If you’ve missed FBAR filings or you’re worried about penalties, here’s what you need to know. FBAR penalties are among the steepest in the tax code, but relief options exist for many situations. This guide covers the 2026 inflation-adjusted penalty amounts, how the IRS determines willfulness, and the programs available to help you come into compliance.
2026 FBAR Penalties at a Glance
- Non-willful: Up to $16,536 per account, per year
- Willful: Greater of $165,353 or 50% of account balance per account
- Criminal: Up to $500,000 fine and/or 10 years imprisonment
- Statute of limitations: 6 years from FBAR due date
- Relief options: Reasonable cause, delinquent procedures, streamlined filing
Table of Contents
Current FBAR Penalties (2026 Inflation-Adjusted)
FBAR penalties adjust for inflation each year. Here are the current maximum amounts:
| Violation Type | Maximum Penalty | Application |
|---|---|---|
| Non-willful | $16,536 | Per account, per year |
| Willful (civil) | $165,353 or 50% of balance | Whichever is greater, per account, per year |
| Criminal | Up to $500,000 | Plus up to 10 years imprisonment |
These amounts represent maximums. The IRS has discretion to assess lower penalties, and relief programs can reduce or eliminate penalties entirely in qualifying situations.
For complete FBAR requirements, see our FBAR Filing Guide.
Understanding Non-Willful Penalties
Non-willful violations occur when you fail to file due to negligence, mistake, or ignorance of the requirement. This is different from intentionally hiding accounts or ignoring a known legal duty.
Maximum penalty: $16,536 per account, per year
Common causes of non-willful violations:
- Didn’t know the FBAR requirement existed
- Relied on a tax preparer who never mentioned FBAR
- Inherited foreign accounts and didn’t understand reporting obligations
- New U.S. resident unfamiliar with U.S. reporting rules
- Thought a foreign retirement account was exempt
While the IRS can assess up to $16,536 per account, they have discretion to assess lower amounts. First-time violations with small balances often receive warnings rather than penalties.
Not sure if you need to file? Check our guide on who needs to file FBAR.
Understanding Willful Penalties
Willful violations carry much steeper consequences. A violation is willful when you voluntarily and intentionally disregard a known legal duty.
Maximum penalty: Greater of $165,353 or 50% of account balance, per account, per year
Willful Blindness Warning “Willful blindness” can be treated as willful conduct. If you deliberately avoided learning about FBAR requirements when you should have known to ask, the IRS may treat this as willful. Courts have upheld willful penalties where taxpayers made conscious efforts to avoid learning about their obligations.
Warning signs the IRS considers:
- Large account balances
- Structured transactions to avoid reporting thresholds
- Offshore accounts in “secrecy” jurisdictions
- False statements to banks or the IRS
- Failure to disclose accounts after being asked
- Continuing to use undisclosed accounts after learning about FBAR
How Penalties Stack Up: Real Math
FBAR penalties apply per account, per year. This means they can stack quickly.
| Situation | Potential Penalties |
|---|---|
| 5 accounts, 1 year missed, non-willful | Up to $82,680 (5 x $16,536) |
| 2 accounts, 3 years missed, non-willful | Up to $99,216 (6 violations x $16,536) |
| 1 account, $500,000 balance, willful | $250,000 (50% of balance) |
| 2 accounts, $200,000 each, 2 years willful | Up to $661,412 (4 x $165,353) |
The Bittner v. United States Supreme Court case (2023) confirmed that non-willful penalties apply per account, not per form. This was actually good news for taxpayers with multiple accounts.
For information on filing deadlines and avoiding late penalties, see FBAR Deadline.
