Can FBAR penalties be waived?

In a case in which the IRS believes that there was a ‘reasonable cause’ for failure to file an FBAR, penalties may be waived. Quite often, though, the IRS disputes a claim of ‘reasonable cause’ and the only way to have one’s failure to file viewed as non-willful noncompliance is through litigation.

What is a non-willful violation?

Non-willful conduct is defined as conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirement of the law.

What is non-willful FBAR?

Each Form, Not Each Account, is Non-willful Violation The willful violation penalty applied to a failure to report a transaction or a report. Thus, it applied to each failure. However, the statutory language of the non-willful violation penalty did not clearly apply the penalty to each FBAR or each account.

How can I avoid FBAR penalties?

You can avoid penalties by filing your FBAR by April 15th. You also need to report any income earned from these foreign accounts, and you may have other reporting obligations.

How common are FBAR penalties?

Willful FBAR Penalties When the IRS can prove that the taxpayer was willful, the penalties are much more damaging and can reach upwards of 50\% of the maximum account value per year (but the total penalty for all years is limited to 100\% value).

How do you prove willfulness?

In order to prove willfulness, the US government only has to show that the Taxpayer acted with reckless disregard — no actual intent is necessary. There are two recent Appellate Court cases which affirmed the lower FBAR willfulness standard.

What is willful disclosure?

Willful nondisclosure means you fail to disclose information when you knew or should have known that it was material.

What is the statute of limitations on FBAR?

6-years
And, while the statute of limitations for a civil tax fraud investigation may have no expiration, the FBAR is 6-years. This time-limit often helps taxpayers who are being investigated. “Failure to file FBAR report (either willful or non-willful): 6 years from the due date of the FBAR report.

How does the IRS find out about foreign bank accounts?

FATCA Reporting One of easiest ways for the IRS to discover your foreign bank account is to have the information hand-fed to them from various Foreign Financial Institutions.

Can an FBAR be amended?

File an Amended FBAR According to the FBAR instructions, a person who previously filed an FBAR but mistakenly provided incomplete or inaccurate information on the form can file an amended FBAR. FinCEN Form 114 includes a box for providing a brief explanation of the error.