FBAR stands for the Report of Foreign Bank and Financial Accounts and is filed on FinCEN Form 114 through the BSA E-Filing System.
U.S. persons (including citizens, residents, and certain U.S. entities) generally must file if they have a financial interest in or signature authority over foreign financial accounts and the aggregate value exceeds $10,000 at any time during the year.
Some accounts, such as some retirement accounts and government-owned accounts, are not reported on the FBAR.
FBAR is due April 15, with an automatic extension to October 15.
Civil and criminal penalties may apply, depending on the facts and whether the violation is non-willful or willful.
FBAR filers must generally keep account records for five years from the FBAR due date.
Starting a business in the United States requires understanding and following the country’s financial regulations. Businesses that have foreign bank accounts or other financial accounts, such as investment, pension, or brokerage accounts, must comply with the Foreign Bank and Financial Accounts Reporting (FBAR) rule.
This article provides an overview of the FBAR rule. It explains the basic FBAR filing rules and why understanding them can help businesses operating in the U.S. avoid penalties and manage tax-season compliance more smoothly.
What Is FBAR (FinCEN Form 114)?
FBAR is the Report of Foreign Bank and Financial Accounts, filed on FinCEN Form 114. It is a reporting requirement under the Bank Secrecy Act for certain U.S. persons with foreign financial accounts. The report is filed with the U.S. Treasury through FinCEN’s BSA E-Filing System, not with a federal income tax return. The IRS enforces FBAR compliance.
FBAR is intended to support financial transparency and help the U.S. government monitor offshore accounts in the context of tax compliance and anti-financial-crime enforcement.
Who Must File an FBAR?
A U.S. person may need to file an FBAR if they meet the reporting threshold. This includes citizens, residents, corporations, partnerships, limited liability companies, trusts, and estates.
An FBAR is generally required if both of the following are true:
- The filer has a financial interest in, or signature or other authority over, at least one foreign financial account, and
- The aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year
The $10,000 threshold is based on the combined total of all reportable foreign accounts, not per account.
What Counts as a Foreign Financial Account?
A foreign financial account is generally an account maintained at a financial institution located outside the United States. For FBAR purposes, an account can be reportable even if it does not generate taxable income.
Reportable accounts commonly include foreign bank accounts, brokerage accounts, and certain other financial accounts held with non-U.S. financial institutions. For valuation, FBAR filers must report the account’s highest value during the year and convert that amount into U.S. dollars using the applicable U.S. Treasury exchange rate rules.
FBAR Exemptions and Exceptions
IRS guidance lists several foreign financial accounts that generally are not reported on an FBAR, including:
- Correspondent/Nostro accounts
- Accounts owned by a governmental entity
- Accounts owned by an international financial institution
- Accounts maintained on a U.S. military banking facility
- Certain individual retirement accounts (IRAs)
- Certain retirement plan accounts
- Certain trust accounts where a U.S. person files the FBAR for those accounts
An FBAR may not be required for a calendar year in certain situations, such as:
- All foreign accounts are reported on a consolidated FBAR, or
- All reportable foreign accounts are jointly owned with a spouse, and the required spouse-authorization conditions are met (including FinCEN Form 114a)
Income tax filing status (for example, married filing jointly vs. separately) does not control this exception.
When to Report FBAR
The FBAR due date is April 15 following the calendar year being reported. If it is not filed by April 15, there is an automatic extension to October 15. No separate extension request is required.
If a filer is late, the IRS and FinCEN guidance generally indicates they should file as soon as possible and provide an explanation where applicable.
How to File FBAR
Officially, FBARs are filed through FinCEN, and electronic filing is the standard method.
Electronic Filing
FBARs must generally be submitted electronically through FinCEN’s BSA E-Filing System. Individuals can file using the no-registration option, while institutions and professionals filing for clients (including attorneys, CPAs, and enrolled agents) must register and obtain a user ID and password.
Paper Filing
Paper filing is not the normal method. If a filer wants to file on paper, they must contact FinCEN’s Resource Center (Regulatory Helpline) to request an exemption from e-filing. Electronic filing remains the default and expected filing method.
If an accountant, attorney, or another authorized person files the FBAR on your behalf, FinCEN Form 114a (Record of Authorization to Electronically File FBARs) may be used to document that authorization. This form is generally kept in your records and is not submitted with the FBAR.
FBAR filers must generally keep records for five years from the FBAR due date. IRS guidance says records should include:
- Name on each account
- Account number or other designation
- Name and address of the foreign bank or other institution
- Type of account
- Greatest value of the account during the reporting period
It is also a good practice to keep copies of filed FBARs and related supporting documents.