Willful vs Non-Willful: How the IRS Decides
The distinction between willful and non-willful can mean the difference between $16,536 and $165,353+ per violation. Here’s what the IRS examines:
| Factor | Leans Non-Willful | Leans Willful |
|---|---|---|
| Knowledge of requirement | No prior knowledge | Knew and ignored |
| Past compliance | Good compliance history | Pattern of non-compliance |
| Amounts involved | Modest balances | Large balances |
| Concealment efforts | None | Evidence of hiding |
| Cooperation | Full disclosure | Resistance, false statements |
| Source of funds | Legal, documented | Questionable origin |
Criminal Penalties
Criminal FBAR penalties are reserved for the most serious violations. These cases typically involve:
- Large unreported account balances
- Documented intent to evade taxes
- False statements to the IRS or banks
- Combined with other crimes (tax evasion, money laundering)
Potential criminal penalties:
- Fines up to $500,000
- Imprisonment up to 10 years
- Often accompanied by tax-related criminal charges
Criminal FBAR cases are relatively rare but do occur. They typically make news when they happen.
Relief Option 1: Reasonable Cause
If you receive a penalty notice, you may request penalty abatement based on reasonable cause. This requires demonstrating:
- Reasonable cause for the failure, AND
- Absence of willful neglect
Factors the IRS considers:
- Reliance on professional advice (from a qualified tax professional)
- Complexity of your situation
- First-time violation
- Prompt correction once you discovered the requirement
- Your education and experience level
- Whether the income was properly reported
Documentation tip: If you’re claiming reliance on professional advice, you’ll need to show you gave your advisor complete and accurate information about your foreign accounts. Keep records of what you disclosed to your tax preparer.
Similar reasonable cause standards apply to other international forms. For comparison, see our guides on Form 5471 penalties and Form 5472 penalties.
Relief Option 2: Delinquent FBAR Submission Procedures
This IRS program allows qualifying taxpayers to file late FBARs with no penalties. It’s the best option for many people who simply didn’t know about the requirement.
Eligibility requirements:
- Not under IRS civil examination or criminal investigation
- Not previously contacted by IRS about delinquent FBARs
- No unreported income from the foreign financial accounts
- All account income was properly reported and taxes paid
- Failure to file was not willful
Expected outcome: When eligibility requirements are met, delinquent FBAR submission procedures typically result in no penalties. You file the late FBARs with a statement explaining why they’re late.
For the complete step-by-step process, see our Delinquent FBAR Filing Guide.
Relief Option 3: Streamlined Filing Compliance
If you have unreported income from foreign accounts, you’ll need the Streamlined Filing Compliance Procedures instead of the delinquent procedures.
Two versions exist:
| Program | Penalty | Who Qualifies |
|---|---|---|
| Streamlined Foreign Offshore | 0% | U.S. taxpayers living abroad |
| Streamlined Domestic Offshore | 5% of highest balance | U.S. taxpayers living in the U.S. |
Requirements:
- Non-willful conduct (must certify)
- 3 years of amended tax returns
- 6 years of FBARs
- Certification statement explaining non-willfulness
The 5% domestic penalty applies to the highest aggregate balance across all foreign accounts during the 6-year period. For someone with $200,000 maximum balance, this would be a $10,000 penalty. That’s significantly less than the standard non-willful penalty of $16,536 per account, per year.
Relief Option 4: IRS Voluntary Disclosure
For willful violations or those ineligible for other programs, the IRS Voluntary Disclosure Program may be the only option. This program:
- Has no set penalty structure (negotiated case-by-case)
- Generally provides protection from criminal prosecution
- Requires full disclosure and cooperation
- Is more expensive than other options
Consider voluntary disclosure when:
- Conduct was willful
- Large amounts are involved
- You’re concerned about criminal exposure
- You’re ineligible for streamlined procedures
Voluntary disclosure typically requires a tax attorney, not just a CPA.
Statute of Limitations
The FBAR statute of limitations differs from tax returns:
| Form | Statute of Limitations | Key Point |
|---|---|---|
| FBAR | 6 years from due date | Never starts if never filed |
| Tax Return | 3 years (or 6 for substantial) | Starts when filed |
Critical point: If you never filed an FBAR, the statute of limitations never begins running. Missing 10 years of FBARs means all 10 years remain open for penalties.
This is one reason why coming into compliance sooner rather than later makes sense. Once you file, the 6-year clock starts ticking.
