Do I need to report wine stored in a UK bonded warehouse on my FBAR?

Generally no. Bottles held in your own name and stored by a warehouse keeper are tangible personal property, not a bank, securities or other financial account under 31 CFR 1010.350. FinCEN has not ruled on wine storage specifically, so the analysis rests on the regulation's definitions. A cash balance held for you by the merchant or broker, or an interest in a wine fund, needs separate review because those can be reportable.

Is a cash balance with my London wine merchant a foreign financial account?

It can be. The FBAR rules include accounts with a person in the business of accepting deposits as a financial agency and, per IRS Publication 5569, accounts with a person performing the services of a financial institution. A standing balance you can withdraw on request looks more like an account than a short-lived unpaid invoice. Where it is material and uncertain, reporting it is the conservative choice.

Does wine held in bond go on Form 8938?

No, if you hold the bottles directly. IRS guidance on Form 8938 says directly held tangible assets such as art, antiques, jewelry, cars and other collectibles are not specified foreign financial assets. However, shares or units in a UK wine fund or wine company are an interest in a foreign entity and are reportable on Form 8938 once your filing thresholds are exceeded.

Why do I owe US tax on a wine gain that HMRC does not tax?

HMRC often treats fine wine as a wasting chattel with a predictable life of 50 years or less, so the gain is exempt from UK capital gains tax, though port and similar fortified wines are not. The US treats any alcoholic beverage as a collectible taxed at up to 28 percent. With no UK tax paid, there is no foreign tax credit to offset the US liability.

How do I file a missed FBAR for a UK wine account?

If your US returns reported all income, file the missing FinCEN Form 114 reports through the BSA E-Filing System and select or explain the reason for late filing. If income such as a wine sale was also omitted, the IRS Streamlined Filing Compliance Procedures are usually the better route. The old Delinquent FBAR Submission Procedures page was withdrawn by the IRS in 2026.

What is the penalty for a non-willful missed FBAR?

The statutory non-willful maximum is 10,000 dollars per violation, adjusted for inflation, and after Bittner v. United States in 2023 it applies per annual report rather than per account. No penalty applies if the IRS accepts reasonable cause on a late FBAR, and compliant Streamlined Foreign Offshore filers resident in the UK pay no FBAR penalty at all.

Missed FBAR: UK Fine Wine Storage Accounts Explained

A missed FBAR on a UK fine wine storage account is usually less serious than clients fear, because the bottles themselves are generally not a reportable foreign financial account. The exposure sits elsewhere: a cash balance held on account with your wine merchant or broker, an interest in a managed wine fund, and the UK bank accounts that fund the purchases. If any of those pushed your aggregate foreign balances over $10,000 at any time in a year and you did not file FinCEN Form 114, you can normally catch up through FinCEN's BSA E-Filing System with a reason for late filing, or through the IRS Streamlined Filing Compliance Procedures if US tax returns also need correcting.

This guide is written for US citizens and green card holders living in the UK who buy investment-grade wine through a London merchant or broker and keep it in bond at a UK bonded warehouse. In the returns we prepare for this group, the wine is rarely the problem. The problem is that nobody asked what else sits on the merchant's ledger, and nobody checked whether the eventual sale was reported to the IRS.

Is a UK wine storage account an FBAR financial account?

The starting point is the regulation, not the marketing language on a merchant's statement. Under 31 CFR 1010.350(a), each United States person having a financial interest in, or signature or other authority over, a bank, securities, or other financial account in a foreign country must report that relationship. The full text is at https://www.law.cornell.edu/cfr/text/31/1010.350 and is mirrored on eCFR. The regulation then defines three categories of account, and a wine storage arrangement has to fit one of them to be reportable.

Bank account: a savings deposit, demand deposit, checking or any other account maintained with a person engaged in the business of banking.
Securities account: an account with a person engaged in the business of buying, selling, holding or trading stock or other securities.
Other financial account (i): an account with a person that is in the business of accepting deposits as a financial agency.
Other financial account (ii): an insurance or annuity policy with a cash value.
Other financial account (iii): an account with a broker or dealer for futures or options transactions in any commodity on or subject to the rules of a commodity exchange or association.
Other financial account (iv)(A): a mutual fund or similar pooled fund that issues shares available to the general public with a regular net asset value determination and regular redemptions. Paragraph (iv)(B), other investment funds, is reserved.

