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
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