A willful FBAR violation is one that was a voluntary and intentional violation of a known legal duty. The determination of whether a violation is willful depends specifically on your knowledge of the reporting requirements for offshore tax shelters and accounts and a voluntary choice not to comply with the law. However, failure to file will not simply be ignored by the IRS if you claim ignorance of the FBAR requirement. Another type of willful under the tax code is willful blindness, which occurs when you make a conscious effort to avoid learning about FBAR requirements.
The Internal Revenue Service is responsible for providing evidence of this criminal tax matter. An IRS criminal tax investigation may be launched to support the allegation of a willful FBAR violation. This IRS criminal investigation may consist of agents reviewing the following types of evidence to use against you:
A willful FBAR violation can be considered criminal tax fraud. The most serious potential consequence is the threat of incarceration. A willful FBAR violation can result in imprisonment up to five years. The civil fine for willful violations is up to $100,000 or 50% of the balance of the account that is in violation of the reporting requirements. However, you can also be assessed an additional fine up to $250,000.
Non-willful violations can only be punished by monetary civil penalties. These fines are set a maximum amount of $10,000 per violation.
If your violation is considered non-willful, you may be able to avoid stiff penalties if you can successfully show through your tax attorney that your violation was due to reasonable cause and that you have filed and reported any past-due FBARs. Reasonable cause may exist if you had an honest misunderstanding of fact or law that is reasonable under the circumstances. Your education, experience and knowledge may be assessed to determine reasonable cause. If your taxpayer acted in good faith, this may also be grounds for finding reasonable cause.
If you are facing charges of a tax crime or civil penalty for FBAR violations, an experienced tax lawyer from Robert J. Fedor Esq., LLC. can help. We can analyze the nature of the charges against you and take steps to minimize the potential penalties you face.