What Are the Penalties for Not Filing an FBAR?

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Latest Facts & News

  • FBAR penalties are at an all-time high: As of 2025, non-willful penalties have risen to $16,536 per violation, and willful violations can result in penalties of the greater of $165,353 or 50% of the account balance.
  • Recent Supreme Court ruling: The 2023 Bittner case clarified that non-willful penalties are applied per FBAR form, not per account, reducing potential penalties for many filers.
  • IRS enforcement is increasing: The IRS is leveraging advanced data analytics and international banking agreements to detect unreported foreign accounts, making non-compliance riskier than ever.
  • Automatic extension: FBAR filers now receive an automatic extension to October 15 if they miss the April 15 deadline.
  • Streamlined compliance options: Taxpayers who act quickly and can demonstrate non-willful conduct may avoid penalties through IRS amnesty programs.

Missing or ignoring FBAR filing rules can now lead to some of the harshest financial penalties the IRS has ever enforced. In 2025, non-willful penalties have jumped to $16,536 per violation, while willful violations can mean losing half your account balance, or more. The IRS is using advanced technology, global banking data, and new court decisions to spot even small mistakes, making it much easier for them to find and penalize unreported foreign accounts.

Whether your mistake was an honest oversight or you’re worried about a past filing, understanding the latest FBAR penalty rules is more important than ever. 

This guide answers, What are the penalties for not filing an FBAR, how the IRS decides what’s willful or non-willful, and what real cases can teach you about the risks.

Read on to learn what you could face and how to protect yourself with the help of an FBAR Tax Attorney.

What is the FBAR?

The FBAR, or Foreign Bank Account Report, is a form to be filed by people in the United States who have money in bank accounts outside the country. Its official name is FinCEN Form 114. This application has no connection to taxation; it is merely a notification to the government that the person holds foreign accounts. 

Should your total value in accounts abroad exceed $10,000 at any time during the year, you are required to file an FBAR. This is so that the government can track offshore money and prevent tax evasion.

Who must file an FBAR?

If you are a “U.S. person” and you have foreign financial accounts, you may need to file an FBAR (FinCEN Form 114). The rule is simple: if the total value of all your foreign accounts goes over $10,000 at any time during the year, you must file.

A U.S. person includes:

  • U.S. citizens, even if living abroad
  • U.S. residents, including green card holders
  • U.S. companies, partnerships, and LLCs
  • U.S. trusts and estates

Foreign accounts that count:

  • Bank accounts (checking, savings, CDs) held outside the U.S.
  • Investment or brokerage accounts at foreign institutions
  • Mutual funds or pooled funds based overseas
  • Certain foreign retirement or pension accounts
  • Insurance policies with a cash value held in another country

FBAR Eligibility Checklist:

  • Are you a U.S. person?
  • Do you have a financial interest in or signature authority over foreign accounts?
  • Did the total value of all your foreign accounts go over $10,000 at any time this year?

If you answer “yes” to all three, you must file an FBAR.

FBAR Deadlines and Extensions

The FBAR deadline is essential. Missing it can lead to problems with the IRS.

Key dates →

  • April 15: Standard FBAR filing deadline each year
  • October 15: Automatic extension, no need to apply

What counts as late filing?

  • Submitting your FBAR after October 15 is considered late and may lead to penalties.

What to do if you’re late?

  • File as soon as you realize you missed the deadline
  • Explain your reason for filing late if asked by the IRS

Tip: The FBAR is filed electronically through the FinCEN website, not as part of your regular tax return.

FBAR Penalties Explained

If you don’t file your FBAR (FinCEN Form 114) when required, you could face serious consequences. Many taxpayers wonder what are the penalties for not filing an FBAR, and the answer depends on whether the violation was accidental, intentional, or simply due to negligence. The IRS applies different FBAR late filing penalty levels based on these factors.

Here’s what you need to know:

1. Non-Willful FBAR Violations and Penalties

The IRS views non-willful FBAR violations as acts committed not with the intent of hiding money or evading the law, but due to some honest mistake or genuine ignorance. The matter usually concerns a person who was unaware of the rules or misunderstood their responsibilities.