A bonded warehouse is not a bank, does not trade securities and is not a commodity futures broker. A case of Bordeaux stored in your name is tangible personal property, in the same family as directly held gold bullion or a painting. FinCEN has not issued guidance addressing wine storage specifically, so the honest position is an analysis rather than a ruling: physical bottles held in your own name and merely stored by a warehouse keeper do not look like any of the listed account types, and in our practice we generally do not report the storage arrangement itself. That conclusion changes when money, rather than wine, is held for you.

What does a missed FBAR on a wine account actually involve?

A missed FBAR on a wine account is a failure to report a foreign financial account connected with a wine holding when your total foreign balances exceeded $10,000 at any point in the calendar year. The IRS FBAR page at https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-accounts-fbar confirms the threshold is the aggregate value of all foreign financial accounts, not each account separately, and that the report is due April 15 with an automatic extension to October 15. For wine investors, three parts of the relationship need testing separately.

The bottles in bond: tangible property, generally not an FBAR account where title is held in your own name.
The cash account with the merchant or broker: sale proceeds, pre-funded deposits or credit balances held for you, which may be an account with a person accepting deposits as a financial agency.
A managed wine investment vehicle: shares or units in a wine fund or company, which raises separate FBAR and Form 8938 questions.
The UK bank and investment accounts that feed the purchases: these are plainly reportable and usually drive the $10,000 aggregate on their own.

The IRS FBAR Reference Guide, Publication 5569 at https://www.irs.gov/pub/irs-pdf/p5569.pdf, adds a broad catch-all description: financial accounts include any other accounts maintained in a foreign financial institution or with a person performing the services of a financial institution. That phrase is why the merchant cash balance deserves real attention.

When a merchant cash balance can become a reportable account

Many UK wine merchants and brokers operate client accounts. You sell a case through their platform, the proceeds sit on your account, and you either draw them down or reinvest in the next release. Some clients pre-fund an account so they can move quickly on en primeur campaigns. Economically, that is money you can call on, held by a business on your behalf.

Whether that makes the merchant a person in the business of accepting deposits as a financial agency is a facts-and-circumstances question that FinCEN has not answered for this industry. The factors we weigh are qualitative: whether the balance is held for you and withdrawable on request, whether it is segregated in a designated client money account, whether the merchant describes the balance as a deposit or account balance on statements, how long balances typically sit, and whether the account exists for purposes beyond settling a single purchase. A balance that simply reflects an unpaid invoice for a few days looks very different from a standing cash float of several thousand pounds held for months.

Where the answer is uncertain and the balance is material, the conservative choice is to report the merchant account on the FBAR. Over-reporting an account carries no penalty; failing to report a reportable one can. What we do not do is tell a client the wine itself is an account, because that misstates the rule and can create confusion in later years.

Managed wine funds and platforms: FBAR versus Form 8938

Some UK offerings are not storage accounts at all. They are investment vehicles where you own shares or units in a company or fund that owns the wine. The FBAR mutual-fund prong only captures a pooled fund whose shares are available to the general public with a regular net asset value determination and regular redemptions. Privately offered funds fall under the reserved paragraph for other investment funds, and Publication 5569 states that foreign hedge funds and private equity funds are not reportable on the FBAR at this time. A closed, privately offered wine fund may therefore sit outside the FBAR, while a retail-style fund with daily or regular dealing may sit inside it.

Form 8938 draws the line differently. The IRS Basic Questions and Answers on Form 8938 at https://www.irs.gov/businesses/corporations/basic-questions-and-answers-on-form-8938 states that directly held tangible assets such as art, antiques, jewelry, cars and other collectibles are not specified foreign financial assets. Wine held in your own name in bond falls into that category. But the same guidance says any other interest in a foreign entity held for investment is a specified foreign financial asset, so shares or units in a UK wine fund or wine company are reportable on Form 8938 once your thresholds are met. Where the vehicle is a foreign corporation, we also review whether passive foreign investment company rules apply.

For US persons living abroad, the IRS comparison page at https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements sets the Form 8938 thresholds at more than $200,000 on the last day of the tax year or more than $300,000 at any time for unmarried filers, and more than $400,000 or $600,000 for married couples filing jointly. It also notes that FBAR and Form 8938 are separate obligations: filing one never satisfies the other.

