The fine for willfully failing to report foreign accounts are not capped, according to an appeals court decision.
Under the statute, the penalty for willful failures is the greater of $100,000 or 50% of the highest balance in the overseas account.
The IRS regulations promulgated in 1987, before the statute was amended in 2004 to add the 50% language, state that the penalty is capped at $100,000. The appeals court says the statute supersedes the regulations (Kahn, 2nd Cir.).
The IRS currently has a perfect 4-for-4 record in appeals courts on this is issue.