Non-willful penalties are civil, not criminal; these cases generally come with the possibility of having the penalty waived if the taxpayer acts promptly and in good faith.

How does the Penalty Work?

In cases of a non-willful violation, the IRS can impose a civil penalty of up to $10,000 per FBAR filing. This amount is adjusted for inflation in 2025; the maximum will be $16,536 per form filed.

In 2023, the Supreme Court confirmed the penalty applies once for each unfiled FBAR, rather than once for each foreign account (Bittner v. United States).

In simpler terms, the penalty attaches to the FBAR itself and not the accounts reported in that FBAR. That’s a huge difference; it can mean a penalty of $16,536 vs. $165,360.

When Can You Avoid the Penalty?

The IRS will reduce or waive the penalty if you can prove that you had reasonable cause, meaning you attempted to follow the rules but were unsuccessful.

Examples of situations that may qualify:

  • You actually relied on a tax preparer and were able to provide complete and accurate information. 
  • You were simply unaware that foreign accounts inherited needed to be reported. 
  • You have no prior issues with FBAR or criminal tax history. 
  • You’re either unfamiliar with finances or the law. 
  • You faced unexpected events that affected your ability to comply

The IRS looks into the facts of each case, how you took corrective action for the mistake, and whether you declared the income from the foreign accounts.

What to Expect from the IRS?

In non-willful cases, the IRS may commence an examination into your situation. This process may include:

  • Checking your financial records
  • Investigating your understanding of FBAR rules
  • Reviewing whether you reported all the foreign income and paid the right kind of tax
  • Assessing whether your conduct was inadvertent or careless

The IRS may consider whether you corrected the matter on your own initiative before any contact.

Options to Fix the Problem

If you missed the filing deadline, there are options available to help you catch up and reduce penalties. The Streamlined Filing Compliance Procedures is one IRS program that helps taxpayers fix non-willful FBAR issues. It allows you to file late forms and possibly avoid penalties altogether.

Non-willful violations can still result in penalties, but they don’t have to be overwhelming, especially if you respond promptly and take the necessary steps.

Case Study: Bittner v. United States
A Supreme Court Ruling That Changed FBAR Penalties for Good

A taxpayer failed to file the required FBARs for multiple years. An FBAR was supposed to report several foreign bank accounts. When the IRS reviewed the case, they didn’t treat the mistake lightly, even though it wasn’t intentional.

They were considering what they labelled a non-willful violation, i.e., meaning that the taxpayer truly did not mean to break the law. However, penalties of $10,000 were imposed by the IRS for each year in which the FBARs were not filed. This resulted in a staggering $2.72 million in total penalties.

The taxpayer challenged the amount of the penalty, claiming that the law allows the IRS to impose only one penalty per FBAR form, not per account.

What did the Supreme Court decide?

In 2023, the Supreme Court entered the fray, issuing a landmark ruling in Bittner v. United States.

The Court ruled that for non-willful FBAR violations, the penalty should apply once per form, not per account.

Therefore, even if the taxpayer had 20 unreported accounts in a single year and filed no FBAR, the IRS could only apply one penalty for that year, not 20 separate penalties.

In Bittner’s case, that reduced the total penalty from $2.72 million to just $50,000

2. Willful FBAR Violations and Penalties

A willful FBAR violation happens when the IRS believes you intentionally ignored the filing requirement or acted with reckless disregard. This means you were aware of the FBAR rules but chose not to comply or attempted to conceal your foreign accounts.

How Does the Penalty Work?

For willful violations, the penalty is much higher. In 2025, it is the greater of:

  • $165,353 per violation, or
  • 50% of the highest balance in the unreported foreign account during the year, per account, per year.

The IRS can apply this penalty for each account and each year you failed to file.

What Counts as Willful?

  • Ignoring clear warnings about FBAR filing
  • Deliberately hiding foreign accounts
  • Providing false information or incomplete disclosures
  • Acting with reckless disregard for the law

Can Willful Violations Lead to Criminal Charges?

