What are the Requirements for FBAR?
By the terms of the FBAR requirements, a U.S. person must disclose any financial interests in, signature authority over, or other authority over foreign financial accounts if the aggregate value of the accounts exceeds $10,000 at any time during the calendar year. The information is acknowledged on a taxpayer’s tax return but reported on FinCEN Form 114, Report of Foreign Bank and Financial Accounts (commonly referred to as FBAR).
Thus, for example, whereas persons must indicate on their Form 1040, Schedule B, whether they have an interest in a foreign financial account by checking the appropriate box, the Schedule B then directs the taxpayer to the FBAR. FBARs must be received (not just filed) by the Department of Treasury for each calendar year on or before June 30 of the succeeding year. The June 30 deadline may not be extended. Those subject to FBAR reporting are U.S. citizens, resident aliens, and entities created, organized, or formed under U.S. laws, including, but not limited to, domestic corporations, partnerships, limited liability companies (LLCs), trusts, and estates.
The federal tax treatment of a person or entity does not determine whether an FBAR filing is required. An entity disregarded for federal tax purposes must still file an FBAR if filing is otherwise required. For example, an entity disregarded for federal tax purposes must still file an FBAR if filing is otherwise required. The penalties for failing to meet one’s FBAR obligations are steep.
A person who is required to file an FBAR and fails to properly file may be subject to a civil penalty not to exceed $10,000 per violation. , Criminal penalties are even harsher. A person who willfully fails to report an account or account identifying information may be subject to a civil monetary penalty equal to the greater of $100,000 or 50 percent of the balance in the account at the time of the violation.