That surprises many people who opened an account long before they moved here.

What is the automatic exchange of tax information?

It is a system where tax authorities send each other financial account data on a fixed annual cycle. Nobody has to ask. The bank collects the data and hands it to its own government, which forwards it.

The scale surprises most taxpayers. The OECD reports over 5,400 activated bilateral exchange relationships covering more than 120 jurisdictions [Source: OECD 2024].

Two frameworks drive this. The OECD Common Reporting Standard covers most of the world. The United States runs its own version called FATCA.

Which countries report under the OECD Common Reporting Standard?

More than 120 jurisdictions exchange financial account information under the Common Reporting Standard, commonly shortened to CRS [Source: OECD 2024]. That list includes nearly every major banking center.

CRS works on residence. A bank asks where you are tax resident. If you are resident in another participating country, your account details go to that country’s tax authority.

Jurisdictions once treated as private now sit inside the network. Switzerland, Singapore, Hong Kong and the Cayman Islands all participate. Banking secrecy as a practical shield is largely gone.

Why is the United States not a CRS participant?

The United States never adopted CRS. It built its own regime first, the Foreign Account Tax Compliance Act, passed in 2010 and known as FATCA.

FATCA reaches the same result by a different route. It applies to citizenship and US person status rather than residence. A US citizen living in Milan is still a US person.

Treasury implements FATCA through intergovernmental agreements, or IGAs, signed with individual countries. More than 100 jurisdictions now have a FATCA IGA in force with the United States [Source: US Treasury 2026].

Most are Model 1 agreements. There, the foreign bank reports to its own government, which sends the file to the IRS. Under Model 2, the bank reports to the IRS directly.

What does a foreign bank actually report to the IRS?

A reporting foreign financial institution identifies your account holder name, address, US taxpayer identification number, account number, account balance or value, and certain payments credited to the account [Source: IRS Form 8966 Instructions]. Interest, dividends and gross proceeds from sales are included.

The bank has a strong incentive to comply. Institutions that do not participate face 30 percent withholding on US source payments [Source: IRS FATCA Provisions]. That is a business risk no serious bank accepts.

This is why foreign banks ask for a Form W-9 and sometimes close accounts held by Americans. They are managing a withholding exposure.

Does the IRS see the account even if I never reported it?

Yes. The reporting obligation belongs to the bank, not to you. Your silence does not stop the file from moving.

Separately, you have your own reporting duties. An FBAR is required when the aggregate value of your foreign financial accounts exceeded $10,000 at any time during the year [Source: IRS FBAR Page]. That threshold is low and counts every account together.

So two data streams reach the government. One comes from the bank automatically. One should come from you. A gap between them is easy to spot and often triggers a notice or an IRS audit. If a letter has already arrived, read what to do if you receive an IRS notice before you respond.

How do FBAR and Form 8938 obligations compare?

They are different forms with different thresholds, and many people owe both. The FBAR goes to FinCEN. Form 8938 attaches to your tax return.

Those Form 8938 figures come from the IRS [Source: IRS FATCA Reporting Summary]. The FBAR deadline is April 15 with an automatic extension to October 15 [Source: IRS FBAR Page].

For the mechanics of the FBAR itself, see our detailed guide to FBAR filing requirements for foreign accounts. Foreign mutual funds add another layer, explained in our article on passive foreign investment companies.

What options exist for someone who has not been reporting?

In general, the IRS maintains separate paths depending on what went unreported and why. Choosing among them is a legal analysis, not a form selection.

The streamlined filing compliance procedures require a certification that the failure was non-willful. The IRS defines non-willful conduct as “negligence, inadvertence, or mistake” or a good faith misunderstanding of the law [Source: IRS Streamlined Procedures].

For a taxpayer residing in the United States, the streamlined domestic track requires amended returns for the most recent three years, delinquent FBARs for the most recent six years, and a miscellaneous offshore penalty of 5 percent of the highest aggregate value of the foreign financial assets [Source: IRS Streamlined Domestic Offshore].

The delinquent FBAR submission procedures are narrower. They are generally aimed at taxpayers who reported and paid tax on all income but simply missed the FBAR filing.

The difference matters enormously. A non-willful certification signed under penalty of perjury is a serious statement. Where the facts suggest willfulness, a different route may be appropriate, and IRS penalty exposure changes sharply. An attorney can assess the facts under privilege, which is one reason to read tax attorney versus CPA before choosing an advisor.

Why this comes up so often in the Bay Area

Santa Clara County and the Peninsula are full of people with accounts abroad. Some kept a home country account open after moving here. Some were posted overseas by an employer and never closed the payroll account.

Equity compensation adds complications for tech workers with cross border tax issues. Inherited family accounts do the same. None of it is unusual, and none of it is automatically a problem. Unreported balances are the problem.

How Kim & Rosado helps

Our attorneys handle offshore disclosure and foreign account examinations from both sides of the table. Several came from the IRS, so they know how these cases are built internally.

Nicholas Rosado and Anthony Kim lead the firm’s tax audit and litigation representation practice. The work starts with a privileged review of the facts, not a rushed filing. Where a balance is already owed, our tax resolution team handles the collection side.

We serve clients from offices in San Jose at 408-290-0280 and Walnut Creek at 925-255-1401, and across the Bay Area.

Frequently asked questions

Does the IRS receive information about accounts under $10,000?

Possibly. The $10,000 figure is the threshold for your own FBAR obligation, not a limit on what banks report. A foreign financial institution follows the due diligence rules in its own FATCA intergovernmental agreement, and those rules use different account thresholds. Small accounts are sometimes excluded from bank reporting, sometimes not. Do not assume a low balance means invisibility. Also remember the FBAR threshold looks at all your foreign accounts combined, so several small accounts can cross it together.

My country is a CRS participant. Does that mean the IRS gets my data?

Not through CRS itself. The United States does not participate in the Common Reporting Standard, so CRS traffic does not flow to the IRS. The IRS receives data under FATCA instead, through an intergovernmental agreement with that country. In practice the outcome is similar for most major jurisdictions, because more than 100 of them have a FATCA agreement in force. The legal mechanism differs, but the account information still reaches the United States.

I only just learned about FBAR. Is it too late to fix?

In general, no. The IRS maintains compliance procedures precisely because many people learn about these obligations late. What matters is acting before the IRS contacts you. Once an examination or investigation opens, the streamlined procedures are no longer available. Timing is therefore a real strategic factor. A tax attorney can review the history, assess willfulness under privilege, and recommend a path. Filing the wrong submission can create problems that did not exist before.

Can I just file the missing forms quietly myself?

Filing amended returns or late FBARs without a strategy is sometimes called a quiet disclosure. The IRS has warned against it. It forfeits the protections of the formal procedures and can look like an attempt to slip past review. It is also easy to get wrong, and errors in this area are expensive to unwind. Our guide to correcting tax filing errors covers the general principles.

Where to start

The exchange of account information is already happening. The useful question is not whether the IRS can see the account. It is what your record looks like when someone reviews it.

If you hold a foreign account and are unsure about your filing history, a confidential conversation is a sensible first step. You can schedule a 30 minute consultation or reach us through our contact page.