Who Must File

A United States person, including a citizen, resident, corporation, partnership, limited liability company, trust and estate, must file an FBAR to report:

1. a financial interest in or signature or other authority over at least one financial account located outside the United States if
2. the aggregate value of those foreign financial accounts exceeded $10,000 at any time during the calendar year reported.

Generally, an account at a financial institution located outside the United States is a foreign financial account. Whether the account produced taxable income has no effect on whether the account is a “foreign financial account” for FBAR purposes.

When to File

The FBAR is an annual report, due April 15 following the calendar year reported.

You’re allowed an automatic extension to October 15 if you fail to meet the FBAR annual due date of April 15. You don’t need to request an extension to file the FBAR.

Keeping Records

You must keep records for each account you must report on an FBAR that establish:

• Name on the account,
• Account number,
• Name and address of the foreign bank,
• Type of account, and
• Maximum value during the year.

The law doesn’t specify the type of document to keep with this information; it can be bank statements or a copy of a filed FBAR, for example, if they have all the information.

You must keep these records for five years from the due date of the FBAR. 

Penalties

You may be subject to civil monetary penalties and/or criminal penalties for FBAR reporting and/or recordkeeping violations. Assertion of penalties depends on facts and circumstances. Civil penalty maximums must be adjusted annually for inflation. Current maximums are as follows:

• Foreign Financial Agency Transaction - Non-Willful Violation of Transaction: penalty of $12,921
  
• Foreign Financial Agency Transaction - Willful Violation of Transaction: penalty of greater of $129,210, or 50% of the amount per 31 U.S.C.5321(a)(5)(D)
• Negligent Violation by Financial Institution or Non-Financial Trade or Business: penalty of $1,118
• Pattern of Negligent Activity by Financial Institution or Non-Financial Trade or Business: penalty of $86,976

US & Canada Tax - Lily Lo CPA Professional Corporation - Edmonton, Alberta