It is perfectly legal to own foreign assets and business interests. Unfortunately, the ownership of foreign assets frequently triggers a series of complex informational and income tax reporting requirements. The IRS continues to aggressively pursue taxpayers who have undisclosed foreign financial accounts or assets. With the passage of the Foreign Account Tax Compliance Act (known as FACTA) in 2010, the U.S. Government has been receiving a significant amount of information about U.S. taxpayer accounts located outside the U.S.

Under the Bank Secrecy Act, U.S. taxpayers must disclose their foreign financial accounts if, at any time during the year, the combined total of all their foreign accounts exceeds $10,000. This is the FBAR filing requirement which is reported on Fin CEN Form 114. Willfully failing to file an FBAR can result in both criminal sanctions and substantial civil penalties. Even a non-willful failure can result in significant financial penalties.