US FBAR Requirements and Deadline

The Importance of Complying with the New U.S. FBAR (FinCEN Form 114) Requirements

If you’re a U.S. person with foreign financial accounts, it’s crucial to stay on top of the new FBAR (Foreign Bank Account Report) requirements to avoid hefty penalties and legal consequences. The FBAR, also known as FinCEN Form 114, is a mandatory filing that must be submitted annually by U.S. citizens, residents, and certain entities to report foreign bank accounts that exceed $10,000 in aggregate value during the calendar year.

Who Needs to File?

Anyone who is a U.S. person (including citizens, residents, and entities like corporations or partnerships) and has a financial interest in or signature authority over foreign bank accounts with a total value greater than $10,000 at any point in the year must file the FBAR. This includes individuals with multiple foreign accounts, such as savings, checking, and investment accounts, if their combined value exceeds the threshold.

When Is the Deadline?

The FBAR filing deadline is April 15th each year, with an automatic extension available to October 15th if more time is needed. The filing is done electronically through the FinCEN website, not the IRS, so it’s important to keep track of this separate process.

Penalties for Non-Compliance

Failure to comply with FBAR reporting requirements can lead to severe penalties. Civil penalties for willfully failing to file the FBAR can be as high as $100,000 or 50% of the account balance for each year the report is not filed. Non-willful violations can also result in penalties of up to $10,000 per violation. In extreme cases, criminal penalties may apply, including fines and possible imprisonment.

Why Comply?

Beyond the potential for significant fines, timely FBAR filing helps the U.S. government combat money laundering, tax evasion, and other illegal financial activities. Complying with these rules also demonstrates good faith and avoids the stressful consequences of non-compliance.

In summary, if you meet the FBAR filing requirements, make sure to report your foreign accounts by the due date. Staying compliant not only saves you from costly penalties but also supports the integrity of the financial system.