Taxpayers having a financial interest or signature authority over any foreign financial account such as a bank account, a securities account, or other types of financial accounts in a foreign country outside the U.S boarders must report these accounts to the Department of the Treasury if their aggregate balance exceeds $10,000 at any time during the calendar year. This is done by filing the Financial Crimes Enforcement Network (FinCEN) 114, Report of Foreign Bank and Financial Accounts (FBAR).

Those failing to properly file the FinCEN 114 may be subject to civil monetary penalties of up to 50% of the account balance at the time of the violation. Generally though, the IRS will not impose a penalty for failure to file FinCEN 114 if the income from the foreign accounts is properly reported and taxes are paid on the taxpayer’s U.S tax return.