Reporting Foreign Bank and Financial Accounts – What You Need to Know

If you have financial authority or even just signature authority over a foreign bank or financial account, you may be required to make an annual report of it to the Department of the Treasury. Failure to do so can result in extremely onerous penalties you’ll want to avoid.

The Bank Secrecy Act requires that any United States person who has a financial interest in (or signature authority over) a financial account located outside of the United States, and the aggregate value of all that person’s foreign accounts exceeds at least $10,000 at some point in a calendar year, must file Form 114, Report of Foreign Bank and Financial Accounts (FBAR). These requirements apply not only to U.S. citizens, but also foreign residents and non-person entities meeting the requirements, including U.S. partnerships, LLCs, corporations, or trusts and estates.

The penalties for failing to meet these requirements are extremely strict. Even non-willful violations are subject to a $10,000 per violation fine. For willful violations, the fine is much more serious – the greater of $100,000 or 50% of the balance of the account. Clearly, FBAR is a subject to be taken very seriously and it is highly recommended that those who think they may be required to file the FBAR form contact a qualified attorney. The Hood Law Group stands ready to answer any questions you may have about the requirements and your responsibilities to comply with them.

International tax planning is our specialty. Contact our office at 816-561-5000 or send us a message through the form below to schedule an appointment.

*This post was originally published on July 29, 2014