The passage of the Foreign Account Tax Compliance Act (FATCA) was a milestone for international tax compliance legislation. Not only does it require U.S. taxpayers to disclose foreign assets, but it provided for intergovernmental agreements that require the sharing of information about U.S. taxpayers abroad with the U.S. government. While this is a huge boon for worldwide transparency, many U.S. taxpayers have had trouble with adjusting to these new filing requirements.
The Foreign Bank Account Report (FBAR), a product of FATCA legislation, requires that U.S. citizens with a “financial interest” or signature authority over a foreign bank account that exceeds certain value thresholds must report that account’s information to the Financial Crimes Enforcement Network (FinCEN), a division of the U.S. Treasury separate from the Internal Revenue Service. This relatively new filing requirement has had its name changed, due date altered, and disclosure requirements updated multiple times since its inception. Adding to the gravity of this filing requirement, those who don’t file an accurate or timely FBAR can be subject to extremely stiff penalties, including 100% of the value of the foreign account.
Taxpayers should retain experienced international tax professionals to coordinate the efficient, accurate, and comprehensive compilation and reporting of their foreign assets.