A Form 13449 Voluntary Disclosure (VDP) Foreign Account Penalty

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The Form 13449 Voluntary Disclosure (VDP) FBAR Penalty

The Form 13449 Voluntary Disclosure (VDP) FBAR Penalty 

Unlike the Streamlined Filing Compliance Procedures (for non-willful taxpayers), the VDP (Voluntary Disclosure Program) has many different forms that a Taxpayer must complete before they finally get a chance to receive back a complete 906 closing letter. In 2020, the IRS updated the Preclearance Form 14457 – which is used to obtain both preclearance (Part 1) and acceptance (Part 2) into the IRS Voluntary Disclosure Program. There are other forms as well, including the IRS Form 13449 “Agreement to Assessment and Collection of Penalties Under 31 USC 5321(a)(5) and 5321(a)(6).” Let’s review the basics of Form 13449.

Penalty Statutes at Issue

      1. Foreign Financial Agency Transaction Violation—willful failure to meet recordkeeping requirements and/or report a foreign account on Department of the Treasury Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts: 31 USC 5321(a)(5) and 31 CFR sections 103.24, 103.32 and 103.57(g)(2).

      2. Foreign Financial Agency Transaction Violation— failure to meet recordkeeping requirements and/or failure to report a foreign account on Department of the Treasury Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts: 31 USC 5321(a)(5) and 31 CFR sections 103.24, 103.32 and 103.57(g)(2).

      3. Negligent Failure to Report: 31 USC 5321(a)(6) and 31 CFR sections 103.24 and 103.57(h).

      4. Negligent Failure to Meet Recordkeeping Requirements: 31 USC 5321(a)(6) and 31 CFR sections 103.32 and 103.57(h).

      5. Pattern of Negligent Activity: 31 USC section 5321(a)(6)(B)

Proposed Penalty and Consent to Penalty

The Taxpayer must sign the following statement:

      • I consent to the immediate assessment and collection of the penalty amount specified above plus any interest and penalty as provided by law.

Foreign Account Penalty Information

For each Calendar Year, the Taxpayer must confirm the following:

      • Calendar year

      • Foreign Bank, Institution, or Agent(s)

      • Proposed penalty per “Definition of Penalty Statutes” (Check applicable box(es).)

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