IRS has developed a new method of taxing people via confiscatory penalties. The penalty for failing to report a foreign bank account with high balance over USD $10,000 is 50% per year of the high balance even if no taxes were due or if the bank paid interest on the account and the interest was reported.
Some people on this site may be America citizens living in Canada, for example. If they have a bank account in Canada, which would be normal, and they file to file form TD F 90-22.1 separately from their tax return by June 30 and their high balance is over $10,000 in US dollars, then they would be subject to confiscation of 50% of the high balance for each year that the report is not filed.
A doctor with $4.3 million in his Panama account just had the entire amount confiscated because he had not reported it for 2 years. I don't know whether he reported interest received on the account or not, but either way his balance would be taken.
This is just a sneaky way of implementing a tax. Many Americans living abroad are not even aware that they need to file a 1040 personal tax return each year. Only the US and Eritrea tax citizens on worldwide income regardless of where they live instead of taxing people based on their residence.
Even if one is not required to file the report, they still have to file a 1040 showing that they have a foreign bank account or financial account and the relevant countries. Alternatively, they may be penalized 50% of the high balance each year.
"All I want to know is where I will die so that I will never go there." Unknown wise man