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IRS Caps FBAR Penalties

Saul Brenner, CPA, J.D., LL.M. 07.07.2015 | eVisor

New IRS guidance1 places a cap on the maximum percentage of the penalty for failing to file a Foreign Bank and Financial Account Report (FBAR).  In a memorandum issued by the IRS on May 13, 2015, instructions were provided for both willful and non-willful FBAR violations. The guidance, which expires on May 13, 2016, applies to all open FBAR penalty cases.

In most willful violation cases, the penalty will be limited to 50% of the highest aggregate balance of all unreported foreign financial accounts during the tax years that are being examined.  In no event will the total penalty amount exceed 100% of the highest aggregate balance of all unreported foreign financial accounts for the tax years under examination.

In most cases involving multiple, non-willful violations, there will be one penalty capped at $10,000 for each open year regardless of the number of unreported foreign financial accounts.  In no event will the total penalties exceed 50% of the highest aggregate balance in all unreported accounts.  

1 SBSE-04-0515-0025, May 13, 2015, Doc. 2015-12570

Questions? Contact your Berdon advisor or Saul Brenner at 212.331.7630 | sbrenner@berdonllp.com

 

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