The IRS is determined to increase compliance with the law requiring individuals to report the existence of any foreign accounts owned or accounts that they have any signature authority over. These accounts aren’t limited to bank accounts; for example, they would include the cash value of life insurance from another country.
The law requires that ownership of any of these accounts that are valued at $10,000 or more at only ONE day of the year be indicated on the individual’s 1040. In addition, there is another information form to be filed.
If this is just an oversight on your part and you willingly come forward, the IRS has indicated a willingness to forgive penalties for those living overseas. Citizens living in the states who have filed returns will likely receive a 5% fine.
However, violators discovered through investigations of financial institutions, or those determined to have knowingly and willfully ignored the law can expect a 27.5% penalty, rising to 50% as of Aug. 4th. This is assessed for each tax year.
NOTE: Foreign accounts include foreign online poker accounts. These gaming accounts have been determined to be acting as banks. So if you are someone who does internet gambling with money or bitcoin, you must evaluate the $10,000 daily standard when you file your tax return to determine if the account is reportable.