How the US and UK tax a sale of fine wine

A sister site has covered wine and art taxation in depth, so this is the short version, but it matters for remediation because unreported wine gains are often the tax that turns a paperwork fix into a return amendment.

In the US, wine is a collectible. Section 408(m)(2) of the Internal Revenue Code lists any alcoholic beverage as a collectible, and section 1(h) taxes long-term collectibles gain, meaning gain on collectibles held for more than one year, at a maximum rate of 28 percent rather than the 20 percent top rate on shares. The statute is at https://www.law.cornell.edu/uscode/text/26/1. The rate you actually pay depends on your ordinary income bracket, and the net investment income tax can also apply.

In the UK, much fine wine escapes capital gains tax altogether. GOV.UK guidance at https://www.gov.uk/capital-gains-tax-personal-possessions explains that you do not pay capital gains tax on anything with a limited lifespan unless it is used for business, and that the general personal possessions rule applies to items sold for 6,000 pounds or more. HMRC's Capital Gains Manual at https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg76901 treats a wasting asset as one with a predictable life not exceeding 50 years, confirms that port and similar fortified wines with a very long storage life are not wasting assets, and frames the fine wine question as whether the wine turns to vinegar or merely matures.

The practical consequence is a mismatch we see every season. The UK gain is exempt, so no UK tax is paid, so there is no UK tax to claim as a foreign tax credit on the US return. The full US collectibles tax is due. Clients who assumed the UK exemption carried across often have unreported US income, and that changes which remediation route fits.

Worked scenario: a London collector with a merchant account

This is an illustration with invented figures. We assume an exchange rate of 1.30 US dollars to 1 pound throughout for simplicity; in a real FBAR you would use the Treasury Reporting Rates of Exchange for the last day of each calendar year, as Publication 5569 instructs, and on the tax return you would translate each purchase and sale at the appropriate rates.

Claire is a US citizen who has lived in London for nine years with no US home. She holds a UK current account that peaked at 40,000 pounds, a UK stocks and shares ISA, and an account with a London fine wine merchant. Her wine, around 60,000 pounds at cost, is stored in bond in her own name at a UK bonded warehouse under the merchant's storage arrangement. In one year she sold part of the collection for 95,000 pounds against a cost of 60,000 pounds, a 35,000 pound gain. The proceeds sat on her merchant account, peaking at 9,000 pounds after she reinvested most of them. She filed US returns but never filed an FBAR and never reported the wine sale.

FBAR: her UK current account alone, at roughly 52,000 dollars, exceeds the 10,000 dollar aggregate threshold, so she had an FBAR obligation regardless of the wine.
Merchant cash account: a standing balance of 9,000 pounds, roughly 11,700 dollars, withdrawable on request, is the kind of balance we would report as an other financial account out of caution.
The bottles in bond: not reported on the FBAR, and not a specified foreign financial asset for Form 8938.
The ISA: a UK investment account, reportable on the FBAR and relevant to Form 8938 and the US income on her returns.
US tax on the wine: 35,000 pounds is about 45,500 dollars of long-term collectibles gain, taxed at up to 28 percent, so up to about 12,740 dollars of federal tax before any net investment income tax, with no UK tax to credit.
UK tax: none on the wine if it qualifies as a wasting chattel; the ISA wrapper is also UK tax-free, but not US tax-free.

Because Claire has both missing FBARs and unreported income, a late FBAR alone would leave the income problem open. She meets the non-residency test and her failure was a genuine misunderstanding, so the Streamlined Foreign Offshore Procedures are the natural route. She files three years of amended returns reporting the wine gain and ISA income, six years of FBARs including the merchant account, a signed Form 14653, and pays the tax and interest.

How do you fix a missed FBAR for a wine account?

There are two main routes, and the choice turns on whether your US income tax returns were correct.

Route one is a late FBAR through BSA E-Filing with a reason for late filing. If your returns already reported all income, including any wine gains, and the only failure is the FBAR itself, you file the missing reports electronically at https://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html. FinCEN's filing instructions say that when a report is filed after October 15 of the year following the reporting year, you select a reason from the drop-down list or choose other and explain in the text box. Publication 5569 states that if the account is properly reported on a late-filed FBAR and the IRS determines the violation was due to reasonable cause, no penalty will be imposed. The IRS previously ran a separate Delinquent FBAR Submission Procedures page; that page was withdrawn around July 2026, so we do not treat it as a live, named route.

