On September 8, 2023, the IRS issued a news release hinting that FBAR (Report of Foreign Bank and Financial Accounts) compliance investigations and audits may increase in the foreseeable future. The federal law, for those unfamiliar with FBARs, obliges United States persons – those who possess a financial interest in, or signature, or some other power over foreign financial accounts exceeding $10,000 at any time during the year – to submit an FBAR annually. Failing to file a timely and appropriate FBAR could result in serious financial repercussions.
According to Gray Reed, this increased scrutiny may be cause for concern for many, especially those with significant financial interest abroad. A highlight of this article is exploring FBAR penalty defenses and techniques, specifically focusing on the wrong “willful” penalty computation.
The term “willful” here indicates a purposeful violation committed by a U.S. person aware of their obligation to file but chooses not to. The penalty for such a violation is severe. Therefore, understanding the nuances of the term “willful” can be crucial in building a defence.
The piece serves as legal guidance for corporations, law firms or individuals apprehensive about the looming evaluation or simply seeking clarity on the topic. It’s a must-read for persons with either a direct financial interest, or even a signature authority over foreign financial accounts.