Avoid Life-Altering Criminal and Civil Penalties for Non-Filing of FBAR: Discover the Astonishing Benefits of Voluntary Disclosure

As a leading and highly trusted nationwide law firm, deeply-versed in handling taxing tax-related cases, Spodek Law Group and the formidable Attorney Todd Spodek can expertly assist you in evading crippling penalties for failing to file a Foreign Bank Account Report (FBAR) by making a strategic voluntary disclosure to the formidable Internal Revenue Service (IRS). However, you might wonder, what is voluntary disclosure, and how on earth can it benefit you?

Voluntary Disclosure: Navigate the Perilous Path Quietly or Noisily

Guided by the IRS, voluntary disclosure is “a submission made by a taxpayer to the Criminal Investigation Division (CI) of the IRS that involves the taxpayer making a full, truthful, and timely disclosure of facts relating to their liability for Federal taxes.” In simpler terms, voluntary disclosure means courageously admitting your mistake of not filing an FBAR and promptly paying any taxes owed, with accompanying interest.

There are two tactics of making a voluntary disclosure: the quiet or the noisy way. The quiet method entails submitting amended tax returns under the radar, without contacting the fearsome CI. This route suits those who tremble at the prospect of being investigated or prosecuted by CI. Taking the noisy approach involves proactively contacting CI directly to openly discuss your dire situation.

The Harrowing Criminal Penalties for Willful Non-Filing

The consequences of not filing an FBAR are utterly devastating if the omission is willful. Possible criminal penalties are as follows:

• Willful Failure to File an FBAR: up to a staggering $250,000 fine; 5 years of grueling imprisonment; both.
• Willful Failure while violating another US law or as part of illegal activity involving over $1000k in 12 months: up to a bruising $500,000 fine; 10 years shackled in imprisonment; both.

Willfully failing can trigger collateral consequences, such as losing essential voting rights, professional licenses, or employment, and even deportation after soul-crushing jail time. It is, therefore, crucial to avoid willful non-filing at all costs.

The Relentless Civil Penalties for Non-Filing

In addition to the criminal penalties, there are relentless civil penalties for non-filing. The civil FBAR penalties are applied through a three-tier system, where the severity varies, depending on whether the non-filing is willful, non-willful, or willful with intent to conceal. For willful violations after October 22, 2004, the maximum penalty can soar up to an eye-watering $100k or 50% of the account balance at the time of violation.

For instance, if an account balance is an immense $6m, then the maximum penalty can be a jaw-dropping $3m imposed repeatedly for each year not filed. This penalty can rapidly balloon into alarming hundreds of thousands of dollars, as demonstrated by the distressing 2014 case against Carl Zwerner, who was assessed a crippling $2.24m penalty for failing to file his FBAR for a Swiss bank account.

For non-willful violations, the maximum penalty can be an imposing $10k per violation but may be waived if a reasonable cause is demonstrated.

It’s vital to note that penalties for non-filing of FBAR can be assessed in addition to other tax penalties, interest, and criminal charges. Consequently, it is critically important that taxpayers file their FBAR forms accurately and on time to evade potential legal calamities.

The Chilling Case Against Carl Zwerner

Carl Zwerner neglectfully failed to report his foreign bank account for several years before being found guilty of violating federal law, by concealing assets from the watchful US authorities through offshore accounts held at UBS AG (UBS). The court ultimately found that his violation was willful and imposed a maximum fine of $2.23 million based on a penalty of $100k per year violated, which is the highest civil assessment possible under current law.

It is also essential to bear in mind that the IRS has discretion when assessing fines less than the maximum amount, depending on specific circumstances such as a reasonable cause, instead of completely neglecting the filing duty.

Crushing FATCA Form Penalties

In addition to the formidable FBAR penalties, a failure to file the required Foreign Account Tax Compliance Act (FATCA) Form 8938 could result in severe penalties. FATCA requires vigilant US taxpayers to report certain foreign financial assets on their tax returns. The penalties for non-filing of Form 8938 can climb up to an astonishing $60k for non-willful violations and up to a staggering $120k for willful violations.

US taxpayers burdened with foreign financial accounts must comprehend the exacting reporting requirements and file all necessary forms before the deadline. The potential penalties for non-compliance can exceed the foreign account balance itself, making it critically important to consult an experienced and savvy tax professional in order to ensure full compliance with all tax laws and regulations.

FBAR Disclosures and Penalties for Failure to File