FBAR Penalties

The FBAR is a yearly report of foreign bank and financial accounts, and the penalties for missing it can be very large. They depend heavily on one question: was the failure willful or not? This page explains who must file, how the two penalty levels work, the dollar maximums we could verify, and what the IRS says you can do about past years.

Who must file

The IRS says a U.S. person, including a citizen, resident, corporation, partnership, limited liability company, trust or estate, must file if both of these apply: the person has a financial interest in, or signature or other authority over, at least one foreign financial account, and the combined value of those accounts exceeded $10,000 at any time during the calendar year. Bank accounts in India, such as NRE and NRO accounts and fixed deposits, can fall within this test. See our page on FBAR for Indian bank accounts.

The FBAR is separate from Form 8938, which is attached to your income tax return and has different thresholds. Filing one does not replace the other. Our page on Form 8938 penalties explains that form.

The penalty levels

The IRS says civil FBAR penalties have varying upper limits and no minimum. They are adjusted for inflation, and the table below shows the figures last published for penalties assessed on or after January 17, 2025.

These amounts are adjusted periodically under federal law, and the IRS directs readers to Title 31 of the Code of Federal Regulations, section 1010.821, for the current table. The January 2025 figures are the most recent adjustment we were able to verify. Before relying on a number for a decision, confirm it at the source.

Bittner and per-report penalties. In 2023 the Supreme Court decided in Bittner v. United States that the non-willful penalty applies once per late or incorrect report, not once per account. The Taxpayer Advocate Service describes a case where per-account penalties of about $2.72 million across 272 accounts were reduced to $50,000, which was one $10,000 penalty for each of five years. The IRS manual was updated through interim guidance after the decision.

Examples (hypothetical). A taxpayer did not file FBARs for three years because they did not know about the rule. If each failure is found to be non-willful and no relief is given, the maximum would be $16,536 for each of the three reports, or $49,608 in total, no matter how many accounts were on each report. In practice the IRS has discretion and can assess less. If an account held $400,000 on the violation date and the violation were found willful, 50% of the balance is $200,000, which is more than $165,353, so the cap for that violation would be $200,000.

What willful means

Willfulness can be shown by knowing violation, reckless violation or willful blindness. The IRS bears the burden of proving it. Failing to answer the foreign account question on Schedule B after admitting an interest in a foreign account can be used as evidence of willful blindness, though a wrong or missing check box is only one fact among several. Because the label drives the dollars, facts about what you knew and what your preparer asked matter a great deal.

Criminal penalties

The IRS reference guide also lists criminal penalties for willful violations: up to $250,000 or 5 years in prison or both for failing to file or retain records, up to $500,000 or 10 years if other laws are violated at the same time, and up to $10,000 or 5 years for knowingly filing a false FBAR. The IRS says civil and criminal penalties can be imposed together. These apply to willful conduct. Whether conduct was willful is a question of fact, and anyone worried about it should speak with a tax attorney before making statements to the IRS.

Filing a late FBAR

The IRS says a person who learns they should have filed for an earlier year should file the late FBAR electronically through the BSA E-Filing System, entering the calendar year being reported and explaining the late filing in the text box provided. If they properly report the accounts and the IRS determines that the violation was due to reasonable cause, no penalty is imposed. The IRS also describes compliance options for people with unreported income or accounts. Which route fits depends on facts including whether the failure was willful, so get advice first.

You should also keep records of the foreign accounts for five years from the FBAR due date, as the IRS reference guide advises.

How to avoid penalties

• List every foreign account, including joint accounts, accounts held through an entity and accounts where you can sign for someone else.
• Track the highest balance in each account during the year and convert to U.S. dollars.
• File the FBAR by April 15, using the automatic extension if you need it, and answer the foreign account questions on your return consistently.

How we can help

We prepare FBARs and Form 8938 for clients with accounts abroad, help work out which accounts are reportable, and review past years to find the right way to come into compliance. Our international tax team works with clients who have accounts in India. We cannot promise a penalty will be waived, and willfulness questions may require an attorney. See also the foreign reporting penalties overview and contact us.

Frequently asked questions

General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.