Reporting of Foreign Bank and Financial Accounts also known as FBAR

There is a requirement to file the Form 114 (which has replaced Form TD F 90-22.1) if all the following apply:

1. Taxpayer is a “U.S. Person” (as defined by the IRS).
2. The U.S. Person has a financial account in a foreign country.
3. The U.S. Person has a “financial interest” in or “signature authority” of the foreign financial account (or other authority).
4. The aggregate highest account balance(s) at any time during the Calendar year of all such foreign bank or financial accounts exceeds $10,000 (USD).

Taxpayers must disclose annually the existence of Foreign Accounts and Trusts on Schedule B Part III (Form 1040A or 1040).

Filing Deadline for the FBAR Form is June 30th of the tax year immediately following the Calendar year being reported, The FBAR form must be received regardless of the postmark date by the June 30th deadline and the deadline cannot be extended.

Penalties

Criminal Penalties

There are Criminal penalties for “willful violations” up to a $250,000 fine and five years in prison.

Civil Penalties

Non-willful - Up to $10,000 per violation.

Willful - The greater of $100,000 or 50% of the highest aggregate balance of the account when the violation occurs, for each year’s filing.