Foreign Bank Account Reporting (“FBAR”)

Michele Carter, International Tax Partner and Jane Chang, International Tax Manager
August 18, 2015

Each U.S. person (see who must file below) that has a financial interest in or signature authority over a foreign financial account is required to file Form 114 (formerly TD F 90-22.1) Report of Foreign Bank and Financial Accounts if the aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year. This report is commonly referred to as the “FBAR.” A person who holds a foreign financial account may have a reporting obligation even though the account produces no taxable income. Once the $10,000 threshold is met, then all foreign financial accounts must be reported even if they contain little to no funds. Abbreviated filing procedures apply when more than 25 foreign accounts are owned. 

As of July 1, 2013, it is mandatory for all individuals and entities to file FBARs electronically using the E-Filing System maintained by the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”).  This mandate also applies to FBARs that are filed late or amend previously filed FBARs if filed after June 30, 2013 even if the originally filed returns were paper filed. If unable to e-file, filers may contact the FinCEN Regulatory Helpline at (800) 949-2732 to request an exemption.

The FBAR is not an income tax return.  It is electronically filed with the Department of Treasury before June 30 each year following the calendar year for which it applies. For example, the FBAR for calendar year 2013 is due June 30, 2014. No extension of time is available. Note that FinCEN Form 114 replaced the former Form TD F 90-22.1 which is now obsolete.

FBAR Penalties

Even though the FBAR is an information return that imposes no tax, there may be significant civil and criminal penalties asserted for failure to file. A civil penalty up to $10,000 per unreported account per year may be imposed on a filer who fails to report the required information for any tax year if the failure is not due to willful neglect. For example, if a Taxpayer fails to report 3 foreign accounts for 2 years, the FBAR penalty can be up to $60,000 even if no willful neglect is present.  If the failure is the result of willful neglect, then the penalty can be up to the greater of $100,000 or 50% of the account balance and criminal penalties may also apply.

The IRS has programs for Taxpayers who have missed foreign filings on prior year’s returns to help them become compliant.

Who is required to file the FBAR?

All U.S. persons that have a financial interest in or signature authority over a foreign financial account are required to file a FBAR if the aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year.

A “U.S. person” means a U.S. citizen, U.S. resident, or U.S. entity.  U.S. entity includes a corporation, partnership, trust or limited liability company (“LLC”) organized or formed in the United States.  A U.S. LLC or a U.S. grantor trust may be required to file a FBAR if it has an interest in a foreign bank account even though it may be treated as disregarded for U.S. tax purposes.

The FBAR is generally filed on an individual basis and is not filed jointly by spouses.  However, the spouse of a U.S. person who files a FBAR (the “Filer”) is not required to file a separate FBAR if: 1) all foreign accounts to be reported by the spouse are jointly owned with the Filer; 2) the Filer reports all the foreign accounts on a timely filed FBAR; and 3) both spouse and Filer sign the FBAR.

Consolidated filing procedures are available for entities that are required to report the same foreign accounts.  Individuals are not allowed to consolidate FBAR filings with an entity.  For example, assume U.S. individual owns 100% of U.S. corporation. U.S. corporation owns 75% of a U.S partnership with a UK brokerage account worth $15,000. U.S. corporation can file a consolidated FBAR for itself and U.S. partnership.  U.S. individual is also required to report the UK brokerage account on the FBAR (see below example) but must file separately and is not allowed to join the consolidated FBAR filing with the entities.

Do you have an interest or signature authority in a foreign financial account?

A “foreign financial account” is a financial account located outside the U.S. The U.S. includes the states, the District of Columbia, territories and possessions of the U.S., and certain Indian lands. An account maintained with a branch of a United States bank that is physically located outside of the United States is a foreign financial account. An account maintained with a branch of a foreign bank that is physically located in the U.S. is not a foreign financial account.  A foreign bank account, foreign brokerage account, or foreign mutual funds are examples of foreign financial accounts.

Furthermore, U.S. persons are required to report foreign bank accounts that are indirectly owned by certain entities.  Each U.S. person has a financial interest in an account if they (or their agent or representative) are the owner of record or holder of legal title, or has more than a 50% interest in the entity that is the owner of record or holder of legal title in a foreign bank account. This may result in duplicate reporting.  For example, a U.S. individual owns 75% of a U.S. corporation and that U.S. corporation has a Swiss bank account with $12,000.  Then, both the U.S. individual and the U.S. corporation are each required to file a FBAR to report ownership in the Swiss bank account of $12,000. 

 A U.S. person has signature authority over an account if they have the authority to control the disposition of the assets in the account by direct communication, whether in writing or otherwise, with the financial institution maintaining the account. The regulations provide exceptions to some officers and employees of specified regulated entities who will not need to report that they have signature authority over certain accounts in which they have no financial interest.


Taxpayers with foreign financial accounts should consult their tax advisors to ensure compliance with all necessary tax filings related to their foreign accounts. This will help to avoid the onerous penalty assessments which may result from a failure to report. If you have any questions about FBAR filing requirements please contact Curt Giles ( or 714-361-7670) or Michele Carter ( or 714-361-7627) for a consultation


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