FBAR penalties in 2025: Everything you need to know
The penalty for failing to report your foreign bank accounts in 2025 could cost more than the accounts themselves, with willful FBAR penalties reaching $165,353 or 50% of the account balance per violation.
FinCEN’s latest inflation adjustment and tighter enforcement, along with new court rulings, have made FBAR compliance riskier than ever. Whether you're an expat, dual citizen, or accidental owner of offshore assets, this guide – based entirely on the 2025 official amendment – shows how to avoid steep fines and stay compliant.
Takeaways you should be aware of
From five-figure fines to prison time, the 2025 enforcement landscape is more aggressive than ever. These are the key facts every expat needs to keep in mind:
- Willful FBAR penalties in 2025 can reach $165,353 or 50% of the account balance per violation, whichever is greater.
- Non-willful FBAR violations are capped at $16,536 per report, not per account, following the 2023 Supreme Court decision in Bittner v. United States.
- Criminal penalties include up to $250,000 in fines and/or 5 years in prison for willful violations, and a separate $10,000/5-year penalty for knowingly filing false FinCEN 114 reports under 31 USC. Section 5322.
- The outdated 31 C.F.R. Section 1010.820 penalty framework was repealed; all enforceable figures now appear in the FinCEN inflation-adjusted penalty table at Section 1010.821.
- Filing FinCEN 114 is required if the aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year, regardless of account location or ownership structure.
- The IRS identifies unreported accounts through FATCA data sharing, foreign bank disclosures, and audit risk flags across international reporting frameworks.
- Mitigation and relief programs, including the Delinquent FBAR Submission Procedures, Streamlined Filing Compliance, and Voluntary Disclosure Practice, offer options for taxpayers to come forward and reduce penalties.
What is FBAR?
The Foreign Bank Account Report (FBAR), formally known as FinCEN Form 114, is an electronic information return mandated by 31 USC. Section 5314 and 31 C.F.R. Section 1010.350. US persons – including citizens, green card holders, and resident aliens – must file it if they hold a financial interest in or signature authority over foreign financial accounts totaling more than $10,000 at any time during the calendar year.
Reportable accounts include not just bank accounts, but also foreign mutual funds, securities accounts, and other financial instruments. The FBAR filing deadline is April 15, with an automatic extension to October 15 if you use our free tax extension service, available for all filers.
FBAR filing failures: How much could it cost you?
Here’s a closer look at how steep the civil and criminal penalties can get, especially with 2025’s inflation-adjusted figures.
Civil penalty for FBAR (inflation-adjusted for assessments on or after Jan 17, 2025)
- Willful failure: Greater of $165,353 per violation or 50% of the unreported account’s balance at the time of the violation.
- Non-willful failure: Up to $16,536 per report (Bittner cap), unless the taxpayer shows reasonable cause.
Criminal penalties
- Knowingly filing a false FinCEN 114: fine up to $10,000 and/or 5 years imprisonment.
- Willful failure to file (or retain records): fine up to $250,000 and/or 5 years imprisonment; higher if coupled with other BSA offenses.
- Both civil and criminal sanctions may be stacked for the same violation under 31 USC. Section 5321(d).
How FBAR penalties are assessed: expat sample
An expatriate with $800,000 across three Swiss accounts forgot to file for 2024. The IRS deemed the lapse willful based on prior warnings. Using the 50% rule, the civil fines reached $400,000 – far above the new $165,353 cap. A separate criminal referral exposed the client to 5 years in prison and another $250,000 fine.
FBAR non-willful penalties: What every expat needs to know
Under Bittner, ignoring four years of FBARs with 15 accounts each generates, at most, four $16,536 penalties ($66,144 total) rather than 60 $16,536.
Non-willful non-compliance instance
A dual-resident software engineer misses the 2023 filing but promptly files a corrected form after receiving an IRS notice. With documented reasonable cause and no tax under-reporting, the IRS can waive the penalty entirely – even though a technical violation occurred.
The IRS has eyes overseas – here’s how they find unreported accounts
Global data sharing means your foreign accounts aren’t private. From FATCA to FinCEN Query, here’s how the IRS finds unreported accounts – even if they’re buried overseas.
