201612.14
5

FBAR Penalties – 2019 New Summary | IRS FBAR Penalty

FBAR Penalties - 2019 New Summary | IRS FBAR Penalty (Krantz Attorneys, Board-Certified in Tax)

FBAR Penalties – 2019 New Summary | IRS FBAR Penalty (Krantz Attorneys, Board-Certified in Tax)

FBAR Penalties – 2019 New Summary | IRS FBAR Penalty

FBAR Penalties: When a U.S. Person misses the IRS FBAR filing deadline, and has not reported foreign accounts (or reported the foreign accounts late), the Taxpayer may be subject to FBAR Penalties.

The penalties associated with FBAR non-compliance range from a warning-letter, all the way up to 100% FBAR penalty in a multi-year audit with an IRS finding of willfulness.

FBAR Penalties

While the non willful FBAR Penalty is the most common penalty issued, the IRS has big leeway in making its FBAR penalty calculation — which will vary based on willful vs. non-willful, and civil vs. criminal.

FBAR Penalty Lawyers – Krantz Attorneys, A PLC

We have successfully represented clients in more than 1,000 streamlined and voluntary disclosure submissions nationwide and in over 70-different countries. We have represented thousands of individuals and businesses with international tax problems.

We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe.

2019 IRS FBAR Penalty Summary (4 Main Types)

FBAR calculations for foreign account penalties will depend on the type of penalty that the IRS issues.

FBAR penalties can be broken down into 4 categories: 

  • Willful FBAR 
  • Non-Willful FBAR  
  • Civil FBAR  
  • Criminal FBAR 

About Krantz Attorneys, A PLC

We have successfully represented clients in more than 1,000 streamlined and voluntary disclosure submissions nationwide and in over 70-different countries.

We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe.

IRS Foreign Account (FBAR) Penalty

There are various different types of foreign bank account penalties. The most common type of IRS FBAR Penalties is a non-willful FBAR penalty. Whether the FBAR is non-filed or late-filed, the penalties are usually the same.

Once you miss the FBAR Filing Deadline, the IRS sees you as “fair game.” 

What is the Penalty for Not Filing the FBAR?

What is the Penalty for Not Filing the FBAR?

What is the Penalty for Not Filing the FBAR?

Not all FBAR Penalties are the same. Sometimes, the IRS penalties for unfiled or late FBARs are bad, and sometimes, well…they’re not so bad. You may even receive a Warning Letter in Lieu of Penalty.

It jut depends on the different facts and circumstances of your situation.

Civil FBAR Penalties

FBAR Penalties can be Civil FBAR Penalties or Criminal. They can then be broken down further, but the threshold question, is whether the IRS will get you for Civil (money) or Criminal (money, and worse).

Civil FBAR Penalties are limited to monetary penalties. A civil FBAR Penalty is a penalty that is focused on monetary fines or warning letters (waivers) — without any risk of criminal investigation or prosecution.

U.S. Code citationCivil Monetary Penalty DescriptionCurrent Maximum
31 U.S.C. 5321(a)(5)(B)(i)Foreign Financial Agency Transaction – Non-Willful Violation of Transaction$12,921
31 U.S.C. 5321(a)(5)(C)Foreign Financial Agency Transaction – Willful Violation of TransactionGreater of $129,210, or 50% of the amount per 31 U.S.C.5321(a)(5)(D)
31 U.S.C. 5321(a)(6)(A)Negligent Violation by Financial Institution or Non-Financial Trade or Business$1,118
31 U.S.C. 5321(a)(6)(B)Pattern of Negligent Activity by Financial Institution or Non-Financial Trade or Business$86,976

Penalties for Civil FBAR can be Broken down into two (2) categories:

  • Willful FBAR Penalties
  • Non-Willful FBAR Penalties

Non-Willful FBAR Penalties

These FBAR Penalties are typically the least severe penalties. An FBAR non-willful penalty is a “lower-level” penalty for not filing the FBAR. The non-willful penalties can be high, BUT, typically they are not as high as willful penalties.

