Taxpayers are required to file a Report of Foreign Bank and Financial Accounts (“FBAR”) to report any financial interest the taxpayer holds in a foreign financial account. The FBAR filing requirement applies to taxpayers that have signature authority over a foreign financial account. Foreign financial accounts include, but are not necessarily limited to, bank accounts, brokerage accounts, mutual funds, and trusts.
If a taxpayer fails to timely file an FBAR, he or she may be able to avoid penalties when a delinquent FBAR is filed. If the taxpayer is not under criminal investigation by the IRS, is not subject to a civil examination by the IRS, has properly reported and paid all U.S. taxes related to the foreign account, or otherwise has not been contacted by the IRS about the delinquent FBAR, the IRS may not impose penalties when the delinquent FBAR is filed. Just be sure to include a statement explaining the reason for the delinquent filing when submitting the delinquent FBAR.
As always, it is best to consult a qualified tax attorney for assistance.