FinCEN FBAR Form 114

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FinCEN FBAR Form 114

Overview of FinCEN Form 114 and Its Requirements

Governing Regulations: FinCEN Form 114, also known as the Report of Foreign Bank and Financial Accounts (FBAR), is regulated under the Department of Treasury Regulations Title 31, Code of Federal Regulations (CFR) 1010.350, pertaining to Money and Finance.

Who Needs to File: Any U.S. persons, as defined under IRC Sec 7701(b), who possess a financial interest in or have signature authority over foreign (non-U.S.) financial accounts with an aggregate highest balance exceeding $10,000 USD during the tax year must file FinCEN Form 114. This requirement extends to both individuals, including minors, and legal entities such as Limited Liability Companies (LLCs), Corporations, Partnerships, Trusts, and Estates. In cases involving minors, responsibility for filing falls to the parents or guardians should the minor be unable to file.

Definition of Foreign (Non-U.S.): For the purposes of FinCEN Form 114, the "United States" encompasses all 50 states, the District of Columbia, U.S. territories and possessions (e.g., American Samoa, Northern Mariana Islands, Puerto Rico, Guam, and the U.S. Virgin Islands), and Indian lands. A foreign account is defined as any account physically located outside of these regions even if held with a U.S. bank branch situated abroad, while accounts of foreign banks located physically within the U.S. are not considered foreign accounts.

Filing Deadline: The deadline for FinCEN Form 114 is aligned with the deadline for individual income tax returns (Form 1040), requiring that it be filed by April 15th of the year following the tax year being reported. An automatic 6-month extension is granted until October 15th, with no separate request form needed.

Financial Interest Definitions: A financial interest is constituted by ownership, legal title holding, or acting as an agent or nominee. This includes a 50% or greater ownership/vote in a corporation or partnership, and beneficial interest over a trust's assets or income.

Foreign Account Classification: Foreign accounts comprise various forms including bank savings, checking, time deposits, securities or brokerage accounts (including commodities, futures, or options), foreign retirement or pension plans, or any insurances or annuities with cash surrender values. Note that defined benefit or employer-sponsored pension plans are excluded.

Procedural Form 114a: Form 114a, serving as a record of authorization for electronic FBAR filing, must be completed and retained by practitioners upon the completion of Form 114, though it is not required to be submitted to FinCEN.

Structure: The form is categorized into five sections covering filer information, individually owned accounts, jointly owned accounts, accounts where the filer holds authority but no financial interest, and accounts reported in consolidated filings.

Penalties: Non-compliance with filing obligations may result in civil penalties per account per annum for non-willful violations, and for willful failures, penalties will be either $100,000 or 50% of the account's value, potentially accompanied by criminal prosecution.

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FinCEN FBAR Form 114

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