Criminal FBAR penalties are among the most serious penalties that can be imposed for tax crimes. These penalties are not nearly as common as civil FBAR penalties and will only be imposed for willful violations.
Criminal FBAR Penalties
The general criminal FBAR penalty is up to $250,000 in fines and/or a prison sentence of up to five years. The government must show beyond a reasonable doubt that you willfully failed to file your FBAR.
A harsher penalty can be imposed if you either:
- Willfully failed to file an FBAR while violating another law of the United States, or
- Willfully failed to file an FBAR as a pattern of illegal activity involving more than $100,000 in a 12-month period.
In these cases, the penalty can be up to $500,000 in fines and ten years in prison.
Immunity for Criminal Prosecution
If you’re seriously concerned about criminal prosecution for FBAR violations, you may want to use the New Offshore Disclosure Program. This is the only method of disclosing your unreported offshore accounts that promises immunity from criminal charges if you cooperate and negotiate a deal with the IRS.
However, you should also know what civil FBAR penalties may be assessed. The non-willful FBAR penalty is generally $10,000 per violation. Willful FBAR violations may result in penalties of the greater of $100,000 or 50% of the highest aggregate offshore account balance.
The Offshore Disclosure Program generally requires payment of willful FBAR penalties. You may be able to negotiate the exact amount you’ll have to pay, particularly if you qualify for the mitigation guidelines.
This is why it’s critical to get a professional opinion on the issue of willfulness. If your conduct is unlikely to qualify as willful, you may use the Streamlined Filing Compliance Procedures instead. This program requires a much smaller penalty to qualify.
There is also a higher standard of proof in a criminal case. You and your tax attorney can go over the risks and benefits of each approach to determine the best course of action.
If you have undisclosed offshore accounts, start learning more about your voluntary disclosure options and talk to a tax attorney to see which offshore disclosure method is most appropriate for your situation.
The Gartzman Law Firm can help you with FBAR penalties and other IRS tax problems. Use our contact form to request a consultation with an Atlanta tax resolution attorney