Route two is the Streamlined Filing Compliance Procedures. Where income was also missed, such as an unreported wine sale, UK interest or ISA income, the IRS Streamlined page at https://www.irs.gov/individuals/international-taxpayers/streamlined-filing-compliance-procedures is the structured path. For US persons resident abroad, the Foreign Offshore version at https://www.irs.gov/individuals/international-taxpayers/us-taxpayers-residing-outside-the-united-states requires no US abode and at least 330 full days outside the US in any one of the last three years, three years of delinquent or amended returns with all information forms, six years of FBARs, a signed Form 14653 certifying non-willful conduct, and full payment of tax and interest. Compliant filers receive no failure-to-file, accuracy-related, information return or FBAR penalties. US residents use the Domestic version, which carries a 5 percent miscellaneous offshore penalty on the highest aggregate balance or value of foreign financial assets. Neither version is available if you are under civil examination or criminal investigation by the IRS.

Non-willful is defined by the IRS as negligence, inadvertence, mistake or conduct resulting from a good faith misunderstanding of the law. A collector who genuinely believed a UK-exempt wine gain was also exempt in the US, or who never realised a merchant balance might be an account, fits comfortably within that description. A collector who was told to report and chose not to does not.

What penalties apply to a missed FBAR after Bittner?

In Bittner v. United States, decided on 28 February 2023, the Supreme Court held 5-4 that the non-willful FBAR penalty applies per report, not per account. The opinion is at https://www.supremecourt.gov/opinions/22pdf/21-1195_h3ci.pdf. The statutory non-willful maximum is 10,000 dollars per violation, and FinCEN adjusts civil maximums annually for inflation under 31 CFR 1010.821. For a wine collector with a UK bank account, an ISA and a merchant cash account, Bittner means one missed annual report is one potential non-willful violation, not three.

Penalties are maximums, not minimums, and reasonable cause removes them entirely. Willful violations are a different category with far higher exposure, which is why the facts behind a missed FBAR need to be documented honestly before choosing a route. Form 8938 carries its own penalty regime of up to 10,000 dollars for failure to disclose, with further amounts for continued failure after IRS notice, so a wine fund interest missed on Form 8938 needs the same attention as a missed FBAR.

Records a wine investor should keep for FBAR and US tax

FBAR records must be kept for five years from the FBAR due date, covering the account name, number, the institution's name and address, account type and maximum value. Wine adds its own paper trail, because the US collectibles calculation needs a cost basis for each lot you sell.

Merchant or broker account statements showing cash balances by month, so you can identify the maximum value for the FBAR.
Purchase invoices by lot, including en primeur purchases, with dates and prices in pounds.
Bonded warehouse statements confirming the wine is held in your name rather than pooled in the merchant's name.
Sale confirmations showing gross proceeds, commissions and the date of sale for each lot.
Any fund or platform documents showing whether you own bottles or shares or units in a vehicle.
Year-end Treasury exchange rates used for each FBAR, and the transaction rates used on your US return.

The title question matters more than most collectors realise. If your merchant holds wine in a pooled account in its own name and you hold only a contractual claim, the analysis moves closer to an interest in a financial arrangement than to direct ownership of tangible goods. Warehouse confirmation that bottles are allocated to you by name supports the position that you hold tangible property, not an account.

Common mistakes we see on wine-related filings

The most frequent failure mode is treating the whole wine relationship as outside US reporting because the bottles are physical. The bottles may be, but the cash is not automatically. The second is assuming UK tax treatment carries across: a wasting-chattel exemption in the UK does nothing for the US return, and the 28 percent collectibles rate is higher than the rate clients expect from their share portfolios. The third is filing a late FBAR through BSA E-Filing when the US returns also omitted income; that leaves the more expensive problem unresolved and can make a later Streamlined submission harder to explain. The fourth is mixing up the forms: reporting bottles on Form 8938, or leaving a wine fund interest off it.

The fix in each case is the same discipline: separate the relationship into its parts, test each part against the regulation and the Form 8938 rules, check whether income was reported, and only then choose between a reasoned late FBAR and a Streamlined submission. A missed FBAR on a wine account is a solvable compliance gap, and handled in the right order it usually costs far less than clients expect.