If you need help maintaining organized financial records, Air Corporate’s bookkeeping and accounting services can help support your compliance workflow.
Penalties for Not Filing FBAR
Failing to file an FBAR when required can lead to civil monetary penalties and, in serious cases, criminal penalties. The IRS makes clear that FBAR penalty outcomes depend on the facts and circumstances, and the civil penalty maximums are adjusted annually for inflation.
Here is the general penalty framework for FBAR violations:
Non-Willful Violation
- A non-willful violation may result in a civil penalty under 31 U.S.C. § 5321(a)(5), subject to current inflation-adjusted limits.
- Criminal penalties generally do not apply to non-willful violations. The statute also includes a reasonable-cause exception in some cases.
Willful Violation (Failure to File or Retain Required Records)
- A willful FBAR violation can trigger a much higher civil penalty and can also carry criminal exposure.
- Under the statute, the civil penalty framework is the greater of $100,000 or 50% of the account balance, with applicable maximums adjusted for inflation.
Willful Violation While Violating Other Laws or as Part of Certain Illegal Activity
- If a willful FBAR violation occurs while violating another U.S. law, or as part of a pattern of illegal activity involving more than $100,000 in a 12-month period, criminal penalties can be higher, including larger fines and longer imprisonment terms under 31 U.S.C. § 5322(b).
Willfully Filing a False FBAR
- Willfully filing a false FBAR is generally treated as a willful violation and may also create criminal exposure, depending on the facts and the charges pursued by the government.
Negligent and Pattern of Negligent Violations
- These are separate penalty concepts under 31 U.S.C. § 5321(a)(6), but they are generally aimed at financial institutions and certain businesses, not typical individual FBAR filers.
- For most taxpayer-facing guidance, the key distinction is non-willful versus willful violations.
The IRS may decide not to impose a penalty in some cases if the filer establishes reasonable cause and properly reports the account on a late-filed FBAR. Because FBAR penalty issues are highly fact-specific, anyone with possible FBAR exposure should speak with a qualified U.S. tax attorney or tax professional.
FBAR vs. Form 8938 (FATCA): What’s the Difference?
FBAR and Form 8938 are often confused, but they are different reporting regimes.
| Item | FBAR (FinCEN Form 114) | Form 8938 (FATCA) |
|---|---|---|
| Filed with | FinCEN (via BSA E-Filing) | IRS |
| Filed with tax return? | No | Yes, generally with federal tax return |
| Purpose | Foreign financial account reporting under Bank Secrecy Act | Reporting specified foreign financial assets under tax rules |
| Can both apply? | Yes | Yes |
IRS guidance confirms some taxpayers may need to file FBAR, Form 8938, or both, depending on their circumstances.
Late or Amended FBAR Filings
If a U.S. person realizes they should have filed an FBAR for a prior year, IRS guidance says they should generally file the late FBAR electronically as soon as possible.
The BSA E-Filing System allows prior-year reporting and provides a way to explain the late filing.
If a filed FBAR needs corrections, the filer should submit a new FBAR marked as “Amended” and complete it in full.
Conclusion
FBAR compliance is important for U.S. persons with foreign financial accounts. Filing on time, reporting the right accounts, and keeping proper records can help avoid costly penalties.
If you manage a U.S.-linked business with cross-border accounts, Air Corporate can help you stay organized and support your broader compliance workflow alongside your tax advisors.
Contact Air Corporate to discuss your setup.
FAQs
The FBAR is the Report of Foreign Bank and Financial Accounts, filed as FinCEN Form 114. It is a U.S. reporting requirement for certain U.S. persons who have a financial interest in, or signature authority over, foreign financial accounts. The FBAR is filed with FinCEN (not with your income tax return).
The key rule is the aggregate value of all your foreign financial accounts, not the balance of just one account. You generally must file an FBAR if the combined value of your foreign accounts exceeds $10,000 at any time during the calendar year. So, a single account under $10,000 can still trigger FBAR filing if your total across all foreign accounts goes over the threshold.
Sometimes, yes. Filing Form 8938 does not replace FBAR filing, and FBAR filing does not replace Form 8938. Depending on your situation, you may need to file one or both, and some accounts may need to be reported on both forms.
Some foreign financial accounts are not reported on the FBAR. IRS guidance specifically notes exceptions for certain accounts held in IRAs and certain tax-qualified retirement plans. IRS/FinCEN guidance also references additional exceptions in the FBAR instructions, such as some accounts at a U.S. military banking facility and certain accounts held with an international financial institution (for example, the World Bank or IMF). Because exemptions are specific, filers should check the current FBAR instructions before filing.
