FBAR and Form 8938 for Business Owners: Foreign Accounts, Signature Authority, and What Happens If You Missed a Filing

Holding money outside the United States is legal. Not reporting it is where the trouble starts. For a small-business owner, the duty usually arrives quietly: the company opens an account in Mexico to pay a manufacturer, or the owner keeps a euro balance in a fintech app because the exchange rates are better.

Two separate reports can apply, filed with two different agencies. Most expensive mistakes come from assuming one covers the other.

Two reports, two agencies

The FBAR is FinCEN Form 114, the Report of Foreign Bank and Financial Accounts. It is a Bank Secrecy Act filing, made to the Financial Crimes Enforcement Network through the BSA E-Filing System, not attached to your tax return. Under the IRS's FBAR overview, a US person must file if they have a financial interest in, or signature or other authority over, at least one financial account located outside the United States, and the aggregate value of those accounts exceeded $10,000 at any time during the calendar year.

Form 8938, the Statement of Specified Foreign Financial Assets, comes from FATCA, the Foreign Account Tax Compliance Act. It is an IRS form, attached to your income tax return, with much higher thresholds and a different list of covered assets.

The IRS's comparison of Form 8938 and the FBAR is the most useful page on this topic, and it confirms that Form 8938 does not replace the FBAR.

The FBAR: what counts and who files

The $10,000 test is aggregate

The $10,000 threshold is measured across all your foreign accounts combined. Three accounts that each peaked at $4,000 put you over the line, and once you're over, every account gets reported.

“US person” includes your company

The FBAR regulation, 31 CFR 1010.350, defines a US person to include entities formed under US federal or state law. Your LLC, corporation, or partnership is a US person in its own right. If the company owns a foreign account over the threshold, the company files its own FBAR.

The owner may have to file too. The regulation treats you as having a financial interest in an account owned by an entity in which you own, directly or indirectly, more than 50 percent. So a sole owner of an LLC with a foreign operating account typically has two FBARs to think about: the company's and her own. The regulation includes a consolidated-reporting option for an entity that owns more than 50 percent of another reporting entity, which can simplify things in a parent-subsidiary structure.

Signature authority counts even without ownership

Signature or other authority means the power to control the disposition of money in the account by direct communication with the bank. An employee who can wire funds from the company's foreign account has an FBAR filing obligation for that account, even with no ownership stake.

FinCEN has repeatedly extended the deadline for a narrow group of individuals who have signature authority but no financial interest. Its most recent notice, FIN-2025-NTC3, pushed reporting for calendar year 2025 to April 15, 2027 for the individuals covered by its prior notice. That group is defined by a chain of earlier notices, and a bookkeeper at a small private company should not assume she is in it without checking.

What counts as a foreign financial account

The regulation covers bank accounts, securities accounts, and “other financial accounts,” including cash-value insurance and annuity policies and foreign mutual funds, at financial institutions located outside the United States. A few categories that trip up business owners:

• Supplier and operating accounts. An account your company opens abroad to pay vendors or collect from customers is a foreign financial account. A supplier's own account is not yours to report.
• Accounts at a foreign branch of a US bank. These are FBAR-reportable, because the account is located outside the United States. They are not reportable on Form 8938.
• Fintech and online payment accounts. The regulation doesn't name payment platforms. The question is where the account is maintained and by what kind of institution. A US-dollar balance with a US-based payment company is generally not a foreign account. A euro or pound balance that a fintech provider holds through a foreign entity or foreign partner bank may be. FinCEN has not published a rule specific to these platforms, so the answer depends on the provider's structure and your account terms. When in doubt, many practitioners report.
• Crypto. In FinCEN Notice 2020-2, dated December 31, 2020, FinCEN said the FBAR regulations do not currently define a foreign account holding virtual currency as a reportable account, unless it also holds reportable assets. In the same notice, FinCEN said it intends to propose amending the regulations to make virtual currency accounts reportable. As of October 2026, no final rule doing that has been issued. A foreign exchange account that also holds fiat currency is reportable.

Due dates

The FBAR is due April 15 following the calendar year being reported. There is an automatic extension to October 15. You don't have to request it. Keep records of each account, including its maximum value, for five years from the due date.

Form 8938: higher thresholds, different assets

Form 8938 applies to “specified individuals” and, since 2016, to certain “specified domestic entities.” The thresholds, per the IRS comparison page:

• Unmarried, living in the US: more than $50,000 on the last day of the tax year, or more than $75,000 at any time during the year.
• Married filing jointly, living in the US: more than $100,000 on the last day, or more than $150,000 at any time.
• Living abroad: $200,000 / $300,000 if unmarried, and $400,000 / $600,000 if married filing jointly.
• Specified domestic entities: more than $50,000 on the last day, or more than $75,000 at any time.

The entity rule is narrower than it sounds. Under the Form 8938 instructions, a domestic corporation or partnership qualifies only if a specified individual owns at least 80 percent of it and at least half its gross income or assets are passive. Most operating businesses fail the passive test. A family holding company of foreign investments may not.

Two other points matter for owners:

• Signature authority alone is not an interest for Form 8938. The bookkeeper who files an FBAR for the company account usually has nothing to report on her own Form 8938.
• Disregarded entities pass through. If your single-member LLC is disregarded for tax purposes, the regulations treat you as holding the LLC's specified foreign financial assets directly. Those assets count toward your personal Form 8938 threshold.