For details on how FBAR differs from Form 8938, see FBAR vs Form 8938 Comparison.
Case Studies
Case 1: Non-Willful Relief Through Delinquent Procedures
Situation: A taxpayer inherited a Swiss bank account from a parent. The account held $150,000. The taxpayer didn’t know about FBAR and had properly reported all interest income on tax returns for 5 years.
Solution: Filed delinquent FBARs with a statement explaining the inheritance and lack of awareness.
Result: No penalties assessed.
Case 2: Willful Penalty Upheld
Situation: A taxpayer asked their foreign bank to stop sending account statements to their U.S. address. They also checked “no” on Schedule B when asked about foreign accounts.
Result: Court upheld 50% willful penalty. The effort to avoid paper trail and false statement showed willful disregard.
Case 3: Streamlined Domestic Success
Situation: A dual citizen living in Texas had unreported interest income from a UK bank account. Total unreported interest over 6 years: $3,200. Highest account balance: $85,000.
Solution: Filed under Streamlined Domestic Offshore Procedures.
Result: Paid back taxes on $3,200 interest plus 5% penalty on $85,000 ($4,250). Total cost far less than potential non-willful penalties of $99,216 (6 years x $16,536).
When to Hire an Attorney vs CPA
The right professional depends on your situation:
| Situation | Who to Hire |
|---|---|
| Simple late filing, no issues | CPA with international experience |
| Unreported income, non-willful | CPA with international experience |
| Willful conduct suspected | Tax attorney |
| IRS criminal investigation | Tax attorney (immediately) |
| Penalty notice received | Either (depends on facts) |
| Large amounts, complex facts | Both (CPA for returns, attorney for strategy) |
Attorney-client privilege applies to tax attorneys but not CPAs. If there’s any possibility of criminal exposure, an attorney should be involved from the start.
Frequently Asked Questions
What is the FBAR penalty for late filing?
For 2026, non-willful FBAR penalties can reach up to $16,536 per account, per year. Willful violations carry penalties up to $165,353 or 50% of the account balance, whichever is greater. These amounts adjust annually for inflation.
How does the IRS determine willful vs non-willful FBAR violations?
The IRS examines whether you knew about the FBAR requirement, your past compliance history, the amounts involved, evidence of concealment, and your cooperation level. Willful violations require voluntary, intentional disregard of a known legal duty. “Willful blindness” can also be treated as willful.
Can FBAR penalties exceed the account balance?
Yes. For willful violations, the penalty is the greater of $165,353 or 50% of the account balance per account, per year. If you have multiple accounts over several years, penalties can stack and potentially exceed the total account values.
What is reasonable cause for FBAR penalty relief?
Reasonable cause relief requires demonstrating both reasonable cause for failure AND absence of willful neglect. Factors include reliance on professional advice, complexity of your situation, first-time violation, and prompt correction once you discovered the requirement.
What are delinquent FBAR submission procedures?
Delinquent FBAR submission procedures allow taxpayers who missed FBAR filings but properly reported all foreign account income to file late FBARs with a statement explaining the delay. When eligibility requirements are met, this typically results in no penalties.
What is the statute of limitations for FBAR penalties?
The FBAR statute of limitations is 6 years from the due date of the FBAR. Importantly, if you never filed the FBAR, the statute of limitations never begins running. This means missing 10 years of FBARs keeps all 10 years open for penalties.
When should I hire an attorney for FBAR issues?
Consider hiring a tax attorney if: you suspect willful conduct, you’re under criminal investigation, the amounts involved are substantial, or you’ve received an IRS notice suggesting criminal referral. For non-willful situations with no unreported income, a CPA with international tax experience can often handle the matter.
Related FBAR Resources
- Complete FBAR Filing Guide
- FBAR Deadline
- FBAR vs Form 8938 Comparison
- Delinquent FBAR Filing Procedures
- FBAR Exchange Rates Guide
- Who Needs to File FBAR
- All International Tax Services
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