- 1 Delinquent FBAR Submission Procedures
- 2 Delinquent FBAR – How Many Years Back?
- 3 Delinquent FBAR Submission Lawyers – Board-Certified Tax Specialist Lawyer
- 4 Delinquent FBAR Submission Procedure Instructions
- 5 Preparing Delinquent FBARs
- 6 Delinquent FBAR Penalties
- 7 What are Criminal FBAR Penalties?
- 8 FBAR Disclosure Programs
Delinquent FBAR Submission Procedures – Tax Specialist
Delinquent FBAR Submission Procedures
FBAR Delinquency occurs when U.S. Person with Foreign Bank and Financial Accounts has not reported the account information to FinCEN, or the IRS. As a result, the account holder may be subject to FBAR Penalties.
FBAR Delinquency usually sounds a lot worse than it really is. There are various FBAR tax amnesty programs for clients who are delinquent on FBAR Reporting, as well as delinquent for the reporting of other international reporting forms.
Delinquent FBAR – How Many Years Back?
Generally, when a person submits delinquent FBARs, they will go back and file (or amend) for up-to 6-years.
Delinquent FBAR Submission Lawyers – Board-Certified Tax Specialist Lawyer
We specialize exclusively in international tax, and specifically IRS offshore disclosure.
We have successfully represented clients in more than 1,000 streamlined and voluntary offshore disclosure submissions nationwide and in over 70-different countries. We have represented thousands of individuals and businesses with international tax problems.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe.
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Delinquent FBAR Submission Procedure Instructions
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?
The main 4 categories of FBAR delinquency, include:
- Unfiled FBAR with no unreported income (non-willful)
- Unfiled FBAR with no unreported income (willful)
- Unfiled FBAR with unreported income (non-willful)
- Unfiled FBAR with unreported income (willful)
Preparing Delinquent FBARs
We have a separate article designed to show you how to prepare the FBAR.
Delinquent FBAR Penalties
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.
|U.S. Code citation||Civil Monetary Penalty Description||Current Maximum|
|31 U.S.C. 5321(a)(5)(B)(i)||Foreign Financial Agency Transaction – Non-Willful Violation of Transaction||$12,921|
|31 U.S.C. 5321(a)(5)(C)||Foreign Financial Agency Transaction – Willful Violation of Transaction||Greater of $129,210, or 50% of the amount per 31 U.S.C.5321(a)(5)(D)|
|31 U.S.C. 5321(a)(6)(A)||Negligent Violation by Financial Institution or Non-Financial Trade or Business||$1,118|
|31 U.S.C. 5321(a)(6)(B)||Pattern of Negligent Activity by Financial Institution or Non-Financial Trade or Business||$86,976|
Penalties for Civil FBAR can be Broken down into two (2) categories:
- Willful FBAR Penalties
- Non-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.
Willful FBAR Penalties and (Reduced) Willfulness
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.
What are 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.
|U.S. Code citation||Criminal Violation & Description||Criminal Penalty|
|31 C.F.R. §103.59(b)||Willful – Failure to File FBAR or retain records of account||Up to $250,000 or 5 years or both|
|31 C.F.R. §103.59(c)||Willful – Failure to File FBAR or retain records of account while violating certain other laws||Up to $500,000 or 10 years or both|
|31 C.F.R. §103.59(c)||Knowingly and Willfully Filing False FBAR||$10,000 or 5 years or both|
|Civil and Criminal Penalties may be imposed together. 31 U.S.C. § 5321(d).||See Statutes||See Statutes|
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.
FBAR Disclosure Programs
There are typically four types of IRS Voluntary Disclosure programs, and they include:
- Traditional (IRM) IRS Voluntary Disclosure Program
- Streamlined Domestic Offshore Procedures (SDOP)
- Streamlined Foreign Offshore Procedures (SFOP)
- Reasonable Cause (RC)
Sean holds a Master's in Tax Law from one of the top Tax LL.M. programs in the country at the University of Denver. He has also earned the prestigious IRS Enrolled Agent credential. Mr. Golding's articles have been referenced in such publications as the Washington Post, Forbes, Nolo, and various Law Journals nationwide.
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