If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, exceeding certain thresholds, the Bank Secrecy Act may require you to report the account yearly to the Internal Revenue Service by filing a Report of Foreign Bank and Financial Accounts (FBAR), using FinCEN Form 114, which was previously done using Form TD F 90-22.1.
United States persons are required to file an FBAR if:
1.The United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; and
2.The aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year to be reported.
United States person means U.S. citizens; U.S. residents; entities, including but not limited to, corporations, partnerships, or limited liability companies, created or organized in the United States or under the laws of the United States; and trusts or estates formed under the laws of the United States.
There are filing exceptions for the following United States persons or foreign financial accounts:
A person who holds a foreign financial account may have a reporting obligation even though the account produces no taxable income. The reporting obligation is met by answering questions on a tax return about foreign accounts (for example, the questions about foreign accounts on Form 1040 Schedule B) and by filing an FBAR (FinCEN Form 114).
The FBAR is a calendar year report and must be filed on or before the deadline of the year following the tax year being reported. The deadline to file FinCEN Form 114 is April 15, with a maximum extension for a 6-month period ending on October 15. The FBAR must be filed electronically through FinCEN's BSA E–Filing System. The FinCEN Form 114 is not filed with a federal tax return. An income tax filing extension, granted by the IRS to file an income tax return, does not extend the time to file an FBAR. There is a separate provision to request the maximum 6-month extension of time to file an FBAR.
A person required to file an FBAR who fails to properly file a complete and correct FBAR may be subject to a civil penalty not to exceed $10,000 per violation for nonwillful violations that are not due to reasonable cause. For willful violations, the penalty may be the greater of $100,000 or 50% of the balance in the account at the time of the violation, for each violation.
Taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS on Form 8938, Statement of Specified Foreign Financial Assets, which is filed with an income tax return. The new Form 8938 filing requirement is in addition to the FBAR filing requirement.
Click to access IRS chart: Comparison of Form 8938 and FBAR Requirements