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Part 5. Collecting Process

Chapter 21. International and Insular Issues

Section 6. Report of Foreign Bank and Financial Accounts

5.21.6  Report of Foreign Bank and Financial Accounts

5.21.6.1  (02-17-2009)
Introduction

  1. Foreign Bank and Financial Account Report (FBAR) is authorized by statute.

    • 31 U.S.C. §5314(a) directs the Secretary to require residents or citizens of the United States, or a person in and doing business in the United States, to keep records and/or file reports when the person makes a transaction or maintains a relationship with a foreign financial agency.

    • Section 5314(b) authorizes the Secretary of the Treasury to carry out this mandate by issuing regulations prescribing the application of the reporting requirements, including, to whom the requirements apply.

5.21.6.2  (02-17-2009)
Reporting Requirements

  1. Each U.S. person who has a financial interest in, or signature or other authority over, one or more foreign financial accounts that has an aggregate value greater than $10,000 at any time during a calendar year is required to report the foreign account on Schedule B of Form 1040, as well as on Treasury Form TD F 90-22.1,Report of Foreign Bank and Financial Accounts(FBAR). The FBAR is due on or before June 30 of the succeeding year.

  2. Each person who is required to report an interest in foreign financial accounts must also maintain certain records of any accounts.

  3. See 31 C.F.R. 103.32for additional information regarding records.

  4. See IRM 5.1.18,Locating Taxpayers and their Assets.

5.21.6.3  (02-17-2009)
Penalties

  1. Failure to file the required report or maintain adequate records is a violation of Title 31. For each violation a penalty may be asserted.

  2. Violations Occurring Prior to October 23, 2004 (Willful). 31 U.S.C. §5321(a)(5)authorizes a civil monetary penalty for any person who willfully violates (or willfully causes any violation of) 31 U.S.C. §5314not to exceed the greater of:

    1. an amount equal to the balance in the account at the time of the violation up to $100,000, or

    2. $25,000.

  3. Violations Occurring on or after October 23, 2004 (Not Willful):

    • 31 U.S.C. §5321(a)(5)(A) authorizes a civil monetary penalty for any person who violates (or causes any violation of) 5314 in an amount not to exceed $10,000.

    • The penalty may be waived for reasonable cause.

  4. Violations Occurring on or after October 23, 2004 (willfully):

    31 U.S.C. §5321(a)(5)(C) authorizes a civil monetary penalty for any person who willfully violates (or willfully causes any violation of) 5314 not to exceed the greater of:

    1. an amount equal to 50% of the balance in the account at the time of the violation, or

    2. $100,000.

      Note:

      The penalty can be for each violation.

5.21.6.4  (02-17-2009)
Delegated Authority

  1. Even though the penalty imposed under 31 U.S.C. §5321(a)(5) for failing to report these foreign financial interests (commonly called the FBAR penalty) is not a tax debt, the IRS has been delegated the authority to assess and collect the penalty for the government. Delegation Order 4-35, revised on March 24, 2008, authorizes revenue officers grade 9 and above to investigate possible civil violations of the FBAR requirements. This delegation order also authorizes insolvency units to protect the government's interest in bankruptcy, state and federal receiverships, and other state and federal insolvency actions.

  2. Collection is not delegated any enforcement authority with respect to FBAR penalties.

  3. See IRM 5.9.4.2.1,BRA 94 and BAPCPA's Effect on Assessment.

5.21.6.5  (02-17-2009)
Systemic Tracking

  1. The Currency Banking and Retrieval System (CBRS) contains a listing of filed FBAR reports:

    1. That system reflects all information the taxpayer included on Form TD F 90-22.1: bank names, account numbers, account balances, other owners, etc. Anyone with ability to query CBRS may obtain this information.

    2. FBAR penalties are asserted under Title 31 as a non-tax debt and do not appear on IDRS. They are tracked on a separate database at Detroit Computing Center (DCC) and that is where payments are posted and notices generated.

5.21.6.6  (02-17-2009)
IDRS

  1. The filing of Form TD F 90-22.1by or for the taxpayer will generate an IDRS IRPTR transcript. IRPTR will only reflect the filing of the form and CBRS will still need to be queried to obtain all information available from the form.

  2. See IRM 5.1.18,Locating Taxpayer, and IRM 2.3.35, Command Code IRPTR.

5.21.6.7  (02-17-2009)
CSED

  1. The government has two-years in which to file a civil action to recover a FBAR penalty beginning on the later of the date the penalty was assessed or the date any judgment becomes final in any criminal action under 31 U.S.C. §5322in connection with the same transaction with respect to which the civil penalty was assessed. Currently, IRS has no procedures for soliciting a waiver of this two-year statute of limitations.

  2. See IRM 5.9.4.2.1,BRA 94 and BAPCPA's Effect on Assessmentfor CSED considerations in bankruptcy.

5.21.6.8  (02-17-2009)
Collection of FBAR Penalties

  1. Financial Management Services, which is a bureau of the Department of the Treasury, is responsible for collecting all non-tax debts. This includes FBAR penalties.

  2. Advise all taxpayers who have questions or need to pay an FBAR penalty to write to:
    Internal Revenue Service
    Detroit Computing Center
    P.O. Box 33115
    Detroit, MI 48232


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