The Procedures for Assessment and Enforcement of FBAR Penalties
For several years, offshore disclosures have been a point of heightened emphasis by the IRS, with significant penalties assessable for failures to comply with relevant requirements. In the offshore realm, the source of greatest consternation from a penalty perspective is FinCEN Form 114 Report of Foreign Bank and Financial Accounts (FBAR). Recent developments have increased the likelihood that the IRS's compliance focus will shift from voluntary disclosures to assessments.
This special report provides an introduction to procedures for assessment and enforcement of FBAR penalties. Procedures for collection of FBAR assessments differ markedly from tax assessments, as the FBAR penalty is not classified as a tax penalty. An understanding of the standards and collection methods is vital when advising clients of relative risks.