If you have an account in Switzerland or any foreign financial institution, you must report it to the IRS and U.S. Treasury. Guenter Fischer/Getty Images

If you have an account in Switzerland or any foreign financial institution, you must report it to the IRS and U.S. Treasury. Guenter Fischer/Getty Images

Tax attention this time of year obviously focuses on the annual rite of filing returns. But just as important to the IRS are the filings by people with foreign financial accounts.

Fun with FBAR

If you had such an account (or, as the IRS puts it, “an interest in, or signature or other authority over” such an account or accounts) worth at least $10,001 at any time during 2015, then you must file Form 114, Report of Foreign Bank and Financial Accounts. This form, known as the FBAR, actually goes to the Treasury Department’s Financial Crimes Enforcement Network, or FinCen.

FBARs are due by June 30 and must be filed electronically — not with the IRS, but through the Bank Secrecy Act e-filing website.

But the IRS still gets its share of foreign account-related filings. If you file Schedule B to report your interest and dividend income, part 3 at the bottom of that form asks about your international financial positions.

More fun with FATCA

And if you read the directions for Schedule B (and who doesn’t read all the tax form instruction booklets?), the IRS reminds you that, “Regardless of whether you are required to file FinCEN Form 114 (FBAR), you may be required to file Form 8938, Statement of Specified Foreign Financial Assets, with your income tax return. Failure to file Form 8938 may result in penalties and extension of the statute of limitations.”

The good news is that under provisions of the Foreign Account Tax Compliance Act, or FATCA, you can have more money abroad before you have to file Form 8938.

In addition to FBAR, Form 8938 generally is required when the aggregate value of your foreign financial holdings is $50,000 or more.

And this form is due in April or later if you get a filing extension. You must send Form 8938 along with your annual tax return.

Penalties for not reporting

If you’re thinking about blowing off these filings, don’t.

Remember that mention of penalties in the Schedule B instructions? Forgetting to file an FBAR form could get you a penalty of up to $10,000.

If your nonfiling is willful, the cost increases to the greater of $100,000 or 50% of the balance in the foreign account at the time of the violation.

Similar penalties apply for not filing Form 8938. They start at $10,000 and the maximum additional penalty for continuing to not file the form is $50,000.

More than a million offshore asset reports

Those financial costs apparently work.

The IRS says that in 2015, FinCen received record FBAR filings of almost 1.2 million, up more than 8% from the prior year. In fact, FinCen data show that FBAR filings have grown on average by 17% per year during the past 5 years.

Form 8938 filings held steady in 2015, hitting more than 300,000. But that is up from the 200,000 filings for tax year 2011, the first year the IRS collected this form.

Do you have foreign financial accounts? Do they meet either 8938 or FBAR reporting targets? Then your filing season is going to extend beyond April 18 this year.

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