There have been numerous reports in various newspapers that a significant number of taxpayers have neglected to file the Foreign Bank Account Report (FBAR) and/or have not reported foreign earnings. The IRS has been increasing its focus in this area. It has announced it will be imposing significant penalties where the FBAR is not filed on a timely basis and will undoubtedly act even more harshly where the income earned by United States taxpayers from foreign accounts is omitted from their income tax returns.

Each United States person (citizen or resident of the United States or a person in and doing business in the United States) who has a financial interest in or signature or other authority over any foreign financial accounts, including bank, securities, or other types of financial accounts, in a foreign country must report that relationship each calendar year by filing the FBAR with the Department of the Treasury on or before June 30 of the succeeding year. This is applicable if the aggregate value of these financial accounts exceeds $10,000 at any time during the calendar year. Where a United States company has a foreign bank account directly or has a financial interest in such an account by virtue of its ownership of a foreign subsidiary which has an account, not only must the U.S. company file the FBAR but any of its U.S. officers or employees who have signatory authority over such account must file a FBAR as well. 

There are discretionary (by the IRS), voluntary disclosure programs available for people who may have previously avoided reporting earnings and paying taxes from overseas interests but wish to do so now.