FinCEN Report 114: The Foreign Financial Accounts Report

FinCEN Report 114, also known as the Foreign Bank and Financial Accounts Report (FBAR), is an essential filing requirement for U.S. persons holding or having authority over foreign financial accounts exceeding certain thresholds. This report ensures compliance with the Bank Secrecy Act and combats tax evasion while promoting transparency in foreign asset reporting.

What is the FinCEN Report 114?

FinCEN Report 114 requires U.S. persons to report their financial interests in, or signature authority over, foreign financial accounts if the aggregate value of those accounts exceeds $10,000 at any point during the calendar year.
This includes:

• Bank accounts
• Brokerage accounts
• Mutual funds
• Other financial accounts located outside the United States.

Who Needs to File FinCEN Report 114?

Any U.S. person, including:

• Citizens
• Residents
• Corporations
• Partnerships
• Limited liability companies (LLCs)
• Trusts and estates

must file an FBAR if they have a financial interest in or signature authority over foreign financial accounts exceeding the $10,000 threshold.

Why is the FinCEN Report 114 Important?

1. Legal Compliance:
   Ensures adherence to the Bank Secrecy Act, preventing legal issues related to undeclared foreign accounts.
2. Financial Transparency:
   Provides authorities with information needed to detect and prevent financial fraud.
3. Avoiding Penalties:
   Protects against hefty fines associated with non-compliance.

FinCEN Report 114 Due Date

The due date for filing FinCEN Report 114 is April 15 of the year following the reported calendar year, with an automatic extension to October 15—no request is required.

How to Fill Out FinCEN Report 114

1. Identify Qualifying Accounts:
   Review your foreign financial accounts to determine if their total value exceeded $10,000 at any time during the year.
2. Gather Account Information:
   Collect details for each account, including account numbers, names and addresses of the foreign banks, and the maximum account values during the year.
3. File Electronically through BSA E-Filing System:
   Complete and submit your FBAR via the BSA E-Filing System, as paper filings are not accepted.

Common Mistakes in FinCEN Report 114

1. Overlooking Smaller Accounts:
   Failing to report accounts that individually do not meet the $10,000 threshold but collectively do.
2. Incorrectly Reporting Account Values:
   Underreporting or inaccurately reporting the maximum account values.
3. Missing the Deadline:
   Failing to file by the final October 15 deadline, even with the automatic extension, can lead to penalties.

Penalties for Late Filing of FinCEN 114

• Non-willful violations:
  May lead to penalties up to $10,000 per year for each non-willful violation.
• Willful violations:
  Can result in fines exceeding $100,000 or 50% of the total account balance for each violation.
  It’s crucial to file the report by the annual June 30 deadline to avoid these penalties.

Reporting Multiple Financial Accounts

If you hold multiple foreign financial accounts, you must report each one on FinCEN 114. All accounts whose total value exceeds $10,000 at any point during the calendar year must be disclosed. FinCEN provides clear guidelines for reporting to ensure full compliance.

FinCEN 114 for Non-Residents

Non-residents with financial interests or signature authority over foreign accounts exceeding $10,000 must also file FinCEN Report 114.
However, non-residents, such as foreign nationals who are not U.S. persons, typically do not have to file FBAR unless:

They are considered U.S. tax residents under specific criteria, such as meeting the substantial presence test or holding a green card.

It’s essential to verify eligibility with a tax advisor to avoid penalties, as exceptions may apply under specific treaties or tax agreements.

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