Failure to File FBAR | Penalties

Even though the FBAR rules fall under the Bank Secrecy Act of 1970 and Title 31 of the United States Tax Code, over time the authority to establish recordkeeping and filing requirements as well as enforcement has been delegated to the Department of Treasury and the IRS.

There are two types of penalties applicable to FBARs – (1) Non-Willful and (2) Willful.  It should be noted that the penalties are assessed per account and not per FBAR.  Additionally, the penalties are assessed for each year there is a violation.  For example, if you have 5 accounts that have not been reported for 5 years, there could be 25 separate penalties assessed.  The penalty regime for violations after October 22, 2004 can be summarized as follows:

Non-Willful Penalty

• Up to $10,000 for each negligent violation
• No Criminal Penalties Assessed

Willful Penalty

• Up to the greater of $100,000 or 50% of the amount in the account at the time of the violation
• Criminal Penalties of up to $250,000 or 5 years in jail or both

Willful Penalty While Violating Certain Other Laws

• Up to the greater of $100,000 or 50% of the amount in the account at the time of the violation
• Criminal Penalties of up to $500,000 or 10 years in jail or both

While these penalties can be overwhelmingly high, there have been a host of Voluntary Disclsoure Programs offered by the IRS that could potentially reduce or even eliminate the penalties noted above. 

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What Should You Do Next?
Please contact a member of our International Tax team.  We at Freed Maxick are poised to assist you in assessing your FBAR filing requirements, assimilating the necessary information and preparing your current and past due FBARs. We also have considerable experience in helping taxpayer’s that have not been historically compliant to navigate the IRS guidelines and minimize their potential penalties through the various IRS Voluntary Disclosure Programs that have been available.

As IRS Commissioner Doug Shulman has stated “for taxpayers who continue to hide their head in the sand, the situation will only become more dire.  They should come forward now under our Voluntary Disclosure Practice and get right with the government”.

Do You Need Our Help?
Unsure if you are affected? Take our FBAR survey to find out if you may need assistance from our team. We will be happy to get in touch with you as soon as possible to address your FBAR tax needs.

Related Links
International Tax Services
Expatriation Consulting Services
Foreign Bank Account Report (FBAR)
FBAR Penalty Relief Under Certain Circumstances
Recent FBAR Developments
Foreign Account Tax Compliance Act (FATCA)
FBAR Survey