Financial Reporting Requirements

Published: May 2026

Our organizations have always supported the elimination of tax fraud and recognize the need for financial reporting. But for Americans resident overseas the complexity of the current taxation system and lack of awareness of reporting requirements serve as major impediments to meeting their reporting obligations.

As the GAO’s report on the impact of FATCA on Americans overseas makes clear,¹ current requirements are poorly targeted and probably ineffective. Furthermore, the “challenges” identified by the GAO in 2018 with “...complying with U.S. tax reporting requirements on their foreign retirement savings”² can be very onerous, often requiring expensive professional assistance. This induces fear of punitive sanctions and causes stress by forcing unwilling non-U.S. spouses and business associates into U.S. reporting, all of which discourages compliance.

Much of this reporting is redundant. Reports on foreign financial accounts of American residents overseas are required on at least three separate administrative forms: FinCen 114 (“FBARs”), required by the Bank Secrecy Act; Form 8938 (required by FATCA as part of tax returns); and Form 8966 (required of foreign financial institutions by FATCA). Savings vehicles and retirement plans may additionally require Forms 8621, 3520 and 3520A as part of tax returns. Small businesses face other obscure requirements. Notwithstanding differences in thresholds and coverage, there is heavy overlap that invites simplification and consolidation.

Given Form 8966 reporting by financial institutions, it is not clear why individual filings are required at all. At a minimum, the two individual bank account filing requirements should be consolidated and shared by IRS and FinCen as need be. This has been recommended in the bipartisan Taxpayer Assistance and Service (TAS) Act (S. 3931), introduced in the Senate in 2026 by Senators Ron Wyden (D. OR) and Mike Crapo (R. ID). FBAR and FATCA thresholds should be synchronized so that the FBAR threshold (not adjusted for inflation since 1970) be increased to at least those for FATCA. Future thresholds should be indexed for inflation.

We recommend replacing the existing reporting regime with the Common Reporting Standard, now widely used internationally. Accounts located in overseas Americans’ countries of residence should not be considered as “foreign” accounts and should be exempted from all reporting.

In the absence of changes to the tax code to eliminate Forms 8621, 3520 and 3520A, these should be drastically simplified.

When foreign financial institutions file Form 8966, the account holder affected should receive a copy, either from the filing institution or the IRS, just as they can now expect to receive Form 1099s from domestic U.S. financial institutions.

Fines for reporting violations, notably for FBARs and Form 3520 (foreign gifts) are excessive. As exemplified in the recent Supreme Court decision in Bittner v. United States, 598 U.S. 85 (2023), as in other recent caselaw and legal challenges, fines or other penalties should be reasonably proportionate to the offense. Relating fines rationally to whatever damages may have been done would facilitate compliance and eliminate constitutionally suspect fines and penalties.

¹ Foreign Asset Reporting, Actions Needed to Enhance Compliance Efforts, Eliminate Overlapping Requirements, and Mitigate Burdens on U.S. Persona Abroad, [GAO-19-180], April 2019.

² Workplace Retirement Accounts: Better Guidance and Information Could help Plan Participants at Home and Abroad Manage Their Retirement Savings, [GAO-18-19], January 2018, “Highlights”.

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