Penalty for Failing to Report Interests in Foreign Financial Accounts

Citizens, residents or persons doing business in the U.S. must keep records and file reports when they make a transaction or maintain an account with a foreign financial entity. Before the AJCA, a civil penalty in the amount of the transaction or the value of the account could be imposed on any person who willfully violated this reporting requirement. The minimum amount of the penalty is $25,000; the maximum is $100,000.

New Law

AJCA Section 821 amends 31 USC Section 5321 to add an additional civil penalty that may be imposed without regard to willfulness on persons who violate the reporting requirement applicable to an account with a foreign financial entity. The penalty is capped at $10,000 (with willful violations subject to penalties of up to $100,000).

Effective Date

The provision is effective for violations occurring after Oct. 22, 2004.

From Paul Manning, Washington, DC