FBAR and FATCA Filing
The IRS has a number of ways it tracks and taxes foreign assets and accounts held by U.S. taxpayers. Some, like the Foreign Account Tax Compliance Act (FATCA), add pages to your tax return. But FBAR's are a separate filing all together. Failure to file either one could result in substantial fines, penalties, or even criminal consequences. The Report of Foreign Bank and Financial Accounts (FBAR), now FinCEN Form 114, is a form that must be filed with the Financial Crimes Enforcement Network (FinCEN) each year to comply with provisions of the Bank Secrecy Act of 1970. It discloses foreign financial interests and signatory authority over foreign financial accounts. The Foreign Account Tax Compliance Act (FATCA) is a law that empowers the IRS to investigate and penalize tax evasion by U.S. taxpayers with financial assets overseas. Form 8938, the Statement of Specified Foreign Financial Assets, is an attachment to your federal tax return on which you must disclose those assets to enable the IRS to ensure that any taxes on income earned on those foreign assets have been paid.