What is Foreign Bank Account Reporting?
In general, federal law requires U.S. citizens and resident aliens to report any worldwide income, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers need to complete and attach Schedule B to their tax returns. Part III of Schedule B asks about the existence of foreign accounts, such as bank and securities accounts, and generally requires U.S. citizens to report the country in which each account is located.
Specifically, you must submit a Foreign Bank Account Report (FBAR) FinCEN Report 114 electronically through FinCEN’s BSA E-filing System. if you had an interest in or signature authority over at least one account outside the U.S., and the aggregate value of all the foreign accounts exceeded $10,000 at any time in the year.
What happens if you don't file FBAR?
Failure to file FBAR could put you on the hook for a penalty as high as $10,000 for non-willful violations (violations occurred before November 2, 2015). Those who knowingly flout the requirement may be charged a penalty of $100,000 or 50 percent of the balance in the account — and if you knowingly flout the requirement to file an FBAR you could also face criminal penalties. For penalties that are assessed after August 1, 2016, whose associated violations occurred after November 2, 2015, the IRS may assess an inflation-adjusted civil penalty not to exceed $12,459 per violation for non-willful violations that are not due to reasonable cause. For willful violations, the inflation-adjusted penalty may be greater than $124,588 or 50 percent of the balance in the account at the time of the violation, for each violation.
How to get help if you fail to file FBAR?
Coast One Tax Group is up to date on FBAR filing requirements. Call us today for a free consultation if you are facing tax challenges regarding Foreign Bank Account Reporting (FBAR). Let our team of experienced tax professionals guide you with their expertise.