If you have dabbled in the realm of international taxes and reporting, then you may know that failing to file certain forms can lead to hefty fines. Failing to file FinCEN Form 114: Report of Foreign Bank & Financial Accounts (known as the “FBAR”) can carry a civil penalty of up to $10,000 for each non-willful violation. And, if the violation is found to be willful, the penalty increases to $100,000 or 50% of the balance in the account at the time of violation.
A recent ruling from a federal trial court in Texas gives hope of somewhat less severe penalties to those who non-willfully failed to file their FBAR. This ruling helped to determine what constitutes a “violation”, as the parties disagreed on whether not filing the FBAR in itself was one single “violation”, or if each account not reported on the FBAR constituted separate “violations” that would each be penalized. Ultimately, the court determined that it was Congress’ intent that the penalty for willful violations relate to specific accounts, and the penalty for non-willful violations constitute a single violation for that year. They summarized that non-willful FBAR penalties are on a “per-form”, rather than “per-account” basis.
The above information is general in nature and is not tax advice. Contact your Henry+Horne tax professional for more details.
Haley Braun, CPA