With globalization of the economy, more and more people in the U.S. own bank or financial accounts which are located overseas. While there are many legitimate reasons to have foreign financial accounts, there are also responsibilities that go along with owning such accounts, as the owners of foreign financial accounts are required to report their accounts to the federal government even if the accounts do not generate any taxable income.

The Bank Secrecy Act requires any U.S. person who owns a foreign bank account, brokerage account, mutual fund, unit trust, or other financial account to comply with these foreign financial account reporting requirements; Report of Foreign Bank and Financial Accounts (FBAR).

If you have a financial interest in, signature authority, or other authority over one or more accounts located outside of the United States; and the aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year, then you are required to comply with the foreign financial account reporting requirements; Report of Foreign Bank and Financial Accounts (FBAR).

The FBAR is a calendar year report (filed every year) and must be filed on or before June 30 of the year following the calendar year being reported. There are serious consequences for foreign account holders who choose not to comply with the foreign financial account reporting requirements. These include civil penalties, criminal penalties or both. Those required to file an FBAR who fail to properly file a complete and correct FBAR may be subject to a civil penalty not to exceed $10,000 per violation for nonwillful violations that are not due to reasonable cause. For willful violations, the penalty may be the greater of $100,000 or 50 percent of the balance in the account at the time of the violation, for each violation.