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Better To Be Safe than Sorry When it Comes to FBAR Filing

Nov 17, 2017


In the 2017 case U.S. v. Bussell, the California Court of Appeals affirmed a ruling by a district court that a taxpayer, Letantia Bussell, had failed to file a Report of the Foreign Bank and Foreign Accounts (FBAR). The IRS claimed she failed to disclose financial interests in an overseas account on her 2006 tax return. Bussell argued several positions ranging from the imposition of excessive fines to due process. Bussell was ultimately fined $50,000, plus $55,000 for the costs of prosecution and a $1.2 million penalty for not disclosing her overseas account held during 2006.

FBAR Requirements

Each U.S. citizen with a financial interest in and/or a signature or other authority over a foreign financial account with an aggregate value exceeding $10,000 at any point during the calendar year must report each account in an FBAR filing to the U.S. Department of the Treasury.


Failure to file the FBAR report may result in civil and criminal penalties. Non-willful violators may receive civil penalties of $10,000 per violation. Willful violators are subjected to penalties of more than $100,000 or 50% of account’s value at the time of the violation. There is a reasonable cause exception, but only for non-willful violators.

Form 8938

If you are unsure about being subject to the FBAR filing, always err on the side of caution. You might be subject to filing Form 8938, Statement of Specified Foreign Financial Assets. Taxpayers holding financial assets with an aggregate value exceeding $50,000 ($100,000 for married couples) on the last day of the year or more than $75,000 ($150,000 for married couples) during any time of the year must file Form 8938. Penalties for not filing this form can be as onerous as those mentioned above for not filing the FBAR form.

If you own or invest in significant amounts of foreign assets, consider seeking advice from a tax professional specializing in this area.

Better To Be Safe than Sorry When it Comes to FBAR Filing

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Daniel Gibson

Daniel Gibson provides accounting, tax planning and consulting services to real estate and services industries and is a member of the AICPA and New Jersey Society of Certified Public Accountants.

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