What are the Penalties for Failing to File an FBAR By October 15?

The deadline for filing an FBAR is October 15. While FBARs are technically due on Tax Day, U.S. taxpayers receive an automatic six-month extension to file without penalties. If you missed the October 15 deadline, what penalties are you facing? New Jersey international tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, explains:

Penalties for Failure to Timely File an FBAR

The penalties for failure to timely file an FBAR vary depending on why you failed to file. The Bank Secrecy Act (the federal law that establishes the FBAR filing requirement) breaks down filing violations into five categories:

• Negligent Failure to File – Negligent failure to file an FBAR is a civil violation of the Bank Secrecy Act (BSA). Potential penalties include fines of more than $1,000 per violation (under the BSA, civil fines are adjusted annually for inflation).
• Pattern of Negligent Activity – For businesses that demonstrate a “pattern of negligent activity” related to the delinquent filing of FBARs, civil penalties can increase to more than $80,000.
• Non-Willful Failure to File – If a failure to file is deemed non-willful as opposed to negligent, the civil fines increase to more than $13,000 per violation.
• Willful Failure to File – Willful failure to file can be prosecuted civilly or criminally under the BSA. In civil cases, fines can exceed $120,000. In criminal cases, penalties can include up to a $250,000 fine and five years of imprisonment.
• Willful Failure to File with Other Violations – Willful violations that also involve, “violating another law of the United States or as part of a pattern of any illegal activity involving more than $100,000 in a 12-month period,” can also be prosecuted civilly or criminally. In civil cases, fines can exceed $120,000. In criminal cases, penalties can include up to a $500,000 fine and 10 years of imprisonment.

Is it Possible to Avoid Penalties for a Delinquent FBAR?

While the penalties for failing to timely file an FBAR can be substantial, there are options for avoiding (or at least reducing) the penalties you owe in some cases. These options include:  

• Submitting a Statement of “Reasonable Cause” – The only way to completely avoid penalties for a delinquent FBAR filing is to file late with a statement of “reasonable cause.” The IRS judges “reasonable cause” on a case-by-case basis, and you will need to consult with a New Jersey international tax lawyer to determine if this is an option you have available.
• Submitting a Voluntary Disclosure – Submitting a voluntary disclosure can protect you from an audit or investigation, and it can also reduce the penalties you owe for a delinquent FBAR filing. There are two different voluntary disclosure options, each of which is available under different circumstances. You will need to consult with a New Jersey international tax lawyer to determine your eligibility for these programs as well.

Schedule an Appointment with New Jersey International Tax Lawyer Kevin E. Thorn

Did you miss the October 15 FBAR filing deadline? If so, you should speak with a lawyer promptly. To schedule an appointment with New Jersey international tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, call 201-355-8202, email ket@thornlawgroup.com or contact us confidentially online today.