IRS Crackdown on U.S. Persons with Foreign Bank Accounts

WASHINGTON - Many taxpayers opened foreign financial accounts without the benefit of tax professionals and are failing to comply with the FBAR disclosure rules. While in the past, criminal and civil prosecutions for those failing to comply had been rare, the IRS has now embarked upon a large-scale initiative to seek out taxpayers with undisclosed foreign bank accounts. Penalties for FBAR violations can be severe -- civil penalties can be up to the greater of $100,000 or 50% of the account balance, per violation; and criminal penalties can result in fines of up to $500,000 and imprisonment of up to 10 years.