The US Treasury estimated that it will cost foreign banks and financial institutions $8 billion to comply with Fatca. This amount does not take into account the amount of time and cost that US citizens will need to take to comply with the demands of foreign banks and financial where they have accounts.
Those who have not filed an FBAR in prior years and who choose to file on their own should familiarise themselves with the Internal Revenue Service Streamlined Filing Procedures that can be found at the IRS website, http://www.irs.gov . If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, exceeding $10,000, the Bank Secrecy Act requires you to report the account yearly to the Department of Treasury by electronically filing a Financial Crimes Enforcement Network (FinCEN) 114, Report of Foreign Bank and Financial Accounts (FBAR).
Who Must File an FBAR? United States persons are required to file an FBAR if: 1. The United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; and 2. The aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year reported. United States person includes US citizens; US residents; entities, including but not limited to, corporations, partnerships, or limited liability companies, created or organised in the United States or under the laws of the United States; and trusts or estates formed under the laws of the United States.
Exceptions to the FBAR reporting requirements can be found in the FBAR instructions.
Signature authority is the authority of an individual (alone or in conjunction with another individual) to control the disposition of assets held in a foreign financial account by direct communication (whether in writing or otherwise) to the bank or other financial institution that maintains the financial account Reporting and Filing Information A person who holds a foreign financial account may have a reporting obligation even when the account produces no taxable income. The reporting obligation is met by answering questions on a tax return about foreign accounts (for example, the questions about foreign accounts on Form 1040 Schedule B) and by filing an FBAR.
The FBAR is a calendar year report and must be filed on or before June 30 of the year following the calendar year being reported. Effective July 1, 2013, the FBAR must be filed electronically through FinCEN’s BSA E-Filing System. The FBAR is not filed with a federal tax return.
When the IRS grants a filing extension for a taxpayer’s income tax return, it does not extend the time to file an FBAR. There is no provision for requesting an extension of time to file an FBAR. Those required to file an FBAR who fail to properly file a complete and correct FBAR may be subject to a civil penalty not to exceed $10,000 per violation for non-willful violations that are not due to reasonable cause. For willful violations, the penalty may be the greater of $100,000 or 50 percent of the balance in the account at the time of the violation, for each violation.
Printed in part from an article at the Royal Gazette online 11/12/14