IRS Fines Tax Payer 200% for Failure to File FBAR

The IRS has started to impose failure to file FBAR penalties, which sometimes exceed criminal fines, as a weapon in their criminal crackdown on offshore tax evasion by US citizens. Many of the more than 70 taxpayers charged since 2009 have pleaded guilty, paying an FBAR penalty of 50 percent of the high account balance in their offshore account for only one year.

The threat of such penalties has helped to drive U.S. taxpayers into an IRS amnesty program that lets holders of undeclared offshore accounts avoid prosecution. They must pay back taxes, fines and penalties and tell the IRS which banks and bankers helped them hide their money. Since 2009, more than 43,000 Americans have taken advantage of the amnesty program, paying US $6 billion to the U.S. Credit Suisse AG pleaded guilty of Americans evade taxes and agreed to pay $2.6 billion in penalties.

Other US tax payers have paid higher FBAR penalties in dollars, not as a percentage of the account. H. Ty Warner, the billionaire creator of Beanie Babies plush toys, pleaded guilty last year to evading taxes on secret Swiss accounts that held as much as $107 million. He paid an FBAR penalty of $53.6 million. more »