FBAR 2024 Penalties: What’s Different Now
Published on May 10, 2024
by Jeff Patterson
Jeff Patterson is an American living in Scotland and joined the team at Expat Tax Online after experiencing the complexities of living abroad with a family.
Table of Contents
What’s new on the FBAR 2024 Penalties?
The FBAR (Foreign Bank and Financial Accounts Report) requirements and penalties have undergone significant changes from 2023 to 2024, particularly following judicial and policy updates.
Here are the key changes:
- The IRS now recommends a single US$10,000 penalty per violation (adjusted for inflation) for non-willful violations unless specific facts justify a different approach. This update aims to standardize penalty assessments across cases.
- It was ruled that the penalty for non-willful FBAR violations applies on a per-report basis, rather than per-account. This decision significantly reduces potential penalties for individuals with multiple unreported accounts, ensuring that the penalty caps at US$10,000 for the entire report, not each individual account.
- Previously, IRS examiners could mitigate the penalties based on various factors, but these guidelines have been eliminated in 2024. Now, examiners have the discretion to determine penalty amounts without a structured mitigation framework, which could affect how penalties are applied in non-willful cases.
What is FBAR?
The Foreign Bank and Financial Accounts Report (FBAR) is a filing requirement for US citizens and green card holders with financial interests in or authority over foreign financial accounts.
It means that if the combined value of these accounts exceeds US$10,000 at any point during the calendar year. As a US citizen, you must report it through the FinCEN’s BSA E-Filing System.
Take a look at our FBAR article to learn more about the topic.
(https://www.expattaxonline.com/fbar-filing/)
What did the Supreme Court decide in the Bittner Case?
The Supreme Court’s decision in the Bittner case has shown a significant shift in how penalties for the non-willful failure to file the Foreign Bank and Financial Accounts Report (FBAR) are assessed.
Previously, penalties could be imposed on a per-account basis, which meant that failing to report multiple accounts could lead to penalties multiplied by the number of accounts. However, the Supreme Court ruled that penalties should apply on a per-report basis instead. This means the penalty is capped at US$10,000 for each unfiled report, regardless of the number of accounts involved.
Before this decision, individuals could face high penalties potentially reaching into hundreds of thousands of dollars for multiple accounts.
Why use the IRS Streamlined Tax Amnesty Program?
It’s for American citizens that didn’t know they had to file U.S. tax returns each year, and have therefore fallen behind. Some more than 30 years! With the IRS Streamlined Procedure, say goodbye to overdue tax returns, late fees, and penalties.
Connect with over 10,000+ expats today!
Embarking on an international journey shouldn’t mean navigating the complex world of US taxation alone. If you’re living and working abroad, our friendly, supportive Expat Tax Online Help Facebook group is here to assist. We’ve designed a community that serves as a comprehensive guide and resource platform tailored for US expats.
What are the 2024 updated penalty structures for non-willful violations?
Just as stated above, the IRS now recommends a single penalty of US$10,000 per violation, adjusted for inflation. This change aims to standardize the enforcement approach.
| Year | Penalty Approach | Maximum Penalty Per Violation |
| 2023 | Per account, depending on the number of unreported accounts | Up to US$10,000 per account, not exceeding 50% of the highest account balance |
| 2024 | Per report, regardless of the number of unreported accounts | US$10,000 per report, adjusted for inflation |
Is there a change in the penalty mitigation guidelines?
Yes, there is. Previously, the Internal Revenue Manual (IRM) provided penalty mitigation guidelines for FBAR violations. These guidelines allowed IRS examiners to reduce penalties based on specific criteria, such as the taxpayer’s cooperation during examinations, their history of compliance, and the absence of fraudulent activity or criminal violations.
However, now, in 2024, the IRS removed these mitigation guidelines. What determines your penalties for non-willful violations largely depends on the discretion of the examiner, without a structured guideline system.
This change means that while the penalties are capped (a maximum of US$10,000 adjusted for inflation per violation), the lack of detailed guidelines could lead to less predictability in how penalties are applied.
How can taxpayers properly comply with FBAR filing requirements?
- Track all foreign accounts: Maintain accurate records of all foreign financial accounts, including bank accounts, securities, and other financial instruments.
- Understand the thresholds: Remember that the filing requirement kicks in if the total value of all foreign financial accounts exceeds $10,000 at any point during the calendar year.
- Use electronic filing: FBARs must be filed electronically through the Financial Crimes Enforcement Network’s (FinCEN) BSA E-Filing System. Ensure you meet the April 15 deadline, which has an automatic extension available until October 15.
- Consult a tax professional: Engaging with a tax professional who specializes in international tax law can provide significant advantages. They can offer tailored advice, help in accurately filing your FBAR, and guide you through any complexities related to foreign income and accounts. This step is particularly beneficial if you have multiple accounts or if the regulations seem unclear or overwhelming.
Spread the word. Please share… 👉
