FBAR matters often involve both reporting obligations and tax consequences. As both a Colorado attorney and licensed CPA, Philip Falco advises clients on the legal, procedural, and tax aspects of offshore compliance. This combined background is particularly valuable when FBAR filings overlap with Forms 3520, 5471, 8938, PFIC reporting, or Streamlined Filing Compliance Procedures.
Who We Help
- Those present in the United States with foreign accounts or assets
- U.S. citizens living abroad
- Green card holders
- Foreign nationals becoming U.S. residents
- Executives with signature authority
- Small business owners
- Dual citizens
- Americans inheriting foreign accounts
- Individuals receiving foreign gifts or inheritances
If you hold a financial interest in, or signature authority over, a foreign bank account, brokerage account, or other offshore financial account, federal law requires you to report it annually to the Financial Crimes Enforcement Network (FinCEN) by filing FinCEN Form 114 — commonly known as the FBAR. The penalties for failure to file are among the harshest. Philip Falco, Attorney, CPA, prepares and files FBARs for individuals, corporations, partnerships, and trusts, and represents clients who have unfiled or deficient FBARs before the IRS.
You must file an FBAR for any calendar year in which the aggregate maximum value of all your reportable foreign financial accounts exceeds $10,000 at any point during the year. The threshold is aggregate — one account holding $6,000 and another holding $5,000 triggers the filing requirement even though neither account alone crosses $10,000.
Reportable accounts include:
– Foreign bank accounts (checking, savings, time deposits)
– Foreign brokerage and securities accounts
– Foreign mutual funds
– The cash surrender value of a foreign whole life insurance policy
– Foreign pension and retirement accounts (in many cases)
– Accounts over which you have signature authority but no financial interest (common for officers of multinational companies)
U.S. persons required to file include U.S. citizens, U.S. residents (green card holders and substantial presence test filers), and entities formed under U.S. law — regardless of where they live or operate.
FBAR Deadline and How to File
The FBAR is due April 15 of the year following the calendar year being reported, with an automatic extension to October 15 — no extension request is required. FBARs are filed electronically through the BSA E-Filing System; they are not filed with your tax return and are not submitted to the IRS.
Because the filing system requires precise account classification and maximum value calculations, errors are common when taxpayers file without professional guidance. We prepare the FinCEN 114 from your account statements, handle electronic submission, and provide you with a filed copy and confirmation number.
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FBAR Penalties: The Stakes Are High
The FBAR penalty structure is severe and bears no relation to your tax liability. The IRS enforces FBAR penalties under 31 U.S.C. § 5321.
Non-willful violations: Federal law authorizes civil penalties for certain non-willful FBAR violations, subject to statutory limits, inflation adjustments, and the reasonable-cause exception. In Bittner v. United States, the U.S. Supreme Court held that the statutory maximum for a non-willful reporting violation applies on a per-report basis rather than separately to each foreign account omitted from the report. Current penalty amounts should be confirmed for the year in which a penalty is assessed.
Willful violations: The greater of $100,000 per account per year or 50% of the account balance at the time of the violation. Willful violations can also result in criminal prosecution under 31 U.S.C. § 5322, carrying fines up to $250,000 and up to five years imprisonment.
Structuring: Moving money to keep account balances below the $10,000 reporting threshold is a separate federal crime.
FBAR vs. FATCA Form 8938: Understanding the Difference
Many clients are confused by the overlap between the FBAR and IRS Form 8938 (Statement of Specified Foreign Financial Assets), filed under FATCA with your Form 1040. These are separate requirements with different thresholds, different filing agencies, and different penalty regimes — and satisfying one does not satisfy the other.
| Requirement | FBAR (FinCEN Form 114) | Form 8938 (FATCA) |
|---|---|---|
| Filed with | FinCEN through the BSA E-Filing System | IRS with the federal income tax return |
| General threshold | More than $10,000 aggregate maximum value in reportable foreign financial accounts at any time during the calendar year | Thresholds vary based on filing status and whether the taxpayer lives in the United States or abroad |
| What is reported | Reportable foreign financial accounts | Specified foreign financial assets |
| Relationship between forms | The FBAR and Form 8938 are separate reporting requirements. Filing one does not necessarily satisfy the other. | |
We analyze both requirements together and prepare all necessary filings in a coordinated engagement.
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Unfiled FBARs: How to Come Into Compliance
If you have one or more years of unfiled FBARs, voluntary disclosure is almost always the right path — and the sooner, the better. The IRS offers two primary offshore compliance programs:
Streamlined Domestic Offshore Procedures (SDOP): For U.S. residents whose failure to file was non-willful. Requires filing amended returns for the three most recent tax years, FBARs for the six most recent years, and payment of a 5% miscellaneous offshore penalty on the highest aggregate balance. No FBAR civil penalties assessed separately.
Streamlined Foreign Offshore Procedures (SFOP): For U.S. persons residing outside the United States who meet the non-residency requirement. No miscellaneous penalty applies.
We evaluate which program fits your situation, prepare all required filings, draft the required non-willful certification where applicable, and manage the IRS submission process from start to finish.
Our FBAR Filing Process
1. Initial consultation — We assess your filing requirement, account profile, and compliance history.
2. Document collection — We provide a tailored checklist of what we need from each financial institution.
3. Preparation — We calculate maximum values, classify accounts, and prepare FinCEN 114 (and Form 8938 if required).
4. Review and submission — We review the completed filing with you, submit electronically, and provide confirmation.
5. Ongoing compliance — We can coordinate annual FBAR filing with your tax return preparation going forward.
Frequently Asked Questions
Does a foreign pension count as an FBAR account?
Generally yes, if it is a financial account at a foreign financial institution. However, some foreign pension plans established under treaty may be excluded. Analysis is fact-specific.
I have signature authority over my employer’s foreign account but no personal financial interest. Do I have to file?
Yes, unless an exception applies. Signature authority triggers the filing requirement regardless of financial interest.
What if the foreign account produced no income?
The FBAR is a reporting requirement, not a tax form. Zero income does not eliminate the obligation to file if the aggregate threshold is met.
Can I file an FBAR myself?
The BSA E-Filing System is publicly accessible, but errors in account classification, maximum value calculation, or account type are common. Given the penalty exposure, professional preparation is strongly advisable.
What is the statute of limitations for FBAR penalties?
Six years from the filing deadline for the relevant year, under 31 U.S.C. § 5321(b)(1).
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Schedule an FBAR Consultation
Whether you need a current-year FBAR prepared, several years of delinquent filings addressed, or advice regarding Streamlined Filing Compliance Procedures, Philip Falco will personally review your situation and recommend the appropriate course of action.
Call (303) 626-7000.
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Philip Falco, Attorney, CPA · 730 17th Street, Suite 900 · Denver, CO 80202
Related Services
Related International Tax Resources
International tax matters frequently involve overlapping filing, foreign-account, disclosure, penalty and enforcement requirements.
Related FBAR and International Tax Resources
FBAR compliance may involve foreign-account reporting, willfulness, voluntary disclosure, income-tax filings, and possible civil or criminal penalties.
Foreign Funds May Have Additional U.S. Reporting Requirements
FBAR reporting is separate from the tax reporting rules that may apply to investments held inside a foreign account. For example, ownership of a foreign mutual fund or similar investment may create separate PFIC and Form 8621 filing requirements even when the underlying foreign financial account is already reported on an FBAR.
Foreign Gifts, Inheritances and Trusts
Foreign account compliance can overlap with foreign gifts, inheritances, and foreign trusts. See our Form 3520 foreign gift and trust reporting guide when inherited assets, trust distributions, or foreign accounts are involved.