A US taxpayer is required to file the Report of Foreign Bank and Financial Accounts, commonly called FBAR, if the taxpayer has foreign financial accounts which exceed $10,000 at any time during the year. Failure to file an FBAR can expose a taxpayer to substantial civil penalties as well as criminal prosecution.
The amount of civil penalties depends on whether the failure to fail FBAR was willful or non-willful. A violation is non-willful when the taxpayer did not knowingly, recklessly, or deliberately disregard the FBAR filing requirement. An inadvertent fail to file would be considered non-willful. But even a non-willful failure to file can lead to substantial penalties.
The original maximum penalty for a non-willful violation was $10,000, but that amount is adjusted for inflation each year. The current maximum penalty in 2026 is $16,536. Thanks to a recent Supreme Court decision (Bittner v. United States), non-willful penalties are applied per form instead of per account. So, a taxpayer who had several foreign accounts and failed to file an FBAR would owe one penalty instead of several.
The law also provides a reasonable-cause exception. If there was a reasonable cause for failing to file the FBAR, then a penalty would not be imposed. However, ignorance of the filing requirement by itself is not a reasonable cause.
Penalties for willful violation of FBAR are more egregious. For a willful violation, the maximum civil penalty is the greater of 50% of the balance of the account or an inflation adjusted amount of $165,353 (as of July 2026). Unlike non-willful penalties, willful penalties are calculated per account instead of per form.
An example will illustrate how large the penalty is for a willful violation. Suppose a taxpayer has two foreign accounts of $5,500 each. This would trip the FBAR filing requirement. If the failure to file FBAR was willful, the taxpayer would owe $330,706 because the penalty is the greater of $165,353 or 50% of the balance of the account, and the taxpayer had two accounts. So, the penalty for willful failure to file an FBAR with two accounts worth $11,000 is $330,706.
In addition to the large civil penalties, a taxpayer may face criminal prosecution if deliberately failing to file FBAR. Under federal law, a taxpayer who willfully violates the FBAR rules may be fined up to $250,000, imprisoned for up to five years, or both. But if the taxpayer willfully violates the FBAR rules while also violating a separate federal law the penalties double to $500,000 or 10 years in prison, or both.
A criminal penalty does not prevent the government from also imposing a civil penalty. In addition, prosecutors may pursue charges related to tax evasion.
Because the difference between willful and non-willful violation of the FBAR rules can result in dramatically different penalties, a taxpayer who is delinquent on their FBAR obligations should consult a tax professional immediately.
At Safeguard Law, PLLC, our team of experienced tax attorneys specializes in helping our clients navigate issues such as this. Contact us today to schedule a consultation! Our main business line is (202) 505-1741.