What is FBAR?

The Bank Secrecy Act (BSA) gave the Department of Treasury authority to collect information from United States persons who have financial interests in or signature authority over financial accounts maintained with financial institutions located outside of the United States. The BSA requires that a FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR) be filed if the aggregate maximum values of the foreign financial accounts exceed $10,000 at any time during the calendar year.


A United States person means a citizen, resident, corporation, partnership, limited liability company, trust or estate. Foreign financial accounts, include bank accounts, brokerage accounts and mutual funds. You report foreign financial accounts to the Treasury Department by filing a Report of Foreign Bank and Financial Accounts (FBAR).


Whether the account produced taxable income or not has no bearing whatsoever on the requirement to file.


What about IRAs, Tax-qualified Retirement Plans, and Trusts


An owner or beneficiary of an IRA is not required to report a foreign financial account held in the IRA. Also, participant in or beneficiary of a tax-qualified retirement plan described in Internal Revenue Code § 401(a), 403(a) or 403(b) is not required to report a foreign financial account held by or on behalf of the retirement plan.


A trust beneficiary with a direct or indirect financial interest in more than 50 percent of

the trust assets or income is not required to report the trust’s foreign financial accounts on an FBAR if the trust, trustee of the trust, or agent of the trust is a United States person; and files an FBAR disclosing the trust’s foreign financial accounts.


Severe Penalties


Failure to file a FBAR when required to do so may result in civil penalties, criminal penalties, or both. For example, a willful failure to file FBAR may carry a civil penalty of up to the greater of $124,588 (plus inflation adjustments from 2016), or 50 percent of the amount in the account at the time of the violation as well as possible criminal penalties of up to $250,000 or 5 years or both.


The FBAR is a calendar year report and must be received by the Department of Treasury on or before April 15 of the year following the calendar year being reported. You must file the FBAR electronically through the Financial Crimes Enforcement Network’s BSA E-Filing System. You don’t file the FBAR with your federal tax return.


Attorney Adler focuses his practice on estate planning, wills, trusts and estates. He can be reached at 212-843-4059 or 646-946-8327.









Recent Posts

See All

For the 99.5% Act and "STEP" Act

You may have read or heard news about two bills recently introduced in the Senate that, if enacted, could have a significant impact on many estate plans. I am writing to you, as a valued allied profe

Estate Planning and Divorce

It has been this authors experience that the engagement agreements of many divorce attorneys specifically disclaim the divorce attorney’s responsibility for any tax or estate planning issues involved

Common Legal Terms Relating To Wills And Intestacy

ABATEMENT Cutting back certain gifts under a will when it's necessary to meet expenses, pay taxes, satisfy debts or take care of other bequests that are given priority under law or under the will. ADE