It is mandatory as per the provisions of IRS to file ‘Foreign Bank Account(s) Reporting (FBAR)’ if you had filed/filing a ‘Resident’ Return for this year and has substantial financial interest outside the United States of America. To know more on FBAR and necessity to file FBAR, please see below information:
The following is the extract from IRS website which determines whether you are required to file FBAR or not.
“All US residents (who has filed Resident Tax Returns, Form 1040’s, for 2015 Tax Year) and Citizens whose aggregate value of Foreign Financial Accounts (FFA) exceed $10,000 at any time during the Tax Year” come under the purview of FBAR.”
Foreign Financial Accounts (FFA) include your Indian Bank accounts (Savings/Current), NRE/NRO accounts, Dmat accounts, Mutual Fund account, Loan accounts (Home/Personal) and even include Provident Fund account.
If you come under the purview of FBAR filing, we strongly suggest you to file FBAR along with the tax return, as failing to do so may lead to severe consequences as per the provisions laid down by the IRS.
What happens if you fail to file FBAR? Please read the below as stated by the IRS.
What happens if an account holder is required to file an FBAR and fails to do so?
A. Failure to file an FBAR when required to do so may potentially result in civil penalties, criminal penalties or both. If you learn you were required to file FBARs for earlier years, you should file the delinquent FBAR reports and attach a statement explaining why the reports are filed late. No penalty will be asserted if the IRS determines that the late filings were due to reasonable cause. Keep copies of what you send for your records.
In view of the above, it is highly advisable to file FBAR in time if you are required to do so. Please note that FBAR is no way related to tax filing and hence you are not liable to pay any taxes by filing FBAR. It is only about disclosing of information.