Do you own an interest in a foreign bank account? If so, you should make sure you are following the strict reporting requirements of the IRS and Financial Crimes Enforcement Network (FinCEN).
Foreign account information must be reported to the Department of Treasury on an FBAR form by all United States persons, including citizens, residents and entities, meeting the following requirements:
- 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
- The aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year reported.
FBAR forms are due by June 30 of each year. The penalties for not following the reporting requirements and filing an FBAR are strict. Those required to file an FBAR who fail 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 percent of the balance in the account at the time of the violation, for each violation.
If you own an interest in a foreign bank account and think you may be subject to these requirements, be sure to inform your tax return preparer so you may avoid any related penalties.