Introduction
If you have a bank account abroad, shares in an overseas fund, or a stake in a business outside the United States, there's a good chance your account details are already moving between governments. Most people only find out when an IRS letter arrives.
FATCA and CRS get treated like two names for the same thing. They aren't. Mixing them up, or assuming that complying with one takes care of the other, is one of the most expensive mistakes people with cross border finances make.
Below we walk through what each regime actually requires, who has to comply, what happens if you don't, and how to get your filings in order before the IRS raises the question for you.
Key Takeaways
- FATCA makes foreign banks and U.S. persons report foreign account details to the IRS
- CRS automatically swaps account data among 100+ countries under the OECD framework
- Individuals, businesses and financial institutions can each have their own reporting duties, and those duties often overlap
- Missing Form 8938 can lead to IRS penalties of up to $60,000
What Is FATCA?
The Foreign Account Tax Compliance Act (FATCA) became law in 2010 as part of the HIRE Act. The goal was simple: stop US persons from parking money offshore to avoid tax.
It runs on intergovernmental agreements (IGAs) between the US and partner countries. Under those agreements, foreign financial institutions (FFIs), meaning banks, brokerages and investment funds, have to identify accounts held by "US persons" and report them. Some report to their own tax authority, which passes the data to the IRS. Others report straight to the IRS.
Who Must Report Under FATCA
FATCA puts obligations on two different groups:
- Foreign financial institutions have to do due diligence on account holders, flag accounts reportable to the US, and send balances, income and identifying details to the IRS each year.
- US persons (citizens, green card holders and certain entities) have to report their specified foreign financial assets on Form 8938 once those assets pass the IRS thresholds.
The thresholds depend on where you live and how you file:
| Filing Status & Location | Value on Last Day of Year | Value at Any Point During Year |
|---|---|---|
| Living in US, unmarried or filing separately | Over $50,000 | Over $75,000 |
| Living in US, married filing jointly | Over $100,000 | Over $150,000 |
| Living abroad, unmarried or filing separately | Over $200,000 | Over $300,000 |
| Living abroad, married filing jointly | Over $400,000 | Over $600,000 |
Source: IRS Form 8938 instructions
Expats get far higher thresholds than people living in the US, and that surprises a lot of filers. Someone in the US with $60,000 spread over two foreign accounts may need to file, while someone living abroad with the exact same balance may not.
FATCA Forms & Compliance Touchpoints
A few forms come up again and again:
- Form 8938: the yearly statement individuals attach to their return to disclose specified foreign financial assets
- Form W-9 / W-8BEN: certifications that establish whether someone is a US person or a foreign person for withholding
- Form 8966: what FFIs and certain other filers use to report US reportable accounts to the IRS
One detail catches people constantly. When you open a foreign account, the bank almost always has you sign a statement about your US person status right there. If that statement is wrong, even by accident, it can cause trouble years later when the bank's records and your tax filings don't line up.
What Is CRS?
The Common Reporting Standard (CRS) is the OECD's version of FATCA, developed in 2014. People call it "FATCA for the rest of the world," and that's close enough as shorthand. But there's one big difference in how it works.
FATCA looks at US citizenship or green card status. CRS looks only at tax residency. So CRS can sweep in someone with no US connection whatsoever, just because they're tax resident in one country and bank in another.
How CRS Reporting Works
Banks and other institutions in CRS participating countries identify account holders who are tax resident somewhere else. They report those accounts to their own tax authority, and that authority automatically passes the information to the tax authority where the account holder lives.
If that sounds like FATCA, it is. The chain closely follows FATCA's Model 1 IGA setup.
CRS also asks for a self certification when you open an account. Instead of asking about US person status, the form asks for every country where you're tax resident and your Tax Identification Number (TIN) in each.
If you have homes or tax obligations in two or three countries, you list all of them, not just the one you think of as "primary."
Why CRS Matters for Cross Border Individuals & Businesses
The scale is huge. In 2024, 116 jurisdictions exchanged data on more than 171 million financial accounts, worth close to €13 trillion.
Those numbers come from the OECD's 2025 peer review of automatic exchange practices, and more jurisdictions keep joining.
That reach matters because dual tax residents, US expats and foreign nationals with US ties can end up reported under FATCA and CRS at the same time. The usual overlap cases:
- US citizens abroad whose local bank reports under CRS, while FATCA still applies to them as US persons
- Dual residents who have to list every residency jurisdiction on the form, not one "home" country
- Foreign nationals with US ties who hold accounts in CRS countries and also have US reporting
Take a US citizen living in Germany with a German bank account. FATCA reaches them as a US person, and CRS can surface the same account if another tax residency is involved.
FATCA vs. CRS: Key Differences You Should Know
Both regimes want the same thing, visibility into offshore money. They just come at it from different angles.
| Aspect | FATCA | CRS |
|---|---|---|
| Origin | US federal law (2010) | OECD standard, adopted by member countries (2014) |
| Legal basis | Bilateral IGAs between the US and partner countries | Multilateral framework, adopted voluntarily by participating jurisdictions |
| Who's reportable | US citizens, green card holders, and entities with substantial US ownership | Anyone tax resident in a participating jurisdiction other than where they bank |
| Reach | One country (the US) as the receiving authority | 100+ countries exchanging with each other |
What this means in practice: because the tests are different, one account can be reportable under both regimes at once.
