Under the Bank Secrecy Act and U.S. Treasury Department Financial Crimes and Enforcement Network regulations, individuals and entities (including U.S. citizens, residents, corporations, business partnerships, limited liability companies, trusts and estates) with financial interest in or signature or other authority over at least one financial account located outside the United States are required to file annual Foreign Bank and Financial Accounts Reports (FBAR).
Failing to properly and timely file reports of foreign bank and foreign financial accounts results in steep penalties, which in some cases have been as high as 50% of the highest account balance for "each account for every year" that the account(s) remained open during the required reporting period.
Whether a foreign account produced taxable income has no effect on whether the account must be reported as a “foreign financial account” for FBAR purposes. Having foreign investments or pensions may also trigger legal requirements for annual FBAR filing.
The most common reporting mistake is failing to file an FBAR.
In many cases, Americans living and working outside the U.S., recent immigrants, foreign citizens who are residents in the U.S., and U.S. children who received gifts or bequests from their foreign parents are often unaware of the FBAR filing obligations. However, unknowingly failing to file FBARs does not shield someone from the U.S. Treasury Department's Financial Crimes and Enforcement Network regulations and potential penalties.
For assistance with your FBAR preparation and filing needs, please contact us at (571) 495-2227 or complete the services request form below.
