FBAR and FATCA Basic Regulations

Jan 1, 2014

FBAR / FATCA General Information

As a U.S. citizen, you may have to file an annual “Report of Foreign Bank and Financial Accounts” (FBAR) with the U.S. Treasury Department.  Existence of such an account or accounts must be reported on schedule B of IRS form 1040, as well as interest earned from such accounts. Keep a copy of your FBAR, quarterly bank reports, and yearly reports of all other financial holdings as detailed below.

The FBAR is not filed with the federal income tax return. The granting, by the IRS, of an extension to file federal income tax returns does not extend the due date for filing an FBAR. You may not request an extension for filing the FBAR.

  • Who must file? ny U.S. person who has a financial interest or signature authority over one or more foreign bank account or securities account which had an aggregate value of $10,000 at any time during the year. This includes individuals, U.S. branches of foreign companies, and U.S. parents of foreign subsidiaries.
  • When? By June 30th.  That means if you had the equivalent of $10,000 (in aggregate) in a foreign bank or securities account in the current year, you have to file the FBAR prior to June 30 of the following year.

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. If there is reasonable cause for the failure and the balance in the account is properly reported, no penalty will be imposed. 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 of the account at the time of the violation. Willful violations may also be subject to criminal penalties.

In addition, beginning in tax year 2011, additional reporting requirements exist to comply with the Foreign Account Tax Compliance Act (FATCA). Failure to report foreign financial assets on Form 8938 will result in a penalty of $10,000 (and a penalty up to $50,000 for continued failure after IRS notification).  Further, underpayments of tax attributable to non-disclosed foreign financial assets will be subject to an additional substantial understatement penalty of 40 percent.

FBAR/FATCA Documentation

For your bank accounts, please send statements for all 12 months of banking activity for the year.  For other financial accounts, please send the yearly report for each account.  Please fax, email, or send photocopies of the statements and keep the original statements with your financial records.  Accounts that must be reported on your FBAR are listed below, but might include other financial accounts in your name.  Please see the frequently asked questions report, or contact your agent for clarification.  If there are any questions, then we recommend that you send us the report of the account.

  • Bank accounts – checking, savings, other (postal account, savings account with insurance company, etc)
  • Pension accounts – such as kupat gemel, keren pensia, etc
  • Provident accounts – such as keren hishtalmut
  • Life insurance

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