Purpose Of The FinCEN Form 114, Report of Foreign Bank and Financial Accounts
BSA FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR), is used to report financial interest in or signature authority over foreign financial accounts and replaces the obsolete Form TD F 90-22.1. Form 114 must be e-filed with the Treasury Department via its BSA E-Filing System. It is an information return only, meaning it will have no information on the filer’s tax liability.
What Is The FinCEN Form 114 Deadline?
The FBAR must be received by the Department of the Treasury on or before June 30th of the year immediately following the calendar year being reported. The June 30 filing date may not be extended. The FBAR (FinCEN Form 114) must be filed electronically through FinCEN’s BSA E-Filing System by the individual taxpayer or through a third party professional, such as Tax Samaritan.
Who Must File The FinCEN Form 114?
A United States person that has a financial interest in or signature authority over foreign financial accounts must file an FBAR if the aggregate value of the foreign financial accounts exceeds $10,000 (the taxpayer must aggregate the highest value of each individual account during the calendar year) at any time during the calendar year.
A United States person means United States citizens; United States residents; entities, including but not limited to, corporations, partnerships, or limited liability companies created or organized in the United States or under the laws of the United States; and trusts or estates formed under the laws of the United States. It does not include non-residents of the United States.
What Is A Foreign Financial Account For The FinCEN Form 114?
A foreign financial account is a financial account located outside of the United States.
A financial account includes, but is not limited to:
- Financial (deposit and custodial) accounts held at foreign financial institutions, such as a securities, brokerage, savings, demand, checking, deposit, time deposit, or other account maintained with a financial institution (or other person performing the services of a financial institution)
- Financial account held at a foreign branch of a U.S. financial institution
- Foreign financial account for which you have signature authority
- Indirect interests in foreign financial assets through an entity if sufficient ownership or beneficial interest (i.e., a greater than 50 percent interest) in the entity
- A commodity futures or options account
- Shares in a mutual fund or similar pooled fund (i.e., a fund that is available to the general public with a regular net asset value determination and regular redemptions)
- Foreign accounts and foreign non-account investment assets held by foreign or domestic grantor trust for which you are the grantor
- Foreign-issued life insurance or annuity contract with a cash-value
- Foreign retirement plan that is a personal or individual account plan
Penalties For Not Filing The FinCEN Form 114
The penalties for not filing the FinCEN Form 114 are harsh.
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 in the account at the time of the violation. In addition, there can also be criminal penalties of up to $250,000 or 5 years in jail or both.
If a person has willfully failed to report and is engaging in a certain pattern of illegal activity, criminal penalties are increased up to $500,000 or 10 years in jail or both.
Tax Samaritan is a team of Enrolled Agents with over 25 years of experience focusing on the taxation of US taxpayers living abroad. This form has been in the news extensively due to the increased efforts by the IRS to bring taxpayers into compliance. Our services include preparing the FinCEN Form 114 and assisting taxpayers get back into compliance. We maintain this tax blog where all articles are written by Enrolled Agents. Our main objective is to educate Americans abroad on their tax responsibilities, so that they can look for planning alternatives on time. They are also designed to help taxpayers looking to self prepare, providing specific tips and pitfalls to avoid. If you found this article helpful, you’ll likely benefit from our future ones as well – so we encourage you to avoid pitfalls and join our mailing list:
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Randall Brody is an enrolled agent, licensed by the US Department of the Treasury to represent taxpayers before the IRS for audits, collections and appeals. To attain the enrolled agent designation, candidates must demonstrate expertise in taxation, fulfill continuing education credits and adhere to a stringent code of ethics.
Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.