IRS Delinquent FBAR Submission Procedures
Delinquent FBAR Submission Procedures: The IRS has developed various amnesty programs to assist taxpayers with delinquent information return filing, such as the FBAR and Form 8938. For Taxpayers who have not reported foreign accounts in the past, the delinquent FBAR submission procedures are a form of FBAR Amnesty used to avoid offshore fines and Penalties. It is an alternative to the streamlined and voluntary disclosure programs.
In order to go back and report previously unreported offshore accounts, assets, and investments, the IRS has developed these various amnesty programs, collectively referred to as offshore voluntary disclosure.
We will summarize the delinquent FBAR submission procedures and how to submit late FBARs.
Late FBAR Filing Procedures
The Delinquent FBAR Submission Procedures are a great option for non-willful taxpayers who do not have unreported income.
In order to qualify the IRS requires the following:
- have not filed a required Report of Foreign Bank and Financial Accounts (FBAR)
- are not under a civil examination or a criminal investigation by the IRS, and
- have not already been contacted by the IRS about the delinquent FBARs
Alternatives to Delinquent FBAR Submission
There are typically four types of IRS Voluntary Disclosure programs, for taxpayers to submit Delinquent FBARs.
- Traditional Voluntary Disclosure Program
- Streamlined Domestic Offshore Procedures (SDOP)
- Streamlined Foreign Offshore Procedures (SFOP)
- Reasonable Cause (RC)
How Many Years Delinquent Can You File?
Generally, when a person submits delinquent FBARs, they will go back and file (or amend) for up-to 6-years.
The concept of FBAR delinquency has several moving parts. For example:
- Was there unreported income along with unreported accounts?
- Was the non-compliance willful or non-willful?
- Are the penalties civil, criminal — or both?
What are the Penalties for Delinquent FBAR Filing?
FBAR Penalties can be Civil FBAR Penalties or Criminal. Civil penalties involve financial penalties, while criminal penalties involve money and possible loss of freedom.
Let’s start with the most common FBAR penalties — civil FBAR penalties.
Civil FBAR Penalties are limited to monetary penalties. A civil FBAR Penalty is a penalty that is focused on monetary fines or warning letters (waivers) — without any risk of criminal investigation or prosecution.
Penalties for Civil FBAR can be Broken down into two (2) categories:
- Willful FBAR Penalties
- Non-Willful FBAR Penalties
These FBAR Penalties are typically the least severe penalties. An FBAR non-willful penalty is a “lower-level” penalty for not filing the FBAR. The non-willful penalties can be high, BUT, typically they are not as high as willful penalties.
The Willful FBAR Penalty is typically more severe. An FBAR Willful Penalty is penalty for acting willful, willfully blind, or with reckless disregard in not filing the FBAR. We have provided detailed explanations and analyses in our free International Tax Law library about these different terms, and what they mean.
Criminal FBAR Penalties
Criminal FBAR Penalties may include monetary penalties and incarceration. This is when the IRS refers the matter to the Department of Justice (DOJ) or other 3 letter government faction for criminal investigation and possible prosecution. These are not very common, but unfortunately they are on the rise.
A few important considerations:
- Most courts have held that the maximum annual FBAR willful penalty is not limited to $100,000.
- If the court believes you acted with Reckless Disregard, they can still penalize you full Willful FBAR Penalties.
- If the court believes you acted with Willful Blindness, they can still penalize you full Willful FBAR Penalties.
- Even in a non-willful setting, the court can issue $10,000 per account, per year penalty.
Golding & Golding: About our International Tax Law Firm
Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.
Each case is led by a Board-Certified Tax Law Specialist with 20-years experience, and the entire matter (tax and legal) is handled by our team, in-house.
*Please beware of copycat tax and law firms misleading the public about their credentials and experience.
Less than 1% of Tax Attorneys Nationwide Are Certified Specialists
Sean M. Golding is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.
Recent Golding & Golding Case Highlights
- We represented a client in an 8-figure disclosure that spanned 7 countries.
- We represented a high-net-worth client to facilitate a complex expatriation with offshore disclosure.
- We represented an overseas family with bringing multiple businesses & personal investments into U.S. tax and offshore compliance.
- We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.
- We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.
How to Hire Experienced Offshore Counsel
Generally, experienced attorneys in this field will have the following credentials/experience:
- 20-years experience as a practicing attorney
- Extensive litigation, high-stakes audit and trial experience
- Board Certified Tax Law Specialist credential
- Master’s of Tax Law (LL.M.)
- Dually Licensed as an EA (Enrolled Agent) or CPA
Interested in Learning More about Golding & Golding?
No matter where in the world you reside, our international tax team can get you IRS offshore compliant.
Golding & Golding specializes in FBAR and FATCA. Contact our firm today for assistance with getting compliant.