Deadline extended for filing report on cash held overseas – penalties for not filing – part 3

Previously discussed the FBAR report and additional background on how easy it is for an NPO with overseas activity to generate a requirement to file the report.  Will get back to the extended deadline, but need to look at the downside of not filing.

Penalties

This is where things get ugly. The FBAR report says the penalty for a person who fails to properly file is a civil penalty up to $10,000. This applies to organizations also.  If there is reasonable cause, then no penalty will be imposed.

It gets worse.

Willful failure to report an account could generate a penalty up to $100,000 or 50% of the balance of the account. Willful violations could also generate criminal penalties.

You’re going to have to talk to an attorney to get an explanation of reasonable in front of the word cause and willful in front of the word violation. Those are phrases that keep attorneys rich and courts clogged.

I think developing a sophisticated scheme to hide tons of money in a numbered Swiss bank account to avoid paying US taxes would likely result in the IRS thinking that the willful failure phrase would be fitting, which would result in those really nasty penalties. But that is just my guess.

The point? Not filing FBARs for your field operations could possibly generate some penalties. Even for a nonprofit, without that willful label, the penalties can get serious.

Additional resources:

Here is the TD F 90-22.1, Report of Foreign Bank and Financial Accounts

The Journal of Accountancy article is IRS further extends deadline for certain 2009 and earlier FBARs

Previous posts at:

One Response to Deadline extended for filing report on cash held overseas – penalties for not filing – part 3

  1. […] more background, see articles I wrote last year, which you can find in part one, part two, part three, and part four. Share this:FacebookEmailLike this:LikeBe the first to like […]

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