Failing to file an FBAR while having foreign financial accounts can result in some significant penalties. These penalties can either be civil penalties, criminal penalties, or both. The statute of limitations for imposing civil penalties for FBAR filing violations is up to six years after the violation date.
If you find that you have a delinquent FBAR, you must file it with the BSA E-Filing system as soon as possible. When you file, you’ll be given a change to explain your late filing. The IRS will then determine if your reason was justifiable (e.g., a natural disaster). After reviewing your reasons for a late filing, the IRS will then choose whether to impose a penalty or not.
For failing to file an FBAR, the IRS has a list of violations, which range from whether the non-filing was negligently to willfully done. There are also penalties for filing a false FBAR. Penalties increase in severity based on the type of violation. Note that civil penalties can be assessed for an amount which is larger than the account balance.
For negligent violations, civil penalties can be up to $1,078.
For non-willful violations, the civil penalties can be up to $12,459 for each negligent violation.
For willfully failing to file and FBAR, the civil penalties can be up to either $124,588 or 50 percent of the amount — whichever is greater. Criminal penalties can be up to $250,000, five years in federal prison, or both.
For willfully failing to file an FBAR along with other law violations, civil penalties can be either up to $100,000 or 50 percent of the amount — whichever is greater. Criminal penalties can be up to $500,000, 10 years in federal prison, or both.
For knowingly and willfully filing a false FBAR, the civil penalties are the greater of $100,000 or 50 percent of the financial account — whichever is greater. Criminal penalties can be up to $10,000, five years in federal prison, or both.