Copyright 2015 by John T. Reed
Okay, So I filled out my damned FinCen Form 114. If you followed my advice and example to put rainy-day savings in foreign savings accounts, you have to fill out form 8938 as part of your IRS 1040 form. I already did that before April 15th.
You also have to fill out an almost identical FinCEN Form 114 before June 30 each year. Severe penalties if you don’t and severe penalties if you make a mistake on it, yadda yadda. With Form 8938, you can get the automatic delay until August just as with the rest of the Form 1040 by filing Form 4868. NOT so with FinCen Form 114. It’s Old Testament. June 30, period!
Through last year, you could fill out Form 114 or Form TDF 90-22.1 as it was called then manually and mail it to the US Treasury in Detroit. Now you have to fill it out and file it electronically. I did that and just got a confirmation and “congratulations” from the IRS for doing so.
You do this at http://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html.
I hasten to add that you do NOT need to fill out this form if your foreign currency is in the form of cash. My Swiss francs (CHF) are in that form—in a safe deposit box in Canada—because it was A. almost impossible for me to get a Swiss bank account and B. they charge negative interest to have a Swiss bank account or did last I checked and C. Swiss francs have suffered deflation since 2011 which means Swiss cash actually gains in purchasing power while sitting in a mattress or safe deposit box.
I plan to also acquire SEK and DKK and put it in the same safe deposit box—for the same reasons.
So if you are one of those government hating, paranoid, conspiracy theorist, privacy kooks, hold all your foreign currency in cash.
I strongly recommend it be in another country. That has nothing to do with the filing-reports requirement. Rather, it relates to the fact that if the US gets hyperinflation, it will almost certainly enact capital controls which typically prohibit possession of gold bullion or foreign currency and require that any of each held in the U.S. be sold to the U.S. Federal Reserve at a lousy conversion rates. See Executive Order 6102.
If it is outside the country, it’s outside the jurisdiction of that law. Super paranoids who don’t read much law say the U.S. government can force you to repatriate it to the U.S. Not without a court judgment recognized by the foreign country in question they can’t. And as a practical matter, they have never tried to do that with ordinary citizens who have not lost a court trial that issued a financial judgment against them even when they issued EO 6102. And even then you would have to declare bankruptcy and not pay the judgment with US assets before they could try to seize foreign assets.
So if you really hate filling out Forms 8938 and 114, or subjecting yourself to the possible penalties, use cash instead of bank accounts. But I must point out the disadvantages of that. Other currencies like AUD and NZD actually earn positive real interest. We earned over $4,000 last year on foreign savings accounts. A Canadian smart saver account at BMO earns a little interest. Bank accounts can be accessed from anywhere in the world by debit card or SWIFT wire.
Also, all safe deposit box transactions require in-person visits to the bank in question. You have to go to Canada in person to initially open an account, but you would never have to go again after that—unless you want a safe deposit box as I do. You do not have to go to Australia or New Zealand to open an account. I had four of my accounts in those countries before I ever visited. I opened four more in New Zealand while I was there in 2013 because it was easier than doing it by Fedex/SWIFT wire.
Unless you go to some other country frequently for family or business reasons, the only place you would want a foreign safe deposit box is Canada for proximity and convenience.
On to the current Form 114.
There is a “filer” whose information you type into Part I of the form. I our case, that was my information.
I did not fill in Part II because I own my foreign accounts jointly with my wife. Part II is for those who own foreign accounts separately.
I had to fill in 13 Part III forms because we have that many joint accounts. The account amount and # is different on each, but we have multiple accounts at each bank (checking and savings and a USD account in Canada as well). So I had to type in the name and address of the five banks repeatedly.
Then there were the joint owners. They want to know the number of joint owners on line 24. I said 1. I believe that was in the instructions I read the first year I did this. In other words, I think “joint owners” on this line means other than the “filer.” Then I had to type in my wife’s name, SS #, and address 13 times in Part III’s. Annoying.
Lines 21 and 23 call for the “State” and “Country/Region.” For Canada, it will not let you fill in a state (called “provinces” up there) until after you use the pull-down menu to identify Canada as the country. Then you can go back up to the “state” line and use its now more enlightened pull-down menu to select the province—British Columbia in my case because our BMO branch is in Vancouver, Canada.
But although the official name of Australia is the United State of Australia, I could not enter New South Wales in the state line for my Sydney bank account even after I had selected Australia from the pull-down country menu.
Once, I accidentally entered a Canadian bank account twice. I deleted all the entries for one but it would not let me delete the state and country. Thereafter, it would not let me file that entire form because It said I left blanks regrading account number and bank, etc. on that particular Part III. So I had to start the whole process all over again!!!
After you fill out each Part III, you must go back to the top of the Part III you just filled out and click on the plus sign to create another Part III form for the next foreign account.
When you’re done, you have to “sign” the form to submit it electronically. That just means you have to “agree” or some such to a statement that you are really you. Ooookay. Not sure what that proves.
So don’t forget to file your damned FinCen Form 114. And be careful to fill it out correctly.
Generally, the forms are self-explanatory and you don’t have to read the instructions. With this one, you’d better read the instructions. The whole purpose of it is to harass you out of having such accounts, even though they are totally legal.
Some have called these forms and FATCA “administrative capital controls.” Capital controls are banana republic restrictions on converting currency to foreign currency, taking local currency out of the country, etc. Cuba, Venezuela, Argentina, and Communist China have them. The U.S. has no capital controls per se to avoid being dismissed as a banana republic, but our sleazy government wants very much to operate like a banana republic.
Once again, if you hold foreign cash you do not need to file these forms.
For more about why you should have your rainy-day money in foreign currencies rather than US currency, see my book How to Protect Your Life Savings from Hyperinflation & Depression, 2nd edition. For more information on how to do that, type the name of the country in question—Australia, Canada, New Zealand, Switzerland—into the search box on almost all of my web pages. That will only search my web site and will list all the article I have written on how to open these accounts including banker contact information.
John T. Reed