Yes. While most FBAR penalties are civil, willful violations can sometimes result in criminal prosecution. This can include:

  • Fines up to $250,000
  • Prison time up to 5 years

If the violation is part of a larger illegal scheme or pattern, penalties can increase to:

  • Fines up to $500,000
  • Prison time up to 10 years

What to Expect from the IRS?

The IRS will conduct a thorough investigation, which may include →

  • Reviewing bank records and financial transactions
  • Interviewing you or your representatives
  • Coordinating with other government agencies

You may face both civil penalties and criminal prosecution.

How do you respond if you face willful penalties?

  • Consider voluntary disclosure programs if you want to come into compliance before the IRS contacts you
  • Gather all relevant documents and be prepared to cooperate fully

Case Study: United States v. Schwarzbaum (2024)
Willful FBAR Penalties Upheld by 11th Circuit

Isac Schwarzbaum was a U.S. citizen who held over $20 million in foreign accounts between 2006 and 2009. He did not file truthful FBARs and failed to report income from these accounts, despite having read the instructions to do so and consulted with accountants. Since the IRS viewed his actions as indicative of reckless disregard of the law, it treated the violation as willful.

The IRS assessed penalties using a per-account, per-year system; fines of up to millions of dollars were imposed, based on whichever was greater: $100,000 or 50% of the highest account balance for each year. 

What did the courts decide?

The 11th Circuit Court of Appeals held two essential rulings in 2024:

  • It confirmed that recklessness is sufficient to establish willfulness under FBAR.
  • FBAR penalties are subject to the Eighth Amendment and must be proportionate to the severity of the violation.
  • The court upheld penalties on the larger accounts but reduced the fines imposed on a few smaller ones, as it found them excessive.

The final result was a $13.4 million penalty, with the court confirming that recklessness is equivalent to willfulness, excessive fines can be reduced, and large penalties remain enforceable.

Read More → Willful FBAR Penalty Case Study

3. Negligence Penalties (for Businesses)

A negligence FBAR violation typically applies to businesses or entities, rather than individuals. Negligence means the company failed to use reasonable care or made careless mistakes in meeting its FBAR filing obligations. This is different from non-willful (honest mistake) and willful (intentional) violations.

How Does the Penalty Work?

  • For simple negligence, the penalty is $1,430 per violation in 2025.
  • If the IRS finds a pattern of negligence, meaning repeated or consistent careless behavior, the penalty can go up to $111,308.

Who Can Be Affected?

  • Banks, corporations, partnerships, LLCs, trusts, and other U.S. entities with foreign accounts may face penalties for negligence.
  • These penalties are rare for individuals but can be applied if a business fails to establish proper systems for FBAR compliance.

What Counts as Negligence?

  • Failing to set up procedures to track and report foreign accounts
  • Ignoring reminders or notices about FBAR requirements
  • Repeated mistakes in filing or reporting

What to Expect from the IRS?

  • The IRS may review your business’s compliance systems and past filings.
  • They may look for signs of a pattern, such as missing FBARs over several years or for multiple accounts.

How Can You Fix Negligence Issues?

  • Review your business’s compliance procedures regularly.
  • Train staff responsible for financial reporting.
  • If you discover a mistake, file the correct forms as soon as possible and explain what happened.

Can Penalties Be Reduced or Avoided?

  • If you can show that your business took reasonable steps to comply and the mistake was not part of a pattern, the IRS may reduce the penalty.
  • Acting quickly and improving your internal controls can help demonstrate good faith.

Negligence penalties are serious, especially for businesses with ongoing compliance issues. Regularly reviewing your reporting process and acting promptly if you identify an issue can help you avoid these costly penalties.

Now that we’ve covered what are the penalties for not filing an FBAR, let’s take a closer look at how long the IRS has to enforce those penalties—and what the statute of limitations means for your case.

Bonus → FBAR Penalty Relief For Taxpayers

The Statute of Limitations for FBAR Penalties

The statute of limitations is the time limit the IRS has to assess FBAR penalties. For most FBAR cases, the IRS has six years from the original due date of the FBAR to review your filing and assess a penalty.

Options for Delinquent FBAR Filers

If you missed the FBAR deadline, there are several ways to catch up and possibly reduce or avoid penalties. The right option depends on your situation and whether your mistake was non-willful or willful.

