FBAR penalties

FBARs Are Due on April 15th This Year. Not the Income Tax Filing Deadline of May 17th!

April 13, 2021 | by Dennis N. Brager

UPDATE: You have until October 15th.

The Internal Revenue Service issued a notice on April 9^th reminding U.S. citizens, resident aliens and any domestic legal entity that the deadline to file their annual Report of Foreign Bank and Financial Accounts (FBAR) is still April 15, 2021. The extension of the federal income tax filing due date and other tax deadlines for individuals to May 17, 2021, does not affect the FBAR requirement.

This could cause many Taxpayers to inadvertently file their FBAR late. The deadline to file the FBAR was changed several years ago to coincide with the deadline for filing individual tax returns in an effort to assist with compliance. With this most recent extension, however, it puts individuals at risk of late filing, since the deadlines are no longer on the same date. Interestingly, in past years the IRS granted an automatic extension of time to file FBARs to October 15^th for FBARs, but there is no mention of the automatic extension in the IRS notice.

How to Avoid Big Fines for FBAR Violations

November 22, 2017 | by Dennis N. Brager

If you were previously unaware of your obligation to file Foreign Bank Account Reports (FBARs), you have a strong argument that your conduct was non-willful, which could qualify you for reduced penalties under the Streamlined Filing Compliance Procedures. However, once you are aware of your obligations, you can no longer turn a blind eye to your unreported foreign accounts or you risk being considered a willful violator, subject to harsher penalties and disqualified from using the Streamlined Procedures.

Get an FBAR Attorney’s Opinion on Willfulness

If there was ever a situation where you should NOT attempt to handle a tax issue on your own, determining whether you willfully violated your foreign reporting requirements is it. The penalties for a willful FBAR violation may be the greater of $124,588 or 50 percent of the balance in the account at the time of the violation, for each violation. If you submit your amended returns under the Streamlined Procedures, but the IRS later decides that you were a willful FBAR violator, you could subject yourself to these penalties, along with the potential threat of criminal prosecution.

What Is the Statute of Limitations for FBAR Penalties?

September 15, 2017 | by Dennis N. Brager

The IRS has six years from the due date of the FBAR to assess the FBAR penalty. In addition, the IRS can assess a separate penalty for each unreported account for each tax year that an FBAR has not been filed, causing the total amount of penalties to add up quickly for some taxpayers.

The current civil FBAR penalties are $12,459 per violation for non-willful violations and the greater of $124,588 or 50 percent of the balance in the account at the time of the violation, for each willful violation. An individual with five foreign financial accounts who has not filed any required FBARs for the past six years could then face a penalty of over $373,000, and that is assuming that the violations are considered to be non-willful.

These penalties can be reduced in certain cases if the IRS believes that penalty mitigation is appropriate. Taxpayers will no previous history of criminal tax violations who cooperate with IRS examiners may receive reduced penalties. If you need assistance negotiating a reduced FBAR penalty, contact a tax attorney with FBAR experience.