WASHINGTON, D.C. (JUNE 3, 2015)
BY: MICHAEL COHN
The Internal Revenue Service has released new guidance on penalties for failing to file a foreign bank account report, capping the maximum percentage of the penalty and providing new requirements for documentation and approval by IRS examiners.
In a memorandum last month from three commissioners in charge of various divisions of the IRS, they wrote, “For each year for which it is determined that there was a willful violation, examiners must fully develop and adequately document in the examination workpapers their analysis regarding willfulness."
The guidance noted that the examiner’s report should clearly state the years for which it was determined that an FBAR violation was willful. For cases involving willful violations over multiple years, the examiners will recommend a penalty for each year for which the FBAR violation was willful. In most cases, the total penalty amount for all years under examination will be limited to 50 percent of the highest aggregate balance of all unreported foreign financial accounts during the years under examination.