What Is The FinCen Form 114? What Expats Need To Know For FBAR Filing

Purpose Of The FinCEN Form 114, Report of Foreign Bank and Financial Accounts

The FinCEN Form 114 reports financial interest in or signature authority over foreign financial accounts. Form 114 must be e-filed with the Treasury Department via its BSA E-Filing System. It is an information return only, meaning it will have no information on the filer’s tax liability.

What Is The FinCEN Form 114 Deadline?

This form has an annual filing requirement.

However, if you cannot file the form before the regular due date of April 15, the IRS is currently automatically extending the deadline to October 15. This is the same standard six-month extension available for your income tax return.

Who Must File The FinCEN Form 114?

A United States person with a financial interest in or signature authority over foreign financial accounts must file an FBAR if the aggregate value of the foreign financial accounts exceeds $10,000. The taxpayer must aggregate the highest value of each account during the calendar year.

A United States person means United States citizens; United States residents; entities, including but not limited to, corporations, partnerships, or limited liability companies created or organized in the United States or under the laws of the United States; and trusts or estates formed under the laws of the United States. It does not include non-residents of the United States.

What Is A Foreign Financial Account For The FBAR?

A foreign financial account is a financial account located outside of the United States.

A financial account for the FinCen Form 114 includes:

• Financial (deposit and custodial) accounts held at foreign financial institutions. This includes securities, brokerage, savings, demand, checking, deposit, time deposit, or other accounts maintained with a financial institution. Or another person performing the services of a financial institution.
• Financial account held at a foreign branch of a U.S. financial institution.
• Foreign financial account for which you have signature authority
• Indirect interests in foreign financial assets through an entity if sufficient ownership or beneficial interest. Typically greater than 50 percent interest in the entity.
• A commodity futures or options account
• Shares in a mutual fund or similar pooled fund. For example, a fund available to the general public with a regular net asset value determination and regular redemptions.
• Foreign accounts and foreign non-account investment assets held by foreign or domestic grantor trust for which you are the grantor
• Foreign-issued life insurance or annuity contract with a cash-value
• A foreign retirement plan is a personal or individual account plan

Penalties For Not Filing

The penalties for not filing the FinCEN Form 114 are harsh.

A person who must file an FBAR and fails to file correctly may be subject to a civil penalty not to exceed $10,000 per violation. If there is reasonable cause for the failure and the account’s balance is appropriately reported, the IRS will impose no penalty.

A person who willfully fails to report an account or account identifying information may be subject to a civil monetary penalty. The penalty is the greater of $100,000 or 50 percent of the account’s balance at the time of the violation.

Also, there can be criminal penalties of up to $250,000 or 5 years in jail, or both.

If a person has willfully failed to report the FinCEN Form 114 and is engaging in a certain illegal activity pattern, criminal penalties are increased up to $500,000 or 10 years in jail or both.

Want to know more? Check out our article on filing the FBAR.