Guide to Foreign Account Reporting (FBAR & FATCA)

FBAR (FinCEN 114) Requirements

The Report of Foreign Bank and Financial Accounts (FBAR) is required for U.S. persons with foreign financial accounts.

Who Must File FBAR

You must file if:

• You are a U.S. person (citizen, resident, or entity)
• You had a financial interest in or signature authority over foreign accounts
• The aggregate value exceeded $10,000 at any time during the year

What Accounts Are Reportable

• Bank accounts (checking, savings)
• Securities accounts
• Mutual funds
• Debit card accounts
• Pension accounts (in some cases)
• Insurance policies with cash value

Filing Deadline

• April 15 (with automatic extension to October 15)
• Filed electronically through FinCEN's BSA E-Filing System
• Filed separately from your tax return

Penalties for Non-Filing

FATCA (Form 8938) Requirements

FATCA requires reporting specified foreign financial assets on Form 8938 with your tax return.

Who Must File Form 8938

U.S. taxpayers with specified foreign financial assets exceeding:

What Assets Are Reportable

• Foreign financial accounts
• Foreign stocks and securities not in a U.S. account
• Foreign partnership interests
• Foreign trust interests
• Foreign-issued life insurance with cash value
• Foreign hedge funds and private equity

FBAR vs FATCA

Both reports are required - they are not duplicative:

• FBAR goes to FinCEN; Form 8938 goes to IRS
• Different thresholds apply
• Some assets overlap, others are unique to each form

Coming Into Compliance

If you have unreported foreign accounts, options exist to come into compliance.

Streamlined Filing Compliance

For non-willful violations:

• File last 3 years of tax returns and 6 years of FBARs
• Pay tax, interest, and miscellaneous offshore penalty (5% of highest account value)
• Sign certification of non-willfulness

Delinquent FBAR Submission

If you don't owe additional U.S. tax:

• File late FBARs with explanation
• No penalty if not under examination
• Relies on "reasonable cause"

Delinquent International Information Returns

For forms like 3520, 5471:

• File with reasonable cause statement
• Penalties may be reduced or waived

Voluntary Disclosure

For willful violations:

• Contact Criminal Investigation Division
• Full disclosure of all violations
• Pay taxes, interest, penalties
• Avoid criminal prosecution

Don't Ignore the Problem

Coming forward voluntarily results in much better outcomes than waiting for IRS discovery.