Form 8938 is due with your tax return, including extensions.

Consider a typical scenario

Consider a Michigan furniture company organized as a single-member LLC that is disregarded for tax purposes. The owner, who files jointly with her spouse, keeps a euro account at a Portuguese bank to pay a hardware supplier. The balance peaked at $140,000 in 2025 and ended the year at $60,000. Her office manager can initiate wires from that account. Separately, the owner holds a personal euro balance in a fintech app that peaked at $6,000.

Here is how the filings likely sort out for calendar year 2025:

• The LLC is a US person and files an FBAR for the Portuguese account.
• The owner has a financial interest through her more-than-50-percent ownership, so she reports the Portuguese account on her own FBAR. If the fintech balance is held at a foreign institution, it goes on her FBAR too. Her aggregate is well over $10,000 either way.
• The office manager has signature authority with no financial interest and has her own FBAR filing duty for the Portuguese account, subject to checking whether any FinCEN extension reaches her.
• Form 8938: Because the LLC is disregarded, the owner is treated as holding the Portuguese account. The account peaked at $140,000, under the $150,000 any-time threshold for joint filers living in the US, and ended at $60,000, under the $100,000 year-end threshold. Even if the fintech balance also counts, the combined maximum values ($146,000) stay under $150,000. On these numbers, no Form 8938 is required, but a modestly larger peak balance would change that. Run the math with your tax preparer every year.

With the automatic extension, those 2025 FBARs are due by October 15, 2026, days after this article's date.

Penalties: what the law actually says

Claims that the IRS “tightened FBAR penalties for 2026” don't match the primary sources.

Non-willful FBAR violations. The statutory maximum is $10,000 per violation, adjusted for inflation. Under FinCEN's January 2025 inflation adjustment, the maximum is $16,536 for penalties assessed on or after January 17, 2025. The Office of Management and Budget cancelled the 2026 inflation adjustments for all agencies in Memorandum M-26-11 (April 17, 2026), because October 2025 price data wasn't produced during the government shutdown. As of October 2026, the 2025 amounts remain in effect. The statute also provides a reasonable-cause exception for non-willful violations when the account is properly reported.

Per report, not per account. In Bittner v. United States, decided February 28, 2023, the Supreme Court held 5-4 that the non-willful penalty applies per report, not per account. The government had assessed $2.72 million against Mr. Bittner, at $10,000 for each of 272 accounts across five late annual reports. He argued for one penalty per report, which across five reports meant a maximum of $50,000, and the Court agreed with his reading of the statute. For an owner with several foreign accounts, that is the difference between ruinous and manageable, if the conduct was non-willful.

Willful violations. The maximum is the greater of the inflation-adjusted amount ($165,353 under the January 2025 adjustment) or 50 percent of the account balance at the time of the violation. Bittner does not change the willful penalty. Criminal penalties are also possible.

Form 8938. The penalty is $10,000 for failing to file, plus up to $50,000 more for continued failure after IRS notice. A 40 percent accuracy-related penalty applies to underpayments tied to undisclosed foreign assets, and the statute of limitations on the return can stay open.

If you missed filings: what changed in 2026

For years, the IRS published “Delinquent FBAR Submission Procedures,” which said the IRS would not penalize a late FBAR if the taxpayer had reported and paid tax on all the income and hadn't been contacted about an exam. As reported by EY and other advisers, the IRS removed that page on July 1, 2026 without a formal announcement. The FBAR rules themselves didn't change. What's gone is the published assurance of no penalty.

The IRS's FBAR page now tells late filers to file “as soon as possible to keep potential penalties to a minimum,” following FinCEN's instructions for explaining a late filing. If a missing FBAR is the only problem and all income was reported, prompt filing with a clear explanation remains the usual path, but the penalty decision now rests on examiner discretion rather than a published safe harbor.

Other options, depending on the facts:

• Streamlined Filing Compliance Procedures. As of the IRS streamlined page (last updated July 2026), these remain available for individuals and estates whose failures were non-willful and who are not under civil examination or criminal investigation. US residents file three years of amended returns and six years of FBARs and pay a 5 percent miscellaneous offshore penalty. Note that the program is for individuals. A business entity's own late FBARs aren't filed through it.
• IRS Criminal Investigation Voluntary Disclosure Practice. This is for willful conduct. The IRS proposed revisions in December 2025. As of October 2026, check the VDP page for current terms before relying on either version.

Whether the conduct was willful decides which path fits, so make that call with a tax lawyer before filing anything. For background on where legitimate offshore structures end and illegal concealment begins, see our guide to offshore accounts.

Frequently Asked Questions

This article reflects FBAR and Form 8938 rules as of October 2026. Agency guidance in this area changes without much notice, as the July 2026 removal of the delinquent FBAR procedures showed, and FinCEN's pending virtual-currency rule could change crypto reporting. Confirm current IRS and FinCEN guidance and your own filing thresholds before relying on it. Nothing in this article is legal advice for your specific situation.

This article is for educational purposes only and does not constitute legal, tax, or financial advice. Consult a qualified professional for guidance specific to your situation.