If you possess signature authority or share financial interests in a foreign financial account, the Bank Secrecy Act requires you to submit annual account reports to the Department of Treasury.
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The Internal Revenue Service today requires all taxpayers with an FBAR filing requirement to report their foreign assets by the June 30 deadline. FBAR filings have risen dramatically in recent years as FATCA phases in and other international compliance efforts have raised awareness among taxpayers with offshore assets.
The IRS encourages taxpayers with foreign assets, even relatively small amounts, to check if they have a filing requirement. Separately, certain taxpayers living abroad may also have to file the FATCA-related Form 8938 with their tax returns by the June 15 deadline. (Domestic filers may also be required to file Form 8938, which would have been due by April 15 with their tax returns.)
"The vast majority of taxpayers pay their fair share. The FBAR and FATCA filing requirements make it tougher for that relatively small number of taxpayers trying to hide assets and income offshore," said IRS Commissioner John Koskinen. "Taxpayers are encouraged to review the rules and disclose their offshore assets."
UNDERSTANDING FOREIGN BANK ACCOUNT REPORTING
Foreign bank account includes all accounts held by an international assignee. On a basic level, it might be a checking or savings account maintained with a branch of a financial institution. The institution is physically located outside the United States.
However, the definition may be broader than this. The accounts may refer to whole life insurance accounts, brokerage accounts, mutual funds, trust funds, and other types of foreign retirement accounts.
Any U.S. person is subject to these foreign account reporting rules. This includes all citizens and residents, as well as legal entities like partnerships and corporations created under United States laws.