Do you have a financial interest in or signature authority over one or more foreign bank accounts or other foreign financial accounts exceeding $10,000 in total?
If so, the Bank Secrecy Act requires United States persons to report the account(s) yearly to the Internal Revenue Service by filing electronically a Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR). FinCEN Form 114 supersedes TD F 90-22.1 and is only available online through the BSA E-Filing System website. The system allows the filer to enter the financial account information and the maximum account balance(s) for the calendar year reported, including past years, on the online FinCEN Form 114.
United States person includes 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.
The FBAR must be filed on or before June 30 of the year following the calendar year being reported. The form also offers an option to “explain a late filing,” or to select “Other” to enter up to 750-characters within a text box where the filer can provide a further explanation of the late filing or indicate whether the filing is made in conjunction with an IRS compliance program.
There is no cost to file but the cost not to file is high. 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.
For assistance filing FinCEN Form 114, please contact Sara Stubler or your MarksNelson advisor at (816) 743-7700.