Willful FBAR Penalties and (Reduced) Willfulness

The Willful FBAR Penalty is typically more severe. An FBAR Willful Penalty is penalty for acting willful, willfully blind, or with reckless disregard in not filing the FBAR. We have provided detailed explanations and analyses in our free International Tax Law library about these different terms, and what they mean.

Criminal FBAR Penalties

Criminal FBAR Penalties may include monetary penalties and incarceration. This is when the IRS refers the matter to the Department of Justice (DOJ) or other 3 letter government faction for criminal investigation and possible prosecution. These are not very common, but unfortunately they are on the rise.

U.S. Code citationCriminal Violation & DescriptionCriminal Penalty
31 C.F.R. §103.59(b) Willful – Failure to File FBAR or retain records of accountUp to $250,000 or 5 years or both
31 C.F.R. §103.59(c) Willful – Failure to File FBAR or retain records of account while violating certain other lawsUp to $500,000 or 10 years or both
31 C.F.R. §103.59(c)  Knowingly and Willfully Filing False FBAR$10,000 or 5 years or both
Civil and Criminal Penalties may be imposed together. 31 U.S.C. § 5321(d).See StatutesSee Statutes

A few important considerations:

Common Client Questions and Concerns about FBAR Penalties

Common Client Questions and Concerns about FBAR Penalties

Common Client Questions and Concerns about FBAR Penalties

Here are some more of the common questions we receive about FBAR Penalties.

2018 & 2019 FBAR Penalty Updates

There has been increased enforcement, with three very important updates:

– Courts are holding that willful penalties are not limited to $100,000 per year.

– Courts are holding that non-willful penalties are not limited to $10,000 per year; and

– There has been an increase in willful penalties and criminal investigations.

What is the FBAR Late Filing Penalty?

Technically, there is no “late filing penalty.’ Rather, the IRS can penalize you for not filing the FBAR at the time it is due. In other words, it is not a “Late Filing Penalty,” because you cannot file the FBAR late, unless you submit using one of the programs. Each program has its own associated FBAR penalty structure or waiver.

How does FBAR Penalty Collection Work?

Generally, the IRS will issue the FBAR penalty or penalties against you. Then, the IRS will give you a certain amount of time to pay, before the IRS sues you, to reduce the FBAR penalty to a civil judgment.

Is there an Amended FBAR Penalty?

Technically, no. Rather, once the FBAR is not filed timely, the FBAR Penalty kicks in, and it is up to you to try to limit the penalties by using one of the approved amnesty or offshore disclosure methods.

Golding & Golding (Board Ceritfied Specialist in Tax Law)

Krantz Attorneys (Board Ceritfied Specialist in Tax Law)

Interested in Filing under FBAR Tax & Amnesty Procedures?

No matter where in the world you reside, our interational tax team can get you IRS offshore compliant.

Krantz Attorneys specializes in offshore tax and reporting amnesty. Contact our firm today for assistance with getting compliant.


International Tax Lawyers - Krantz Attorneys, A PLC

International Tax Lawyers - Krantz Attorneys, A PLC

Krantz Attorneys: Our international tax lawyers practice exclusively in the area of IRS Offshore & Voluntary Disclosure. We represent clients in 70+ different countries. Managing Partner Ezra Krantz is a Board-Certified Tax Law Specialist Attorney (a designation earned by < 1% of attorneys nationwide.). He leads a full-service offshore disclosure & tax law firm. Ezra and his team have represented thousands of clients nationwide & worldwide in all aspects of IRS offshore & voluntary disclosure and compliance during his 20-year career as an Attorney.

Ezra holds a Master's in Tax Law from one of the top Tax LL.M. programs in the country at the University of Denver. He has also earned the prestigious IRS Enrolled Agent credential. Mr. Krantz's articles have been referenced in such publications as the Washington Post, Forbes, Nolo, and various Law Journals nationwide.
International Tax Lawyers - Krantz Attorneys, A PLC

Latest posts by International Tax Lawyers - Krantz Attorneys, A PLC (see all)