Oh no, What happened?! A letter from the Financial Crimes Enforcement Network arrives in your mailbox. A penalty of $10,000 FBAR (Foreign Bank Account Report) is being charged to your spouse, which will be enforced by the IRS.
You filed your FBAR report on time, so why did they do this?!
If both you and your spouse have separate foreign accounts (as well as joint accounts you may have), it isn't enough to file only one FBAR report. Two separate reports are required.
So if you both have separate bank accounts, or even pension accounts from your jobs, you will both need to file separate reports.
For instance, since all employers in Israel are required to set up pension accounts for their employees, if both spouses work, they will need to file two separate FBARs.
Sorry, but FinCEN (the agency responsible for accepting these reports) is not looking to make life easy for you.
The spouse of an individual who files an FBAR is not required to file a separate FBAR only if the following conditions are met:
(1) All the financial accounts that the non-filing spouse is required to report are jointly owned with the filing spouse;
(2) The filing spouse reports the jointly owned accounts on a timely filed FBAR electronically signed; and
(3) The filers have completed and signed Form 114a, “Record of Authorization to Electronically File FBAR’s”. Otherwise, both spouses are required to file separate FBARs, and each spouse must report the entire value of the jointly owned accounts.
If you never filed separate reports, and were required to, you should quickly file the missing reports before any penalties will be assessed.
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