The penalties for not filing an FBAR are $10,000 for non-willful actions and $100,000 for willful failure to file, but because those penalties are indexed to inflation, they're over $16,000 and $160,000, respectively, as of 2026. The willful penalty can climb up to 50% of your account balance if that's higher than $160,000.
There are ways to catch up on delinquent FBARs, minimize penalty risk, or even fight penalties. Keep reading for an overview, or contact the international tax attorneys at Wiggam Law to get help now.
Key takeaways for taxpayers with unfiled FBARs
- Penalties: $16,536 for non-willful or the greater of $165,353 or 50% of the account balances for willful failure to file, assessed per unfiled report as of 2026.
- Nonwillful penalties: When the taxpayer made a mistake or was negligent.
- Willful FBAR penalties: When the taxpayer was intentionally or recklessly blind about the rules.
- Reasonable cause: Events outside of the taxpayers' control prevented them from meeting the filing requirement, potentially providing non-willful penalty relief.
Who's at Risk of FBAR Penalties?
Taxpayers who are required to file an FBAR but don't are at risk of penalties. If the total balance in your foreign bank accounts meets or exceeds $10,000 during the tax year, you must file an FBAR for that year. The FBAR is due on April 15 each year for the previous year, but if you miss that deadline, it is automatically extended to October 15.
To avoid penalties, file FinCEN Form 114 on the BSA E-Filing System by the deadline. Then, keep records for your foreign accounts for at least six years so you are prepared in case of an audit.
How Does the IRS Know You Didn't File Your FBAR?
The United States requires international financial institutions to provide reports about accounts owned by U.S. tax residents. The law incentivizes banks to make these reports because otherwise, the IRS assesses a 30% withholding tax on all U.S.-source payments to that bank.
This means that the IRS can track down people who should be filing an FBAR every year and those who are not. Once that happens, you may face penalties.
Penalties for Non-Willful Vs. Willful FBAR Violations
The non-willful FBAR penalty adjusts annually based on inflation and is based on a 2004 starting penalty of $10,000. For non-willful penalties assessed after January 2026, the maximum penalty is $16,536.
The majority of FBAR violations are non-willful. This doesn’t just mean that they were unintentional; it means that the account holder didn’t know and reasonably could not have been expected to know that they needed to file each year.
Willful violations occur when a U.S. person knew or could reasonably have been expected to know that they needed to file an FBAR every year. The maximum penalty is either $100,000 or half of the value of the non-disclosed accounts, whichever is greater. As of 2026, the penalty is $165,353 per report or 50% of the account balances if higher.
For example, if the IRS determines that your failure to file an FBAR was willful, you could face a penalty of $165,353 as of 2026. However, if your account balance is $400,000, 50% of your account balance is $200,000, and because that's higher than the standard amount, you'll incur the $200,000 penalty.
What Makes a Violation Willful or Non-Willful?
The IRS considers the totality of the circumstances, meaning they look at all of the information they have and make a decision based on that, versus making a decision based on strict preset guidelines. They look at the individual’s knowledge of the reporting requirements or lack thereof.
They may also consider the individual’s financial knowledge and professional background when determining whether or not they should have known about the requirements. If a taxpayer has financial literacy but turns a blind eye to this filing requirement, the IRS may consider that blindness reckless and impose the willful penalty.
However, this is an entirely subjective decision, so it’s possible for two different IRS examiners to make completely different decisions regarding a filer’s willfulness or non-willfulness. That's also why it's critical to have an experienced tax attorney in your corner fighting for your side of the story.
Criminal Penalties for Not Filing FBARs
In certain circumstances, failing to file an FBAR or filing late isn’t just a civil matter – it’s a criminal matter. If the failure to file is related to tax evasion, money laundering, or other crimes, you can face severe penalties and imprisonment.
It’s important to note that this is not common; most people only ever face civil penalties. Criminal charges are generally only pursued if an individual egregiously files false FBARs, knowingly and willfully fails to file over a period of years, or engages in crimes like money laundering.
How to Reduce Penalties With Late FBARs
The IRS offers several different ways to catch up on delinquent FBARs, and the path you take can play a big role in which penalties you face. Here's a breakdown:
| Situation | Action | Penalty |
| Unfiled FBAR but no unreported income | File late FBARs | Penalties may apply at the IRS's discretion; no penalties under delinquent submission procedures prior to July 2026 |
| Unfiled FBAR and unreported income | Amend returns and file FBARs | Penalty risk due to "quiet disclosure" – consult with a tax attorney first |
| Unfiled FBAR and unreported income | Amend returns under the IRS streamlined procedures and file the FBARs | 5% of the highest aggregate year-end account balances for domestic filers, no penalty for foreign residents |
| Unfiled FBARs due to reasonable cause | File FBARs and attach a reasonable cause statement | The IRS may waive penalties if the agency agrees with your reasonable cause claim |
Penalties for Streamlined Offshore Procedures
Under the Streamlined Foreign Offshore Procedures, taxpayers living abroad will not be subject to late filing, late payment, accuracy, or FBAR penalties. Under the Streamlined Domestic Offshore Procedures, taxpayers living in the United States will not face accuracy-related penalties, information return penalties, or FBAR penalties, but during the covered period, they will incur a Title 26 miscellaneous offshore penalty of 5% of the highest aggregate end-of-year value of their undisclosed account(s).