  • Delinquent FBAR Submission: If you forgot to file an FBAR but reported your income and paid your taxes, you can file it now on the FinCEN website without facing penalties, as long as you’re not under IRS investigation. 
  • Streamlined Filing Compliance: If you missed FBARs and some foreign income but your errors were unintentional, you can file the last three years of tax returns and six years of FBARs, pay any taxes owed, and certify your mistake to potentially reduce or eliminate penalties. 
  • Voluntary Disclosure: If you may have willfully not filed FBARs or have bigger issues, this program allows you to disclose everything to the IRS, pay the taxes and higher penalties, and avoid criminal charges if done before the IRS contacts you.

Important Note →

Do not simply file late FBARs (“quiet disclosure”) without using an official IRS program. This can increase your risk of full penalties and further IRS scrutiny.

How to Respond If You Receive an FBAR Penalty Notice?

If the IRS sends you an FBAR penalty notice, do not sit on it for long. Read the notice carefully to find out why you were penalized and what it is that the IRS asserts you did wrong. There are usually time constraints that limit your ability to respond.

  • Review the notice and gather your records.
  • If you believe the penalty is improper, you may appeal by following the directions in the notice. 
  • Respond within the deadline and provide any supporting documents for your claim.
  • If you are unsure about what to do, seek professional assistance immediately.

Note →

Suppose you disagree with assessing an FBAR penalty. In that case, you may appeal to the IRS’s Independent Office of Appeals, which may, depending on your circumstances, reduce or remove the penalty or penalties. FBAR penalties are not considered taxes; therefore, the U.S. Tax Court does not have jurisdiction over these cases. You must further challenge decisions by prosecuting your case in federal district court or the Court of Federal Claims.

Don’t Ignore FBAR Rules!
Immediate Action Counts Much

FBAR violations and penalties exist, and enforcement of FBAR rules is more rigorous than ever. If you have any foreign accounts, make sure you know your business, remain on the filing deadline, and correct any errors once faced with them. Early action can save you from a heavy dollar fine and from truckloads of stress.

If you have questions or need help with FBAR issues, Verni Tax Law is here for you. We can guide you through your options and help you move forward with confidence. Don’t wait; reach out today and get the support you need.

FAQs

  1. Can FBAR penalties be waived?

Yes, in some cases. The IRS may waive or reduce FBAR penalties if you can show reasonable cause, meaning you made a genuine effort to comply but still missed the requirement. This could include relying on incorrect advice from a tax professional or facing personal hardships. Acting quickly and correcting the mistake can improve your chances.

  1. What if I didn’t know I had to file an FBAR?

If you truly didn’t know and the mistake wasn’t intentional, the IRS may treat it as a non-willful violation. These usually carry lower penalties and may be waived if you show reasonable cause. But if they believe you ignored clear signs or were reckless, the penalties can still be serious.

  1. How far back can the IRS assess FBAR penalties?

The IRS can generally go back six years from the date the FBAR was due. For example, if you didn’t file an FBAR in 2018 (due in 2019), they can still assess penalties until 2025.

  1. Does the IRS audit for FBAR violations?

Yes. The IRS reviews FBAR compliance during audits, especially if it sees signs of unreported foreign income. They also receive foreign bank data through international agreements and may match it against your tax returns to find FBAR issues.

  1. What is the difference between FBAR and FATCA reporting?

Both FBAR and FATCA involve reporting foreign accounts, but they serve different purposes:

  • FBAR (FinCEN Form 114): Required if you have over $10,000 in foreign accounts in total. Filed separately with FinCEN, not the IRS.
  • FATCA (Form 8938): Form 8983 is required if your foreign assets exceed certain thresholds (starting around $50,000 for individuals). Filed with your tax return.

You may need to file both if your accounts and assets meet the filing rules.

  1. How long do I need to keep records for my foreign accounts after filing an FBAR?

You should keep all records for at least 5 years from the FBAR’s due date. This includes the account number, bank name and address, account type, and the highest balance during the year. The IRS or FinCEN can ask to see these records anytime within that period, so it’s best to keep them safe and organized.

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