FBAR Penalty: Non-Filing and Other Violations

Apr 30, 2020

The FBAR penalty—whether you fail to file or file inaccurately—can be serious, including hefty fines or even jail time. It depends on your situation, but even accidental violations can lead to harsh punishments.

Below, we’ll cover the various penalties for not filing FBAR. If you need a refresher on FBAR basics, including who needs to file, learn more here.

What are the IRS FBAR penalties?

You can receive a penalty for:

  • Not filing an FBAR when it was required
  • Filing an FBAR but omitting one or more required accounts
  • Filing an FBAR with inaccurate account values

The FBAR penalty depends on whether the IRS deems your actions willful (if you intentionally failed to report or misreported) or non-willful (if it was unintentional).

Civil FBAR Penalty

For non-willful violations, the FBAR penalty is typically $10,000 for each year you didn’t file, but it ultimately depends on the number of violations (accounts not reported or misreported) and the value of those accounts.

For willful violations, you can be fined $100,000 or 50% of your highest account value—whichever is higher. The IRS can assert these penalties for each year you didn’t file. For example, if you willfully didn’t file FBARs for 5 years, you could be fined $500,000.

Criminal FBAR Penalty

In some cases, the IRS can pursue criminal prosecution in addition to civil penalties. Criminal penalties include:

  • Willful failure to file: A fine up to $250,000, 5 years in prison, or both
  • Willful failure to file in concurrence with another crime (such as tax evasion): A fine up to $500,000, 10 years in prison, or both

Willful failure to file an FBAR is a felony, so if you are convicted, you will lose the right to vote, lose professional licenses, and other associated penalties. If you are not a United States citizen and are convicted of a felony, you will be deported after serving jail time.  

What if I missed the FBAR deadline?

The deadline for filing the FBAR is April 15 (or June 15 if you’re a U.S. person living abroad). If you miss the deadline, you will automatically get an extension to October 15.

If you missed the October 15 deadline, you can submit the FBAR late and risk potential penalties. This is known as “quiet disclosure.” Otherwise, you’ll want to use one of the programs outlined below.

What if I haven’t filed FBARs for multiple years?

If you didn’t know about your FBAR filing requirements or can otherwise show you acted non-willfully, you may qualify for streamlined offshore disclosure and avoid harsh penalties.

If you didn’t file and your actions were willful, you should call a tax attorney right away to discuss your options. You may be able to use the Voluntary Disclosure Program. While there are no guarantees, this program typically allows you to avoid criminal charges in exchange for paying IRS penalties.

Need an FBAR attorney? Give us a call at 847-281-3436 to schedule your confidential consultation!

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