FBAR Penalties in 2023: What Expats Need to Know
The Foreign Bank Account Report (FBAR) is a requirement for all citizens and residents with a financial interest in or signature authority over foreign financial accounts to report such accounts to the Department of Treasury. Failure to file the FBAR can result in penalties from the Internal Revenue Service (IRS). In 2023, the FBAR penalties for failure to file are set to increase, and expats need to be aware of these changes.
FBAR Penalty Overview
The FBAR penalty for failing to file or improperly filing is one of the most severe penalties that the IRS can impose on expats. The FBAR failure to file penalty IRS is subject to annual inflation adjustments, which means that the penalty amounts change every year. For 2023, the FBAR penalty for failure to file or improperly filing will increase from $12,921 to $13,072.
FBAR Penalty for Wilful Noncompliance
In addition to the FBAR penalty for failure to file or improperly filing, the IRS can also impose a penalty for wilful noncompliance. The penalty for wilful noncompliance is the greater of $139,320 or 50% of the balance of the foreign financial account at the time of the violation. This penalty is not subject to inflation adjustments and remains the same in 2023.
FBAR Penalty for Non-Wilful Noncompliance
If an expat fails to file or improperly files an FBAR due to non-wilful noncompliance, the IRS may impose a penalty of up to $1,356. This penalty is per violation and is not subject to inflation adjustments. The IRS may waive the penalty for non-wilful noncompliance if the violation was due to reasonable cause.
What Expats Need to Know
Expats who have foreign financial accounts with a combined value exceeding $10,000 are required to file an FBAR with the Department of Treasury. Failure to file or improperly filing the FBAR can result in severe penalties from the IRS. In 2023, the FBAR penalties for failure to file or improperly filing will increase, making it more critical than ever for expats to be aware of their reporting requirements.
Summary
FBAR compliance is essential for expats with foreign financial accounts. Failure to file or improperly filing the FBAR can result in severe penalties from the IRS. In 2023, the FBAR penalties for failure to file or improperly filing will increase, making it more important than ever for expats to be aware of their reporting requirements. If you have any questions about FBAR reporting requirements or penalties, it’s essential to speak with a tax professional who can help ensure compliance and avoid costly penalties.
