent's consolidated FBAR. A UK subsidiary of a US-listed group does not fit that wording, and that gap is what FinCEN's extension notices, described next, were issued to deal with. A UK company whose own shares or depository receipts are listed on a US exchange appears to fall within the wording directly.
Where an exception applies, it removes the employer's accounts from the individual's report. It does nothing for accounts the person owns, and it is not available to someone with a financial interest in the employer's account. The employers concerned are listed below.
- Banks examined by the US federal banking regulators, for accounts the bank owns or maintains
- Financial institutions registered with and examined by the SEC or the CFTC
- Certain service providers to investment companies registered with the SEC
- Entities with equity securities or American depository receipts listed on a US national securities exchange
- Entities with equity securities registered under section 12(g) of the Securities Exchange Act
Is there a later FBAR deadline for signature authority filers?
For a narrow group, yes. The ordinary FBAR due date is 15 April, extended automatically to 15 October, and it applies to most people with signature authority. FinCEN has extended the date each year by notice for certain individuals with signature authority and no financial interest whose position is tied to the regulated and listed entity exceptions.
The notices cover officers and employees of the regulated or listed entities who can sign on accounts of entities more than half owned by their employer, officers and employees of those owned entities who can sign on group accounts, and certain officers and employees of investment advisers registered with the SEC. The most recent notice we have read says a proposed rule to widen and clarify the exceptions has not been finalised, and extends the date by a further year. It states that for all other individuals the ordinary due date is unchanged.
So a US person working for the London subsidiary of a US-listed group may be within the extension, and should confirm the position with the group's tax team. A US person at an independent UK company or a charity is not within it. The extension defers the report and does not cancel it. FinCEN's page on reporting foreign accounts (opens the official FinCEN page in a new tab) is the place to check for the current notice.
Does an employer's account go on Form 8938?
No. The IRS comparison of Form 8938 and FBAR requirements (opens the official IRS page in a new tab) says an account over which you have signature authority alone is not reported on Form 8938 unless you otherwise have an interest in it. The FBAR is the only one of the two reports that picks up an employer's account.
That difference matters once there is ownership. The employer's balances are not your assets for Form 8938, so signing rights do not bring that form into a return. A US person who owns, directly or indirectly, more than half of a company is in a different position: they have a financial interest in its accounts for the FBAR, report them as their own, and face the company filings described in our post on Form 5471 for a one-person UK limited company.
Signature authority also affects couples who are both US persons. One spouse's FBAR can cover the other only where every reportable account of the second spouse is jointly owned with the first. An employer's account breaks that condition, so a spouse with signing rights at work files their own report. Our post on joint accounts with a non-US spouse covers the other case.
What do you need from your employer to file?
In most UK cases, very little: the employer's legal name, its address, any US taxpayer identification number it holds, and your own title. Filers who cannot use the shortened report also need each account's number, bank, type and highest value.
Ask in writing and ask early. A finance team may be wary of an employee sending company details to a foreign agency, so explain that the report is your personal obligation and that the shortened version carries no balances. The IRS guidance on the FBAR (opens the official IRS page in a new tab) adds that an officer or employee who reports signature authority over an employer's account does not have to keep the account records personally.
Where years were missed and tax returns were otherwise right, the usual course is to file the missed reports late with an explanation, as our post on late FBARs sets out. Non-wilful penalties apply per report and not per account, following Bittner v. United States, and whether any penalty is charged depends on the facts. Where returns are also wrong and the conduct was non-wilful, our IRS streamlined filing service may be the route. Our foreign income and FBAR reporting service prepares the annual report, and the guide to FBAR and FATCA for UK residents covers every other kind of account.
- The employer's registered name and address
- Any US taxpayer identification number the employer holds
- Your job title and the dates your authority began or ended
- A copy of the bank mandate or the list of online banking users
- Account numbers, banks and highest balances, where the full Part IV is needed
General information, not advice. The right answer depends on your circumstances and the tax year concerned.