However, in both cases, if the IRS discovers that the failure to file was willful or that the taxpayer did not report all of their income/assets in the newly filed or amended returns, the IRS may assess penalties or even recommend criminal charges.
To participate, you must not be under audit or examination, and you must certify that your failure to file was not willful. The streamlined disclosures don't affect previously filed FBARS – taxpayers who have previously filed delinquent/amended returns must pay previous penalties assessed.
Reasonable Cause Statements for FBAR Penalties
Submitting a statement of reasonable cause essentially involves telling the IRS that you should not be charged penalties for your delinquent FBAR because you had reasonable cause not to file. You must be able to show that there were significant mitigating factors leading to your failure to file or events beyond your control that kept you from filing. Additionally, you must be able to prove that you acted in a responsible manner before, during, and after your failure to file.
Potential mitigating factors include:
- Never having needed to file that form prior to the failure to file.
- A history of complying with information reporting requirements.
- No history of previous penalties for failure to file.
Events beyond the filer’s control include the unavailability of business records for the time period in question and actions taken by the IRS or an IRS agent.
Note that the examples listed above are not an exhaustive list of reasons. The IRS will assess each reasonable cause letter on its own merits, not by checking its contents against a list.
Reporting Other Foreign Assets
If you are required to file an FBAR, you may also be required to file Form 8938. This form requests information about specified foreign assets, such as the value of your interest in foreign partnerships. It has a longer list of assets than the FBAR but has much higher reporting thresholds.
Additionally, you may have to file Form 5471 if you're an officer, director, or shareholder in certain foreign corporations, and as with the FBAR, there are significant penalties for failure to file this form.
Misconceptions About FBAR Rules & Penalties
To avoid penalties, you need to know the truth about these common FBAR misconceptions:
- Misconception: You don't have to file an FBAR if you live abroad. Truth: All U.S. persons, including U.S. citizens who live abroad, must file if they meet the reporting requirement.
- Misconception: If you're not a citizen, you don't need to file. Truth: If you're a resident of the U.S. (for example, a green card holder or anyone who meets the substantial presence test), you must file the FBAR if your accounts meet the threshold.
- Misconception: If you use the delinquent submission filing procedures, the IRS won't assess penalties. Truth: The IRS used to offer administrative penalty relief for FBAR penalties under the delinquent submission procedures, but removed its guarantee for penalty relief in this situation from its website as of 2026.
- Misconception: You don't need to report foreign accounts unless they earned income. Truth: The reporting requirement is based on the type of account and its balance, not on whether it produced income.
FBAR Penalty FAQ
Can FBAR penalties be waived?
Yes, the IRS can waive non-willful penalties if you show reasonable cause or use an IRS administrative procedure to catch up on delinquent filings and minimize penalties.
What's a Title 26 penalty?
It's a penalty assessed by the IRS under its administrative powers in Title 26 of the U.S. Federal Law. In contrast, a Section 31 penalty is the FBAR penalty assessed under the legal code detailed in Title 31 of the U.S. Federal Law, which covers money and finance.
Can I avoid penalties by using the IRS's official FBAR delinquent submission procedures?
Not necessarily. Prior to 2026, the IRS offered administrative penalty relief under its delinquent submission procedures, but the agency removed that part of its website as of July 2026.
How did FBAR penalties change in July 2026?
The IRS removed its pledge to waive late FBAR penalties for taxpayers who met the delinquent submission procedure requirements in 2026. Now, the website simply says to file late FBARs but also says you may face a penalty for doing so.
Are willful penalties criminal?
Yes, under 31. U.S.C. 5322, the government can bring a criminal charge for the willful failure to file FBAR penalties.
Get Help With Delinquent FBARS Now
The stakes are high (and expensive) if the IRS realizes you have not been filing your FBARs. The options listed here can be overwhelming, and mistakes can potentially cost you thousands or millions of dollars in penalties. But we can help.
If you’ve failed to file one or more FBARs, you have options. Turn to the team at Wiggam Law to explore your options and take the first step toward compliance. To get help now, schedule a case review or call us at (404) 609-1300.
Judson Mallory
Partner
Judson is a partner at Wiggam Law in Atlanta, Georgia. Judson represents individuals and businesses in a wide array of IRS and state tax matters. He has significant experience handling IRS tax settlements, tax compliance, appeals representation, offshore foreign bank reporting compliance, syndicated conservation easement issues, audit representation from responding to IRS audit letters through to IRS audit reconsiderations if necessary, innocent spouse relief, IRS levy and IRS garnishment releases, penalty waivers/abatements, and lien releases/withdrawals.
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