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<\/p>\nKnowledge is protection when the IRS is involved. I'm Darrin Mish, a tax attorney in Tampa with 32 years of experience representing taxpayers nationwide. Here's what I want you to understand.<\/p>\n
Filing a Foreign Bank Account Report (FBAR) is mandatory for all persons and businesses operating accounts outside the United States. If you fail to file a FBAR, you can face either criminal or civil penalties.<\/p>\n
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The criminal penalties include:<\/p>\n
\u2022 A fine of $250,000 or 5 years imprisonment or both for an intentional failure to file a FBAR.<\/p>\n
\u2022 A fine of $500,000 and\/or 10-year\u00a0imprisonment if the willful failure to file a FBAR violated other written laws. The fine also occurs if the failutre to file was to\u00a0promote illegal activities in the country.<\/p>\n
The criminal penalties compound with collateral consequences as outlined below:<\/p>\n
\u2022 You can lose your right to vote.<\/p>\n
\u2022 Your professional license can be revoked.<\/p>\n
\u2022 You can lose your right to be in possession of arms.<\/p>\n
\u2022 You can lose your job.<\/p>\n
\u2022 If you are a holder of a green card, you can be deported to your country of origin upon completion of your jail term.<\/p>\n
The civil penalties classify into a three-tier system as follows:<\/p>\n
\u2022 If the failure took place after October 22, 2004, you can receive a penalty of up to $100,000 or 50% of the foreign account balance as at the time of committing the violation. The said penalty will continue to gain for each year that you do not file a FBAR.<\/p>\n
\u2022 If the failure was as a result of an oversight, a penalty of $10,000 will be imposed on you for each violation.<\/p>\n
\u2022 The failure is due to a reasonable cause such as poor communication skills for immigrants or lack of financial knowledge. You can get a waiver from payment of a civil penalty.<\/p>\n