Foreign Bank and Financial Accounts Requirements (FBAR) rules were established to protect against international terrorism. The reports filed as a result of this regulation provide leads to investigators that facilitate the identification and tracking of illicit funds or unreported income, as well as providing additional prosecutorial tools to combat money laundering and other crimes.
Who must file a FBAR? Any US person who has a financial interest in or signature authority to control the disposition of money or other authority over any financial account in a foreign country, if the aggregate value of these accounts exceeds $10,000 at any time during the calendar year.
The FBAR is due by June 30 of the year following the year that the account holder meets the $10,000 threshold. An extension to file Federal income tax returns does not extend the due date for filing an FBAR. Filers cannot request an extension of the FBAR. Failure to file form TD F 90-22.1 when required to do so may potentially result in civil penalties, criminal penalties or both.
- Failure to File Penalty – Civil penalties up to $10,000 for each non-willful violation and the greater of $100,000 or 50% of the account balances for each willful violation. Each year is a separate violation.
- Criminal Penalties – Fines up to $250,000 and 5 years imprisonment. If the FBAR violation occurs while violating another law (such as tax law, which it often will), the penalties are increased to $500,000 and/or 10 years of imprisonment.
If foreign financial assets (including FBAR accounts) exceed $50,000 additional reporting is required on Form 8938, Statement of Specified Foreign Financial Assets.
For more information, contact Padgett Business Services in Bothell, Washington at (425) 408-1695. We handle your accounting, tax (personal & business) and payroll needs – so you can focus on what makes you money. Serving Bothell, Lynnwood, Kenmore, Mill Creek and surrounding areas.