How to File Late FBAR Prior Year Forms
If a U.S. Person missed filing prior year FBARs, the IRS has procedures in place for taxpayers to submit untimely FBAR filing for prior year FBAR forms.
The IRS has very strict deadlines when it comes to filing the FBAR. In 2017, the IRS updated the FBAR due date to coincide with tax return filings. Therefore, if a person misses the FBAR reporting due date, the IRS may issue fines and penalties.
When a Taxpayer misses a prior year FBAR filing, they have many IRS options available to resolve the issue. If the IRS gets to them first, the taxpayer may be subject to significant offshore Penalties for FBAR violations — in addition to various other penalties for other additional missed forms.
As of 2017, the FBAR is on automatic extension.
What Happens if you do not Report Foreign Accounts?
If you have missed a prior year FBAR filing (or multiple FBARs) you should consider your compliance options.The IRS has procedures for filers who miss the deadline for filing FBAR. The IRS has developed several Amnesty Programs. The programs allow U.S. Account Holder to use FBAR Filing procedures in order to file FBAR for previous years. The programs go by many names, including: FBAR Amnesty, Streamlined Filing, FATCA Amnesty, IRS Voluntary Disclosure, and IRS Tax Amnesty.
Penalties for Not Reporting Foreign Accounts?
Penalties can be broken down into 4 categories:
- Willful FBAR
- Non-Willful FBAR
- Civil FBAR
- Criminal FBAR
Civil Foreign Account Violations
Not all FBAR Penalties are the same. Sometimes, the IRS penalties for unfiled or untimely FBARs are bad, and sometimes, well…they’re not so bad. You may even receive a Warning Letter in Lieu of Penalty. It jut depends on the different facts and circumstances of your situation.
FBAR Penalties can be Civil FBAR Penalties or Criminal. They can then be broken down further, but the threshold question, is whether the IRS will get you for Civil (money) or Criminal (money, and worse).
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.
Fines for Civil FBAR can be Broken down into two (2) categories:
- Willful FBAR Penalties
- Non-Willful FBAR Penalties
Criminal Foreign Account Violations
Criminal FBAR Violations 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
Common Questions About Missed Prior FBAR Filings
Here are some more of the common questions we receive about FBAR Penalties.
Are there Penalties for Missing the FBAR Filing Date?
Technically, there is no “missed filing penalty.’ Rather, the IRS can penalize you for not filing the FBAR at the time it is due. In other words, unless you submit using one of the programs. Each program has its own associated FBAR penalty structure or waiver.
How does Foreign Account Penalty Collection Work?
Generally, the IRS will issue the FBAR penalty or penalties against you. Then, the IRS will give you a certain amount of time to pay, before the IRS sues you, to reduce the FBAR penalty to a civil judgment.
Is there an Amended FBAR Penalty?
Technically, no. Rather, once the FBAR is not filed timely, the FBAR Penalty kicks in, and it is up to you to try to limit the penalties by using one of the approved amnesty or offshore disclosure methods.
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:
- Board Certified Tax Law Specialist credential
- Master’s of Tax Law (LL.M.)
- 20-years experience as a practicing attorney
- Extensive litigation, high-stakes audit and trial experience
- 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.