Foreign Bank Account Penalty Guide
Failing to report foreign bank accounts can result in enormous fines — sometimes exceeding the account balance itself. Understand willful vs. non-willful penalties and your options for coming into compliance.
FBAR Penalty Schedule
Non-Willful Violation
Applies when the taxpayer was unaware of the FBAR requirement or the violation was due to reasonable cause. Post-Bittner Supreme Court ruling (2023): $10,000 per violation, not per account.
Willful Violation
Applies when the taxpayer knew about the FBAR requirement and intentionally failed to file. Multiple years of willful violations can result in penalties exceeding the total account value. Courts have upheld 100%+ of balance in aggregate penalties.
Criminal Penalties (Willful)
The Department of Justice prosecutes willful FBAR violators, particularly those with large account balances or who used offshore accounts to evade taxes.
How to Come Into Compliance (Without Criminal Risk)
Streamlined Filing Compliance Procedures (Non-Willful)
File 3 years of amended/delinquent returns + 6 years of FBARs + pay 5% miscellaneous offshore penalty (foreign residents: no penalty). Best option for inadvertent non-filers.
Delinquent FBAR Submission Procedures
If you have no unreported income and just missed the FBAR filing — file late FBARs with an explanation. No penalty if you had no underreported income.
Voluntary Disclosure Program (OVDP / VDP)
For potentially willful violations. Provides criminal protection in exchange for full disclosure. Requires a CPA and tax attorney. Penalties are steep but certain.
Quiet Disclosure (Not Recommended)
Amending returns without formally entering a program. The IRS views this unfavorably and can reject the protection, potentially leading to willful treatment.