What happens if the IRS finds a foreign account I did not report on FBAR?
If the IRS discovers a foreign account you failed to report on the FBAR before you come forward, you lose eligibility for the Streamlined or Delinquent FBAR Submission Procedures. Penalties can reach $16,536 per form for non-willful violations or the greater of $165,353 or 50% of the account balance per year for willful violations, inflation-adjusted.
How the IRS typically finds unreported accounts:
- FATCA reports: Foreign banks submit account data for U.S. persons
- Treaty exchange: Multilateral information exchange under TIEAs and CRS
- Whistleblowers: Former employees, ex-spouses, disgruntled advisors
- Audit: A domestic audit uncovers a wire transfer abroad
- Form 8938 vs FBAR mismatch: Discrepancy flags for review
Penalty structure:
| Violation | Civil penalty |
| Non-willful | Up to $16,536 per form, per year |
| Willful | Greater of $165,353 or 50% of account balance per year |
| Criminal willful | Up to $500,000 and/or 10 years imprisonment |
Defenses available:
- Non-willful factual showing (negligence, mistake, misunderstanding)
- Reasonable cause statement based on specific facts
- Mitigation guidelines: IRS may reduce penalties in modest cases
- Reliance on professional advice: When properly documented
If you have unreported accounts:
- Come forward before IRS contact: Preserves Streamlined eligibility
- Do not delay: Statute of limitations extends while non-compliant
- Get professional help before any disclosure
For catch-up options, see our Streamlined Filing Compliance Procedures.
Last updated on April 29, 2026
