FBAR vs FATCA: Understanding the Key Differences

Navigating U.S. tax obligations as an individual with foreign financial accounts can be daunting. If terms like “FBAR” and “FATCA” have made their way into your search history, you’re not alone. These acronyms represent two separate but overlapping sets of requirements aimed at ensuring foreign financial transparency. But what exactly do they mean, and how do they affect you?

At Tax Relief Counsel, a Washington DC-based tax law firm representing clients nationwide and internationally, we’ve helped countless taxpayers understand their obligations under FBAR and FATCA. This guide is designed to break down the complexity surrounding FBAR vs FATCA, help you stay compliant, and avoid severe penalties.

What Is FBAR?

FBAR stands for the Report of Foreign Bank and Financial Accounts. It’s a requirement under the Bank Secrecy Act (BSA), administered by the Financial Crimes Enforcement Network (FinCEN). The goal of FBAR is to prevent tax evasion by requiring U.S. persons to report foreign financial accounts that exceed certain thresholds.

Who Must File an FBAR?

U.S. persons must file an FBAR if they meet these conditions:

• They have a financial interest in, or signature authority over, one or more foreign financial accounts.
• The aggregate value of those accounts exceeds $10,000 at any point during the calendar year.

For FBAR purposes, “U.S. persons” include:

• U.S. citizens and residents.
• Entities such as corporations, partnerships, and trusts created or organized in the United States.

What Needs to Be Reported?

The FBAR requires you to disclose:

• Each foreign account’s maximum value during the year.
• The financial institution, account number, and type of account.

The filing deadline typically aligns with your tax return due date—April 15—with an automatic extension to October 15.

Penalties for Not Filing FBAR

Failing to file FBAR comes with substantial penalties:

• Non-willful violations may cost up to $10,000 per violation (adjusted for inflation)
• Willful violations can lead to penalties of up to $100,000 or 50% of the account balance, whichever is greater

Even criminal charges may apply in egregious cases.

The takeaway? Don’t underestimate FBAR compliance—it’s about more than just ticking a box.

What Is FATCA?

FATCA stands for the Foreign Account Tax Compliance Act, enacted in 2010. FATCA is part of the Internal Revenue Code (IRC) and is enforced by the Internal Revenue Service (IRS), with a broader focus than FBAR. FATCA compels both individuals and foreign financial institutions to disclose foreign assets and accounts, enhancing global tax compliance.

FATCA for Individuals

FATCA requires U.S. taxpayers to file Form 8938 (Statement of Specified Foreign Financial Assets) if their overseas financial holdings surpass specific thresholds.

• For single or married filing separately taxpayers, the thresholds are:
• $50,000 on the last day of the year or $75,000 at any point during the year (U.S. residents).
• Higher thresholds apply for taxpayers residing overseas.
• For married filing jointly taxpayers:
• $100,000 on the last day of the year or $150,000 at any point during the year (U.S. residents).

Form 8938 is filed as part of your annual tax return.

FATCA for Foreign Financial Institutions

FATCA obligates foreign financial institutions to report financial accounts held by U.S. persons to the IRS. This has led to greater international scrutiny and cooperation under Intergovernmental Agreements (IGAs) between the United States and other countries.

Penalties for Not Filing FATCA

Non-compliance with FATCA requirements is costly:

• Failure to file Form 8938 may result in a $10,000 penalty.
• Continued non-compliance can incur an additional $50,000 in penalties.
• Underreporting foreign income may lead to a 40% accuracy-related penalty.

Both individuals and financial institutions are held to stringent standards.

FBAR vs FATCA: Key Differences

At first glance, FBAR and FATCA seem to cover similar ground. Both aim to promote foreign financial transparency and deter tax evasion. However, it’s crucial to understand their distinctions:

Feature	FBAR	FATCA
Governing Authority	FinCEN	IRS
Form Used	FinCEN Form 114	IRS Form 8938
Filing Threshold	$10,000 across all foreign accounts	Varies by filing status (e.g., $50,000+)
Who Must File?	U.S. persons with foreign financial accounts	U.S. taxpayers meeting reporting thresholds
Purpose	Monitor international financial transactions	Enforce global tax compliance
Penalties	Up to $10,000 (non-willful) or more (willful)	Up to $60,000+ and potential additional tax liabilities

Both FBAR and FATCA may apply to the same financial accounts, but they require separate filings. Make sure you’re compliant with both.

Why FBAR vs FATCA Compliance Matters

Failing to comply with FBAR or FATCA doesn’t just mean hefty fines—it also jeopardizes your financial integrity and can result in criminal prosecution. With tighter enforcement and international cooperation, non-compliance is more noticeable than ever.

Here at Tax Relief Counsel, we’ve seen individuals and businesses pay the price for misunderstandings or oversights. But with the right guidance, avoiding these pitfalls is entirely possible.

How Tax Relief Counsel Can Help

At Tax Relief Counsel, we specialize in helping clients comply with FBAR vs FATCA regulations. Whether you’re a nationwide taxpayer or an expat managing complex international finances, we’re here to help.

Our services include:

• FBAR Filing Assistance: We’ll ensure your FinCEN Form 114 is filed accurately and on time.
• FATCA Compliance Support: Our team can help you complete Form 8938 and understand how FATCA affects you.
• Penalty Mitigation: If you’ve failed to comply in prior years, we can guide you through the IRS’s Streamlined Filing Compliance Procedures to reduce penalties.
• Personalized Advice: Whether you’re an individual taxpayer or a business, we’ll tailor our recommendations to your unique situation.

At Tax Relief Counsel, we don’t just handle paperwork—we offer peace of mind.

The Global Reach of Tax Relief Counsel

Although headquartered in Washington DC, Tax Relief Counsel serves clients across the United States and internationally. Whether you’re an expat in Paris, a business owner in New York, or a foreign account holder in Sydney, our team of experts ensures you’re always in good hands.

We believe transparency and compliance shouldn’t come at the cost of unnecessary stress. With our deep expertise and unwavering commitment, navigating FBAR vs FATCA regulations has never been easier.

Stay Ahead with Tax Relief Counsel

Don’t leave your international tax obligations to chance. With penalties for non-compliance higher than ever, now is the time to ensure you’re meeting all FBAR vs FATCA requirements. Reach out to Tax Relief Counsel today at (202) 630-4095 for a free consultation, and take the first step toward total compliance.