Foreign Accounts and FBAR: The Penalties Are Catastrophic
If you have foreign bank accounts or financial assets and haven't reported them, listen carefully. The penalties for willful FBAR violations can reach $100,000 or 50% of the account balance per year. Per year. This is not something to handle on your own.
FBAR Requirements
If you have a financial interest in or signature authority over foreign accounts with an aggregate value exceeding $10,000 at any point during the year, you must file FinCEN Form 114. This is separate from your tax return.
FATCA Reporting
Form 8938 requires reporting of specified foreign financial assets if they exceed certain thresholds. The thresholds depend on your filing status and whether you live in the US or abroad. This overlaps with but is different from FBAR.
Streamlined Filing
If your failure to report was non-willful, you may qualify for the IRS Streamlined Filing Compliance Procedures. This program lets you come into compliance with reduced or eliminated penalties. I handle streamlined filings regularly.
Voluntary Disclosure
For willful violations, the IRS Voluntary Disclosure Practice may be the only way to avoid criminal prosecution. This is a formal process with specific requirements. I guide clients through it from start to finish.