To ensure that U.S. taxpayers are properly reporting
and pay taxes on funds held in foreign accounts, the
IRS now requires “U.S. individuals” to submit a
Report of Foreign Bank and Financial Accounts (FBAR)
filing. The report is only necessary if the value of
the account is greater than $10,000 (USD) during any
period during the tax year.
The filing requirements apply to U.S. individuals
which includes; citizens of the United States, green
card holders, domestic partnerships, domestic
corporations, domestic trusts, and individuals that
have signatory authority over a non-U.S. bank
account. It is very important to be aware that there
are NO special rules for minors; as a result minors
who meet the listed criteria must also submit a FBAR
The IRS has provided specific direction on what
qualifies as a foreign financial account. Qualifying
accounts include bank accounts (savings, checking,
and deposits), securities or brokerage accounts,
mutual funds, debit and prepaid credit cards,
annuities and pension plans, retirement plans,
interests in partnerships, trust and pass through
entities with foreign accounts, and insurance
policies with a cash surrender value.
FBAR Filing Penalties
There are currently two categories of penalties
applicable to FBARs including willful and
non-willful. Regardless of the category, the IRS
assesses penalties on a per account basis and not on
a per filing basis. So, one individual could face a
large fine based on the number of accounts they
control. Penalties are generally assessed for each
year there is a violation. Penalties range from
fines of $10,000 per violation per year to criminal
penalties including a $250,000 fine and 5 years
imprisonment for willful neglect in reporting.
Contact Our FBAR Professionals!
Do you have a foreign financial account? If so, it’s
important to understand your filing obligations. The
FBAR filings are complex and require the assistance
of a professional to navigate. There have been
several modifications and changes to the regulations
since they were initially implemented. For
please click here to contact a member of our
international tax team.
In a brief consultation he can assess your situation
and determine the next steps to attain compliance.