IRS Compliance

FBAR: Foreign Bank Account Reporting

If you have a non-U.S. bank account, you may likely need to report this bank information to the U.S. each year. The good news is that there is no tax directly associated with filing an FBAR. However, if you meet the filing requirements and do not file each year, the U.S. can impose a non-filing penalty of up to 50% of your bank account balance or $10,000, whichever is less.

The Precursor to FATCA

FBAR filing requirements have existed since the 1990s and are now an integrated part of the relatively new FATCA rules, but the FBAR requirements long preceded the creation of FATCA in 2011. However, FATCA laws have accentuated pre-existing requirements to file an FBAR disclosure. The U.S. is so serious about filing FBARs they have created a new department where your FBAR is actually filed, called the Financial Crimes Enforcement Network (FinCEN).

Calculator and financial charts with data sheets.

Reporting Requirements

You have a non-U.S. bank account that on any given day of the preceding calendar year had a balance of $10,000 on deposit (even if you simply passed the funds through your account for 1 day).
If you have more than one non-U.S. bank account and the total amount on deposit for all non-U.S. bank accounts combined totals $10,000 or more.
You are listed as a joint account owner with your spouse, relative, or other person, and you meet the criteria in 1 or 2 above.
You are listed as a signatory only on a non-U.S. bank account, even if you have never accessed this account. (i.e., your elderly parent has put your name on their account in the event something should happen, you can access the funds.)
If you closed your non-U.S. bank account before the end of the year but the account met the criteria in 1 or 2 above, you are still obligated to file an FBAR.

Delinquent FBARs

What to do if you haven’t filed an FBAR in prior years

In order to avoid non-filing penalties, you will need to voluntarily disclose by electronically filing Form FinCEN, disclosing all non-U.S. bank accounts you held for the past 6 years. Even if the account had been closed for several years, the reporting is still required if the account existed in your name in the past 6 years.

Note: If the U.S. has already contacted you about your delinquent filing of FinCEN 114, you are no longer eligible for no penalty, as you are not 'voluntarily disclosing' (essentially, you have been caught!) So do not procrastinate filing your FBARs.

FBAR Form FinCEN 114 is due with your tax return filing, including extension dates.