- Banks don't pick FATCA or CRS; they run both tests separately
- Following one regime's rules does nothing for the other
- People get caught when they assume one filing or one self certification covers both
Who Needs to Comply, and What Happens If You Don't
Individuals and US Persons With Foreign Ties
Every US citizen or green card holder whose foreign assets pass the IRS thresholds has to file Form 8938, no matter where they live. Many also have to file FinCEN Form 114, the FBAR, because the two forms are triggered differently.
The FBAR test is lower and simpler: total foreign account value over $10,000 at any point in the year, per FinCEN's reporting guidance. Form 8938 doesn't replace the FBAR. Lots of taxpayers file both, with two different agencies, on two different forms.
Foreign nationals have paperwork too. In most countries, opening a financial account now means certifying your tax residency up front, plus your US person status if it applies.
Businesses and Entities With Cross Border Exposure
Entities add another layer:
- LLCs, trusts and partnerships with foreign owners or US controlling persons may be classified as passive NFFEs/NFEs, which pushes the reporting onto the individuals who control them
- Companies with foreign investors, subsidiaries or bank accounts have to work out if they count as an active or passive entity for FATCA and CRS. That label decides what gets reported and who receives it
Get the classification wrong and it's more than a paperwork issue. Reports can go to the wrong place entirely, leaving real obligations unmet while the business thinks it's covered.
The Cost of Getting It Wrong
Form 8938 penalties build fast:
- Initial penalty: $10,000 for not filing or for filing incomplete information
- Continuing penalty: another $10,000 for each 30 day period (or part of one) the failure continues more than 90 days after the IRS sends notice
- Maximum additional penalty: $50,000, for total exposure of $60,000
And that's before the separate underpayment penalties: up to 40% of the tax tied to an undisclosed foreign asset, or 75% where there's fraud.
The IRS handles willful and nonwillful failures differently. Nonwillful cases (the honest "nobody told me I had to file this" situations) may qualify for the Streamlined Filing Compliance Procedures, which carry much lower penalties.
Willful violations fall under the IRS voluntary disclosure practice, which can limit criminal exposure but demands full, truthful and timely cooperation. Neither route is open once the IRS has already started an examination.
How Assured Financial Services Helps With FATCA & CRS
Cross border tax exposure doesn't come with a manual. A US citizen with a UK pension, a foreign national who just opened a US brokerage account, an LLC with one overseas investor: each one has its own mix of thresholds, forms and entity rules.
Assured Financial Services works with people and companies in exactly these positions: US expats, foreign nationals with US ties, and businesses with owners or accounts in more than one country.
We look at your accounts, entities and residency to sort out whether FATCA applies, whether CRS self certification and residency rules apply, or both. Then we prepare the US filings that follow, including:
- Form 8938 and the FBAR for foreign financial assets and accounts
- Forms 5471 and 5472 for foreign entity reporting
- Forms 3520 and 3520-A for foreign trust reporting
How we differ from a general accounting shop:
- An IRS Enrolled Agent founder with unlimited rights to represent clients before the IRS in all 50 states, covering inquiries, penalty notices and late foreign account filings. If a notice has already turned into a balance due, our IRS tax resolution work picks up from there
- All work done in house by our U.S. team, with no offshore outsourcing, so your foreign account details stay with us
- The founder leads every engagement, so your review gets senior attention instead of being passed to a junior pool
Not sure whether your foreign accounts, overseas business interests or residency put you under FATCA, CRS or both? Call Assured Financial Services for a compliance review before the IRS writes to you first.
Frequently Asked Questions
Who needs to fill in FATCA?
US persons (citizens, green card holders and certain entities) whose specified foreign financial assets exceed the IRS thresholds file Form 8938. Foreign financial institutions separately report their US account holders to the IRS.
What is a FATCA CRS declaration?
It's the self certification a bank asks you to sign when you open an account. It records where you're tax resident and, if relevant, your status as a US person, so the bank knows what to report.
What is FATCA for US citizens?
For US citizens, FATCA means reporting specified foreign financial assets on Form 8938 once they pass the threshold that applies to you, wherever in the world you live.
What is the difference between FATCA and CRS?
FATCA is US law and decides who's reportable based on citizenship or green card status. CRS is an OECD standard used by 100+ countries, and it decides based on tax residency.
Do I need to file both FBAR and FATCA Form 8938?
Often you do. The two have different thresholds and go to different agencies (FinCEN and the IRS), so plenty of people with foreign accounts file both every year.
What happens if I don't comply with FATCA or CRS reporting requirements?
You can face serious IRS penalties, including Form 8938 fines that grow the longer the failure continues. If you have foreign account disclosures you never filed, get professional help before the IRS contacts you.
