Willful FBAR Violations: Distinguishing Willful and Nonwillful, Relevant Factors, Mitigating Penalties

The FBAR penalties are not tax penalties and are separated into two categories. The IRS can assess nonwillful violation penalties up to $10,000 per account and, egregiously higher, willful violation penalties up to the greater of $100,000 or 50 percent of the amount in the account at the time of the violation for FBAR reporting noncompliance. The government has the burden of proof in establishing willfulness, which is defined as a voluntary, intentional violation of a known legal duty. However, the IRS is only required to meet the lowest threshold, the preponderance of the evidence standard, to prove a taxpayer willfully violated the FBAR statute.

There are no clear-cut standards for defining a willful violation. Instead, it is a facts and circumstances determination. Many taxpayers are indeed unaware of their FBAR filing obligation. Even though no intentional action is required to evoke the penalty, reckless disregard or willful blindness could turn what would otherwise be a nonwillful oversight into a willful one. Certain factors contribute to the classification of an FBAR violation as either willful vs. nonwillful. Tax professionals working with international individuals need to understand the significant differences between willful and nonwillful FBAR violations.

Listen as our panel of international tax reporting experts reviews the latest guidance for assessing penalties for failing to file the FBAR, including strategies to avoid willful violations.

1. FBAR: background
2. Nonwillful violations
3. Facts contributing to willful violations
4. Facts contributing to nonwillful violations
5. Relevant cases
6. Mitigating penalties
7. Enforcement measures
8. Best practices

The panel will review these and other critical issues:

• Factors that contribute to a willful FBAR violation classification
• Strategies to avoid willful FBAR violations and penalties
• Notable cases and guidance surrounding FBAR noncompliance
• What is willful blindness and how does this affect the classification of FBAR penalties?

Learning Objectives

After completing this course, you will be able to:

• Determine factors that support nonwillful FBAR noncompliance
• Identify penalties assessed for willful FBAR violations
• Ascertain distinct differences between willful and nonwillful violations
• Decide steps a taxpayer can take to mitigate FBAR penalties

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of international taxation including residency determination, foreign entity classifications, application of treaty benefits, as well as GILTI, Subpart F, and the related Section 250 deductions.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).