If you’re required to file an FBAR (Foreign Bank and Financial Accounts Report) and fail to do so in a timely and accurate manner, you may face significant consequences, including civil monetary penalties, criminal penalties, or both.
For U.S. persons who discover they should have filed an FBAR in previous years, it’s important to take immediate action. The recommended course of action is to electronically file the overdue FBAR using the BSA E-Filing System. This article will delve deeper into the types of penalties associated with FBAR non-compliance, how these penalties are assessed, and the steps to become compliant.
UNDERSTANDING FBAR AND ITS FILING OBLIGATIONS
The FBAR is a critical reporting requirement for U.S. persons holding foreign bank accounts. This requirement is triggered when the total value of an individual’s foreign financial assets exceeds the reporting threshold of $10,000 at any time during the calendar year. It’s crucial to understand that these assets include not just bank accounts, but also other financial assets held overseas. Failing to meet these filing obligations can lead to significant penalties, as detailed in the sections below.
CIVIL PENALTIES FOR FBAR NON-COMPLIANCE: AN OVERVIEW
The civil monetary penalties for failing to comply with FBAR requirements come with various upper limits, but there is no set minimum. These limits are subject to annual adjustments for inflation, as mandated by the Federal Civil Penalties Inflation Adjustment Act of 1990 and its subsequent amendment, the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. For penalties assessed after August 1, 2016, linked to violations that occurred post-November 2, 2015, the adjusted maximum penalty amounts are outlined in Title 31 of the Code of Federal Regulations (CFR), section 1010.821, under the Penalty Adjustment Table. This section details the inflation-adjusted civil penalties that can be imposed for failing to meet the FBAR reporting and recordkeeping obligations.
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