FBAR Statute of Limitations (5321) – IRS FBAR Statute of Limitations
FBAR Statute of Limitations: The IRS has a limited-time to enforce FBAR Penalties. Statute of Limitations FBAR time-limits vary based on Assessment vs. Civil Court Action.
FBAR Statute of Limitations
Unlike other areas of tax, in which the IRS can rely on a never-ending statute of limitations — which gives the Internal Revenue Service an unlimited time to enforce penalties against you (civil tax fraud) — the statutory enforcement period for FBAR penalties is more limited.
Common Questions about FBAR Statute of Limitations include:
- What is an FBAR?
- When is the FBAR due?
- What is an FBAR Transaction?
- Can the IRS assess FBAR Penalties?
- How long can the IRS Asses FBAR penalties?
- When does the FBAR Statute expire?
- How can I avoid FBAR penalties?
This is due in part to the fact that FBAR is a FinCEN form, governed by Title 31 instead of Title 26.
FBAR Section 5321
Section 5321 is the basis for FBAR Penalties.
Time for Assessment & Commencement of Civil Actions
When it comes to FBAR penalties, there are two main aspects to it:
Assessment of the Penalty – The time the Secretary of Treasury has to actually assesses you have penalty for not properly filing the Form.
Civil Action: The time the Secretary has to commence the civil action against you, which is essentially filing the court case to enforce penalties that have been assessed, but not paid.
(1) Assessments.— The Secretary of the Treasury may assess a civil penalty under subsection (a) at any time before the end of the 6-year period beginning on the date of the transaction with respect to which the penalty is assessed.
(2) Civil actions.—The Secretary may commence a civil action to recover a civil penalty assessed under subsection (a) at any time before the end of the 2-year period beginning on the later of—
– the date the penalty was assessed; or
– the date any judgment becomes final in any criminal action under section 5322 in connection with the same transaction with respect to which the penalty is assessed.
What is a Transaction?
Unfortunately, the IRS has not pinned down specifically what the definition of a transaction is – but, it is generally considered as the time in which the filing is supposed to be made. In other words the time to assess is based on the date of the transaction and the date of the transaction would be the date of filing is due — so that the IRS has 6 Years from when the filing was due to assess penalties.
What Can You Do?
Like (almost) anything in life, it is better to put out the fire when it is small — before it becomes a blazing inferno.
The best thing you can do to avoid monstrous FBAR penalties is to safely get into compliance before the IRS finds you. The IRS has various programs available, which are referred to as amnesty programs or voluntary disclosure programs, which you can use to safely get into compliance.
Depending on the facts and circumstances of your situation, you may be able to minimize become a limit and even avoid penalties altogether.
Serious Tax Matters; Serious Tax Consequences
Getting hit with an eggshell audit, reverse-eggshell audit, or IRS Special Investigation involving offshore money is serious business – it’s not like getting a traffic ticket or speeding ticket.
The ramifications of serious tax inquiries by the IRS (especially in the area of Offshore Disclosure and Compliance), can result in serious consequences such as monetary fines, penalties and even jail time.
We Specialize in Safely Disclosing Foreign Money
We have successfully handled a diverse range of IRS Voluntary Disclosure and International Tax Investigation/Examination cases involving FBAR, FATCA, and high-stakes matters for clients around the globe.
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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.