While IRC 6501(c)(8) may apply to extend the limitations period for assessment on the related tax return, there is a reasonable cause exception.Other PenaltiesCriminal penalties may apply to U.S. and foreign taxpayers who willfully fail to file a return (IRC 7203) or file a false or fraudulent return (IRC 7206 and IRC 7207).IRC 6662(e), Substantial Valuation Misstatement Under Chapter 1, and IRC 6662(h), Increase in Penalty in Case of Gross Valuation Misstatements, may be applicable in the international reporting context.In addition, the following reporting and filing requirements are subject to failure to deposit penalties and are applicable to Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons.StatuteSubjectIRC 1441Withholding of Tax on Nonresident AliensIRC 1442Withholding of Tax on Foreign CorporationsIRC 1446Withholding Tax on Foreign Partners’ Share of Effectively Connected Income31 U.S.C. 5321—Report of Foreign Bank and Financial Accounts (FBAR), FinCEN Form 114 (as of September 30, 2013)Generally, a U.S. person having one or more foreign accounts with aggregate amounts in the accounts of over $10,000 any time during the calendar year is required to maintain records and submit FinCEN Form 114 by the due date in the following year.Penalties for a failure to file may

Returns that are filed but that are not substantially complete and accurate are considered “un-filed” and may result in penalty assessments. Criminal penalties may apply to U.S. and foreign taxpayers who willfully fail to file a return (IRC 7203) or file a false or fraudulent return (IRC 7206 and IRC 7207).Certain international information returns are also considered un-filed if the taxpayer does not provide required information when requested by the IRS, and penalties may be assessed even if the required return has been submitted.If a taxpayer under-reports on Form 926 and that leads to a tax underpayment, they can receive a 40% penalty. Sometimes a tax penalty may be avoided if the filer can show that the misrepresentation was due to reasonable cause and they acted in good faith – but don’t count on it.IRS: Ignorance of the Requirements is No ExcuseThe IRS maintains that taxpayers who conduct business or transactions offshore or in foreign countries have a responsibility to exercise ordinary business care and prudence in determining their filing obligations and other requirements.