- FATCA data sharing: Over 110 partner jurisdictions transmit US-account data to the IRS under Model 1/2 IGAs.
- International banking cooperation: FinCEN Query and other BSA databases cross-match foreign account info received from banks.
- Risk flags during audits: The IRS’s SB/SE and LB&I examiners use IRM 4.26 filters (e.g., Schedule B inconsistencies) to pick returns for FBAR review.
Missed the FBAR deadline? Here’s how to fix it fast
Life gets busy for everyone. So if you missed the deadline, don’t panic – you still have options. Several programs exist to help expats come clean and reduce or eliminate penalties. Here’s how each one works.
Delinquent FBAR submission procedures
If you’ve already reported the income and owe no tax, file the late FinCEN 114 electronically, mark “delinquent,” and attach a concise statement. The IRS generally issues no FBAR penalty when the facts are reasonable.
Streamlined Foreign Offshore Compliance Program
Qualifying non-willful taxpayers can file three years of amended returns plus six years of FBARs. Offshore fines are 0% (foreign residents) or 5% (US residents) of the highest unreported account balance – far below willful rates. In case you’re wondering where to even start from, or you are a filing novice, Taxes for Expats has softened the process with our streamlined procedure service, made with expats in mind.
FBAR penalty relief programs: What are my options?
Caught in the web? You might still qualify for relief. The IRS offers multiple routes to reduce or avoid FBAR penalties – but you’ll need to act fast and follow the rules carefully.
Reasonable cause exception
Demonstrate (in writing) that you exercised ordinary business care but circumstances prevented timely filing – e.g., natural disasters, inaccessible records, or professional advice that turned out wrong. Cite supporting documents; if accepted, the IRS drops all FBAR penalties.
Voluntary disclosure options
For willful cases where criminal exposure looms, the IRS Voluntary Disclosure Practice (VDP) allows full disclosure, payment of tax, a 75% fraud penalty, and the statutory civil FBAR penalty – but generally avoids prosecution. Early entry is critical; once you’re under investigation, VDP shuts.
Avoid these costly FBAR pitfalls: Quick compliance checklist
It’s the little things that trip people up. From exchange rates to crypto wallets, these are the most common – and costly – filing mistakes expats make.
- Forgetting joint accounts held with a non-US spouse or elderly parent.
- Misreading the $10,000 threshold as “per account” rather than aggregate.
- Late filing without disclosure – simply sneaking FinCEN 114 into the system forfeits mitigation opportunities.
- Using tax-year exchange rates instead of calendar-year Dec 31 rates.
- Omitting cryptocurrency “cash-value” wallets at foreign exchanges (FinCEN has signaled future FBAR coverage).
Should you hire a tax professional to help with FBAR?
Given the six-figure fines, potential criminal exposure, and evolving court precedent, most expats choose professional help.
Taxes for Expats CPAs and enrolled agents specialize in FBAR reporting, reasonable-cause narratives, and Streamlined or VDP submissions. Let us cut your risk – and your stress – before the next April 15 clock starts.
FAQ – FBAR penalties & compliance
Failing to file FinCEN 114 can result in civil FBAR penalties up to $16,536 per report for non-willful cases, or $165,353 or 50% of the account for willful violations. Criminal charges may apply, carrying fines up to $250,000 and 5 years in prison, so ensure you report foreign bank accounts.
Log in to the BSA E-Filing System, choose File Amended FBAR, and submit a complete Foreign Bank Account Report – checking the Amend box and listing all accounts, not just the ones you’re fixing. FinCEN’s filing guide stresses that every amended submission must be a full replacement report.
The Treasury can assess civil FBAR penalties for up to six years after the original due date. For an FBAR that was never filed, that clock never starts – leaving exposure open indefinitely.
FATCA treaties enable over 110 countries to share US account holder data automatically. FinCEN and IRS use this with analytics and tax return matching to flag discrepancies.
Absolutely. Global data-sharing, whistle-blower tips, and AI-driven pattern analysis let the IRS spot missing FBAR reporting quickly. Once identified, taxpayers face the full menu of fines, back-dated interest, and – where willfulness appears – criminal referral.
