The US Department of the Treasury said in a March letter to retired teacher Faith Fippinger, 62, that she broke the law by crossing the Iraqi border before the war.
Her travel to Iraq violated US sanctions that prohibited American citizens from engaging in "virtually all direct or indirect commercial, financial or trade transactions with Iraq," she was told.
She and other peace activists from 30 countries fanned out across Iraq in an optimistic bid to prevent the war. She spent about three months there, including time at an oil refinery.
Only about 20 of nearly 300 "human shields" were Americans, she said. The story was reported in the Sarasota Herald-Tribune.
Fippinger, who returned home to Florida on 4 May, is being fined at least $10,000, but she has refused to pay. If convicted she faces up to 12 years in prison.
"She was (in Iraq) in violation of US sanctions ... That's what happens."
US Treasury Department
"If it comes to fines or imprisonment, please be aware that I will not contribute money to the United States government to continue the build-up of its arsenal of weapons," Fippinger wrote in her response to the charges.
She said she has no intention of paying. "Therefore, perhaps the alternative should be considered."
The government also has asked Fippinger to detail her travels to Iraq and any financial transactions she made. In her response she wrote that the only money she spent was on food and emergency supplies.
If Fippinger does not pay, the fine may increase, and the money will be drawn from her pension, her social security or any of her assets, officials said.
"She was (in Iraq) in violation of US sanctions," said Taylor Griffin, a Treasury Department spokesman. "That's what happens."