What are the penalties for failing to file an FBAR? Key information!
The penalties for failing to file an FBAR (Foreign Bank Account Report) can be quite significant, and they vary depending on whether the failure to file is deemed non-willful or willful. Here’s an overview of the potential penalties:
For non-willful violations, the maximum civil penalty is $10,000 per violation. This penalty can be applied for each year an FBAR is not filed.
The IRS has the discretion to determine the penalty amount based on the facts and circumstances of the case. In many cases, they may assess a lower penalty, especially if the failure to file was unintentional or due to ignorance of the requirement.
For willful violations, the penalties are more severe. The greater of $100,000 or 50% of the balance in the account at the time of the violation can be assessed as a civil penalty for each violation.
In some cases, criminal penalties, including fines and imprisonment, may also apply for willful failure to file an FBAR.
It’s important to note that the determination of whether a violation is non-willful or willful is fact-specific. Willful violations are considered more serious and may involve actions taken with the intent to evade taxes or conceal assets. Non-willful violations may result from mistakes, negligence, or a lack of awareness of the FBAR filing requirement.
In addition to these civil and potentially criminal penalties, taxpayers who fail to file an FBAR may also face other consequences, including the assessment of interest on unpaid taxes and potential audits by the IRS.
To avoid FBAR penalties, it’s crucial to stay informed about your reporting obligations, keep accurate records of your foreign financial accounts, and consult with a tax professional who specializes in international tax matters if you have questions or concerns about FBAR compliance. If you have failed to file FBARs in the past and believe your failure was non-willful, you may consider participating in IRS amnesty programs like the Streamlined Filing Compliance Procedures to come into compliance and potentially reduce penalties.
Understanding the strain of lagging in your US tax commitments, we at Xerxes Associates LLP are equipped with the expertise to help US expats become up-to-date with their filings. For further information on your obligations or assistance in determining the most suitable options, contact us today or submit an enquiry online.
Contact us via www.xerxesllp.com or fill out our contact form to discuss your expat tax situation with us.