IRS Willful FBAR Penalty Process

Once the IRS flags a potential willful FBAR violation, the investigation process begins, and it’s more aggressive than most taxpayers expect. If you’ve received a notice or been contacted by an examiner, here’s what typically follows:

1. Initial Review: The IRS checks your tax returns, FBAR history, and foreign bank data for signs of noncompliance.
2. Information Requests: You may be asked to provide bank records, account statements, and financial documents. Not responding can be used against you.
3. IRS Interview: The IRS may schedule an interview (often after Letter 3709) to ask about your knowledge and intent. What you say here is key.
4. Willfulness Determination: The IRS uses a “more likely than not” standard. Reckless actions or ignoring the rules may be treated as willful, even if you didn’t intend to break the law.
5. Penalty Assessment: If the IRS decides your actions were willful, they’ll calculate penalties and send a notice, often based on 50% of account balances per year.
6. Response Window: You have a limited time to respond or challenge the proposed penalty. Without legal action, it becomes final and collectible.

What You Can Do During This Process

If you’re still in the review or interview stage, this is your opportunity to present facts, clarify misunderstandings, and reduce exposure. Verni Tax Law steps in to:

• Represent you during IRS interviews and correspondence
• Review IRS findings and evidence before penalty assessment
• Build a legal defense that challenges willfulness classifications
• Protect your position before the case escalates into enforcement

Book a Strategy Session Before the IRS Finalizes Your Case →

And If the Penalty Is Already Assessed

If you’ve already received a final penalty notice, there may still be options to limit the damage, but time is limited.

• Appeal or Protest: You may be able to file a written protest and request an administrative appeal. This is your last chance to dispute the IRS’s willfulness finding before collection begins.
• Penalty Abatement: In some cases, we may present evidence that the IRS misclassified the violation or overlooked key facts, which can lead to partial or full penalty removal.
• Payment Options: If penalties are upheld, the IRS may offer relief through an installment agreement, offer in compromise, or hardship-based status. These options depend on your financial situation and legal standing.

Request a Case Review to Explore Post-Penalty Options →

Risks & Consequences of Willful FBAR Penalties

Civil Consequences
Massive Monetary Penalties Up to 50% of the highest account balance per year, per account, even if the funds were legally earned.	Penalties That Exceed the Account Balance Multi-year assessments can total more than 100% of your original funds, especially if multiple accounts are involved.
Immediate IRS Collections Once final, the penalty becomes a personal debt. The IRS may initiate aggressive collection through levies and garnishments.	Federal Tax Liens Public liens can be filed against your name or business, damaging credit and financial standing.
Asset Seizure The IRS can seize U.S.-based assets, including property, retirement funds, and investment accounts.	Passport Restrictions If penalties trigger certain IRS thresholds, you may be denied passport renewal or experience travel limitations under IRC §7345.
Business and Licensing Impact  Some industries (e.g., finance, law, healthcare) may suspend or revoke licenses for unresolved FBAR violations.
Criminal Exposure (Severe Cases)
Department of Justice (DOJ) Referral Egregious or repeated violations may be referred for criminal investigation and prosecution.	Fines and Imprisonment Willful violations may carry criminal fines up to $250,000 and up to 5 years in prison under 31 U.S.C. §5322.
Additional Charges Related offenses may include conspiracy, tax evasion, or false statements, significantly increasing legal exposure.	Immigration Consequences Criminal convictions may impact visa eligibility, green card status, or naturalization for non-citizens.
Reputational and Legal Risks
Increased IRS Scrutiny Going Forward You may be flagged for further audits or compliance reviews in future tax years.	Public Disclosures (in Criminal Cases) Criminal convictions are public record and may appear in media or background checks.
Long-Term Legal and Financial Monitoring  Even after resolution, tax liens or payment plans can affect lending, business opportunities, and professional roles.

Our Willful FBAR Penalty Defense Services

Verni Tax Law provides full legal support to individuals facing willful FBAR penalty investigations or assessments. These cases require a combination of legal precision, tax understanding, and direct IRS representation, all of which are handled personally by Anthony N. Verni with focus and discretion.

1. Confidential Legal Consultation

Every engagement starts with a private, attorney-led consultation. This includes a review of any IRS notices, foreign account details, and related filings to understand your exposure and clarify where legal intervention is needed.

2. Case Review and Risk Evaluation

We perform a detailed review of your FBAR history, tax returns, account documentation, and the IRS’s position. This helps uncover inconsistencies, overreach, or unsupported classifications in the government’s case.

3. Custom Legal Defense Strategy

Clients receive a tailored legal defense focused on disputing willful classifications, narrowing penalty scope, and leveraging factual or procedural errors in the IRS’s findings. We position your case using applicable law and supporting documentation.

4. Full IRS Representation

We handle all communication with the IRS on your behalf, including interview preparation, written responses, and direct representation in meetings or correspondence. This helps control the narrative and avoids self-incrimination or missteps.

5. Formal Protests and Appeals

If the IRS has proposed penalties, we prepare and submit formal protests, legal briefs, or supporting materials to challenge the classification and amount. We also represent you in administrative appeals to resolve the matter before it reaches enforcement.

6. Penalty Negotiation and Relief Support

Our team assists in securing penalty reductions, installment agreements, or hardship-based resolutions when applicable. All relief options are evaluated in line with your financial position and the legal framework of the case.

Why Choose Verni Tax Law?

When you’re facing willful FBAR penalties, you’re not just dealing with paperwork; you’re defending your finances, your reputation, and possibly your future.

Here’s what you can count on with Verni Tax Law:

We focus only on high-stakes IRS and tax defense matters.

This isn’t a side practice. FBAR penalties, foreign account cases, and IRS enforcement are our core. We don’t prepare tax returns or manage bookkeeping; we handle serious, often urgent, legal tax issues with the precision they demand.

We know how the IRS frames willfulness and how to challenge it.

The IRS doesn’t need to prove fraud to impose crushing penalties. They often rely on vague standards like “recklessness” or “willful blindness.” We’ve seen these tactics before, and we know how to respond with facts, law, and clarity.

We don’t hand your case to staff. You get direct legal representation.

If you’re trusting someone with your defense, you deserve to know who’s actually working on your file. At our firm, your case isn’t passed around; it’s handled directly, with confidentiality and care from start to finish.

We work with clients across the U.S. and overseas.

Whether you’re in New York or New Delhi, if the IRS is targeting you for FBAR violations, we can represent you. We understand the added complexity of offshore accounts and cross-border financial activity, and we personalize your defense accordingly.

We won’t overpromise, but we’ll protect you at every turn.

We don’t guarantee outcomes, and you should be wary of anyone who does. What we guarantee is a defense built on truth, structure, and a commitment to pushing back where the IRS goes too far.