FBAR – Report of Foreign Bank and Financial Accounts

A United States person must file an FBAR report if that person has financial interest in, signature authority, or other authority over any financial account (s) in a foreign country and the aggregate value of these account(s) exceeds $10,000 at any time during the calendar year.

The account value is the largest amount of currency and/or monetary instruments that appear on any quarterly or more frequently issued account statement for the applicable year. If a periodic account statement is not issued, the maximum account value is the largest amount of currency and/or monetary instruments in the account at any time during the year.

Foreign financial accounts include the following accounts:

•  Bank accounts such as savings accounts, checking accounts, and time deposits.
• Securities accounts such as mutual funds, brokerage accounts, and securities derivatives or other financial instruments accounts.
• Accounts where the assets are held in a commingled fund that is a mutual fund.
• Any other account(s) maintained in a foreign financial institution or with a person doing business as a financial institution.

And are located outside of the United States proper and its territories and possessions.

Financial interest includes accounts for which the U.S. person is the owner of record or has legal title, whether the account is maintained for his or her own benefit or for the benefit of others including non-United States persons. Financial interest also includes accounts where the owner of record or holder of legal title is a person acting as an agent, nominee, or in some other capacity on behalf of a U.S. person.

Signature Authority includes a U.S. person that has account signature authority if that person can control the disposition of money or other property in the account by delivery of a document containing his signature to the bank or other person with whom the account is maintained.

Account Authority includes a person with other authority over an account that is able to exercise a power of disposition (make deposits or disbursements) that is comparable to a signature authority over an account by direct communication, either orally or by some other means to the bank or other person with whom the account is maintained.

If two persons jointly maintain an account, or if several persons each own a partial interest in an account, then each U.S. person has a financial interest in that account and each person must file an FBAR.

In cases where spouses have a joint interest in a bank or financial account(s) the spouse that files form TD F 90-22-1 should include the other spouse as a joint account owner in Part III of the FBAR.  If the filer’s spouse has no interest in any other account(s) not jointly held with the filer that spouse need not file a separate FBAR but must sign the filer spouse’s FBAR.

If the filer’s spouse is required to file an FBAR for any account that is not jointly owned with the filer he or she must file a separate FBAR reporting all accounts including those owned jointly with the other spouse.

The following are the civil and criminal penalties that may be assessed by the IRS for failure to comply with FBAR reporting and record keeping requirements. Both Civil and Criminal Penalties may be imposed for the same infraction.

Negligent Violation.
Civil penalty: Up to $500
Criminal Penalty: N /A

Non-Willful Violation.
Civil penalty: Up to $10,000 for each negligent violation.
Criminal Penalty: N /A

Pattern of Negligent Activity.
Civil penalty: In addition to penalty for Negligent Violation not more than $50,000
Criminal Penalty: N/A

Willful Failure to File FBAR or retain records of account.
Civil penalty: Up to the greater of $100,000, or 50 percent of the amount in the account    at the time of the violation.
Criminal Penalty: Up to $250,000 or maximum 5 years in prison or both.

Willful Failure to File FBAR or retain records of account while violating certain other laws
Civil penalty: Up to the greater of $100,000, or 50 percent of the amount in the account at the time of the violation.
Criminal Penalty: Up to $500,000 or maximum 10 years in prison or both.

Knowingly and Willfully Filing False FBAR.
Civil penalty: Up to the greater of $100,000, or 50 percent of the amount in the account at the time of the violation.
Criminal Penalty: $10,000 or maximum 5 years in prison or both.