Delinquent FBAR Submission Procedures

Delinquent FBAR Submission Procedures

Delinquent FBAR Submission Procedures

Delinquent FBAR Submission Procedures: The FBAR refers to Foreign Bank and Financial Account Reporting (aka FinCEN Form 114). And, in recent years, the Internal Revenue Service has increased enforcement of foreign accounts compliance for Taxpayers worldwide.  In order to go back and disclose previously unreported offshore accounts, assets, and investments, the IRS has developed various international tax amnesty programs — collectively referred to as offshore voluntary disclosure. The Delinquent FBAR Submission Procedures is one of many Delinquent FBAR Amnesty Submission Programs developed by the IRS for Taxpayers who are non-willful. It is one of the most popular offshore disclosure programs and is considered an alternative to the streamlined and voluntary disclosure programs. The FBAR Delinquency Procedures are a great option for non-willful taxpayers who have late FBAR issues — but do not have unreported income. We will summarize the delinquent FBAR submission procedures, and how to submit late FBARs.

Late FBAR Filing

The Internal Revenue Service has developed various amnesty tax programs to assist US Persons worldwide with safely getting into international tax compliance with offshore account, asset and income reporting. The Delinquent FBAR Submission Procedures for late filing are specifically designed to assist taxpayers with delinquent filing of the FBAR for one or several years simultaneously — when they do not have unreported income. For Taxpayers who qualify for the Delinquency Procedures, it can help them avoid all offshore fines and penalties.

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.

They include:

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 reason for the 6-year benchmark is because 6-year is the cut-off for the FBAR Statute of Limitations

Common Delinquent FBAR Issues

  • 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 Submission Procedures

FBAR Penalties can be civil or criminal in nature.  Civil penalties involve financial penalties, while criminal penalties involve money and possible loss of freedom. Let’s start with the most common FBAR penalties, which are 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) —

Penalties for Civil FBAR can be broken down further into two (2) categories:

  • Willful FBAR Penalties
  • Non-Willful FBAR Penalties

Non-Willful Delinquent FBAR

These FBAR Penalties are typically the least severe penaltiesAn FBAR non-willful penalty is a “lower-level” penalty for not filing the FBAR.  The non-willful penalties can be high, but are typically not as high as willful penalties.

Willful Delinquent FBAR 

The Willful FBAR Penalty is typically more severeAn FBAR Willful Penalty is penalty for acting willful, willfully blind, or with reckless disregard in not filing the FBAR.

Criminal FBAR Penalties

Criminal FBAR penalties may include monetary penalties and incarcerationIn a criminal FBAR scenario, 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.

Fees for Hiring a Delinquent FBAR Submission Procedures Tax & Legal Team

Learn why experienced FBAR Offshore Disclosure Lawyers always charge flat-fee for tax and legal representation — and avoid using Kovel Letters.

Golding & Golding: About our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure and the Delinquent FBAR Submission Procedures.

Contact our firm today for assistance.

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