The Stakes
Non-willful FBAR penalties: up to $10,000 per account per year. Willful: up to $100,000 or 50% of balance per account per year. These penalties can exceed the account value. The IRS and DOJ are actively pursuing foreign account cases.
The Fix
The Streamlined Filing Compliance Procedures offer reduced penalties (5% or 0% for overseas residents) for non-willful non-filers. File amended returns for three years and FBARs for six years. Do this before the IRS contacts you.
Foreign account penalties are the most severe in the tax code. The remediation programs are the most generous. The window to use them is still open.