FBAR / FATCA / CRS

The FBAR (FinCEN Form 114) requires U.S. persons to report foreign financial accounts annually when aggregate balances exceed a threshold set by regulation. FATCA (the Foreign Account Tax Compliance Act) separately requires U.S. taxpayers with foreign financial assets above certain amounts to report them on their U.S. tax return, and requires foreign financial institutions to identify and report U.S. account holders to the IRS. CRS (the Common Reporting Standard) is the OECD's multilateral equivalent, under which participating countries automatically exchange financial account information with one another. It does not exchange directly with the U.S., but it affects U.S. families with foreign structures.

For families with international investments, foreign trusts, or accounts held through offshore entities, these regimes create layered and overlapping filing obligations with significant penalties for non-compliance. Missing an FBAR filing, for example, can carry penalties that are disproportionately large relative to the underlying tax owed. Families exploring private markets through offshore fund structures often encounter these obligations for the first time.

A common confusion is treating FBAR and FATCA as duplicative and therefore optional to file one of them. They are separate legal requirements with different thresholds, different forms, and different filing deadlines. A qualified CPA or international tax attorney must evaluate which filings apply given a family's specific asset and entity structure.