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Report of Foreign Bank and Financial Accounts (FBAR)

If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, exceeding certain thresholds, the Bank Secrecy Act may require you to report the account yearly to the Department of Treasury by electronically filing a Financial Crimes Enforcement Network (FinCEN) 114, Report of Foreign Bank and Financial Accounts (FBAR).   If the aggregate value of financial accounts exceeds $10,000 at any time during the calendar year. This is a cumulative balance, meaning if you have a combined account balance of $12,000 at any one time (but divided between 2 accounts, both accounts would have to be reported.
Exceptions:

Certain Accounts Jointly Owned by Spouses. The spouse of an individual who files an FBAR is not required to file a separate FBAR if the following conditions are met:
(1) all the financial accounts that the non-filing spouse is required to report are jointly owned with the filing spouse;
2) the filing spouse reports the jointly owned accounts on a timely filed FBAR electronically signed; and
(3) the filers have completed and signed Form 114a, “Record of Authorization to Electronically File FBAR’s” (maintained with the filers’ records).
Otherwise, both spouses are required to file separate FBARs, and each spouse must report the entire value of the jointly owned accounts.
If an individual fails to file the FBAR, the IRS can impose one of two civil penalties :
  • A nonwillfulness penalty, not to exceed $10,000, may be imposed on any person who violates or causes any violation of the FBAR filing and recordkeeping requirements (IRM §4.26.16.4.4); or
  • A willfulness penalty may be imposed on any person who willfully fails to file the FBAR, with the ceiling on the penalty being the greater of $100,000 or 50% of the balance in the account at the time of the violation (IRM §4.26.16.4.5.1).  Criminal penalties may be imposed as well
Significantly, the nonwillfulness penalty should not be imposed if an individual’s violation was due to reasonable cause and the balance in the account was properly reported on an FBAR (IRM §4.26.16.4.4).


You have Financial Interest if:

You are the owner of record or holder of legal title; the owner of record or holder of legal title is your agent or representative; you have a sufficient interest in the entity that is the owner of record or holder of legal title.



You have Signature authority if:
You have authority to control the disposition of the assets in the account by direct communication with the financial institution maintaining the account
.


FinCEN 114 - Report of Foreign Bank and Financial Accounts (FBA R)
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