974 / What are the penalties for failing to comply with the FBAR filing requirements?

The maximum civil penalty for non-willful failure to comply with FBAR reporting requirements is $10,000.¹ However, additional penalties may apply for willful violations. Penalties for a willful failure to file can be as much as the greater of $100,000 or 50 percent of the amount in the account at the time of the violation.² These penalties can be imposed for failure to file or for failure to maintain the required records (see Q ).

The statute of limitations for civil or criminal violations is generally six years for FBAR purposes, meaning that the total penalties for failure to file for multiple years could be more than the value in the account.

These dollar values are adjusted annually for inflation. In 2023, the penalty for a non-willful failure to comply is $15,611 and $156,107 or 50 percent of the amount in the account at the time of violation for a willful failure to comply.³

The Tax Court has ruled that FBAR penalties are not taxes imposed under the Internal Revenue Code, so taxpayers are not entitled to the notice and other requirements of IRC Section 6330.  The taxpayers in the case had submitted a request to the Treasury Department's Debt Management Servicing Center (DMSC) to request a Collection Due Process (CDP) hearing.⁴

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Planning Point: On multiple occasions, disputes have arisen over whether the $10,000 maximum penalty for non-willful FBAR filing failures is to be imposed on a per-account basis or a per-taxpayer basis.

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Both the Ninth Circuit and a Texas district court previously held that the total non-willful FBAR penalties that can be imposed on an individual should be limited to $10,000 per FBAR report, rather than $10,000 per financial account.⁵ However, the IRS continued to attempt to assess penalties on a $10,000 per-account basis. That position was accepted in the Fifth Circuit. The U.S. Supreme Court has now clarified that non-willful FBAR penalties should be imposed on a per-report basis, rather than a per-account basis.⁶

The test for willfulness is generally whether there was a voluntary, intentional violation of a known legal duty. The IRS has the burden of establishing willfulness. Willfulness is shown by the person’s knowledge of the reporting requirements and the person’s conscious choice not to comply with the requirements. In the FBAR situation, individuals should know is that they have a reporting requirement. If a person has that knowledge, the only intent needed to constitute a willful violation of the requirement is a conscious choice not to file the FBAR.