Delinquent Submissions, Streamlined Procedures, and Voluntary Disclosures
Not filing an FBAR can lead to significant penalties and possible criminal charges. Still, if you’re proactive, you may be able to use the delinquent filing procedures to catch up on your filing requirements and avoid excessive penalties.
Keep reading for an overview, or contact us at Wiggam Law to get help now.
Key takeaways for taxpayers with unfiled FBARs
- Penalties- As of 2025, $16,536 for non-willful or $165,353 for willful failure to file. Assessed per unfiled report.
- Delinquent submissions – For taxpayers who didn’t file an FBAR but who reported all income related to the foreign accounts.
- Streamlined domestic procedures – For taxpayers living in the United States who filed a return but didn’t report the income from their foreign accounts and didn’t file an FBAR.
- Streamlined foreign procedures – For taxpayers living out of the United States who didn’t report the income from their foreign accounts (whether they filed a return or not) and didn’t file an FBAR.
- Voluntary Disclosure – For taxpayers who willfully (purposefully) failed to file an FBAR.
Who Should File an FBAR?
If the total of the person’s foreign accounts that they own, have a financial interest in or have signature authority over ever meets or exceeds $10,000 during the tax year, they must file an FBAR for that year. The FBAR is due on April 15 each year for the previous year, but if you miss that deadline, it is automatically extended to October 15.
To get more info, check our page on FBAR reporting requirements. Note that this is not the only form for people with foreign assets – depending on the situation, you may also need to file Form 8938. You should consult with an experienced international tax attorney if you are interested in foreign assets or accounts to ensure you are properly reporting them.
Requirements for Filing an FBAR
If the total value of the accounts equaled or exceeded $10,000 at any point during the previous calendar year, you must file an FBAR for that year. This includes accounts at foreign branches of American banks and accounts where you are not the only account holder. Even if you are not the account holder, you must still report the account if you are an authorized signatory on it.
Not all accounts must be reported on an FBAR. Excluded accounts include those that are owned by governmental entities, correspondent and Nostro accounts, accounts owned by international financial institutions, and accounts maintained on a U.S. military banking facility.
When you file, you must file electronically on the BSA E-Filing System. You cannot opt for paper filing without special permission from FinCEN.
Another important requirement relates to documentation and record keeping. Your FBAR records may be audited for six years from the date on which they were due. Keep records for your foreign accounts for at least six years so you are prepared in case of an audit.
Penalties for Not Filing an FBAR
The United States has agreements with international financial institutions that allow them access to their banking records. This means that they can track down people who should be filing an FBAR every year and who are not.
If you’ve realized that you should have been filing for years now but never have, you’re in good company—a surprising amount of people think they do not have to file, especially if they live out of the country. However, don’t let the common nature of this mistake lull you into a false sense of security. Failure to file penalties are intense, and it is always in your best interest to become compliant as soon as possible to avoid unnecessary penalties.
Penalties for Non-Willful Violations
The majority of violations are non-willful. This doesn’t just mean that they were unintentional; it means that the account holder didn’t know and reasonably could not have been expected to know that they needed to file each year. The penalty varies from year to year based on inflation and is based on a starting penalty of $10,000. For penalties assessed after January 2024, the maximum penalty is $16,117. This number adjusts annually.
Willful Violation Penalties
Willful violations occur when a U.S. person knew or could reasonably have been expected to know that they needed to file an FBAR every year. The penalties are much steeper for a willful violation. The maximum penalty is either $100,000 or half of the value of the non-disclosed accounts, whichever is greater. As of 2024, the penalty is $161,170 per report.
For example, if you failed to file an FBAR for two years in a row and the IRS determined that your failure was willful, you could face a penalty of $322,340. However, if 50% of your account balance is higher than this amount, you will incur that penalty.
What Makes a Violation Willful or Non-Willful?
When considering whether a failure to pay is willful or non-willful, the IRS has the freedom to consider the totality of the circumstances. This basically means that they look at all of the information they have and make a decision based on that, versus making a decision based on strict preset guidelines. They look at the individual’s knowledge of the reporting requirements or lack thereof.
They may also consider the individual’s financial knowledge and professional background when determining whether or not they should have known about the requirements. However, this is an entirely subjective decision, so it’s possible for two different IRS examiners to make completely different decisions regarding a filer’s willfulness or non-willfulness.
Criminal Penalties
In certain circumstances, failing to file an FBAR or filing late isn’t just a civil matter—it’s a criminal matter. For example, knowingly and willfully filing false FBARs can result in fines of $10,000, five years imprisonment, or both. Failure to file FBAR or failure to retain records may lead to fines as high as $250,000 and up to five years in prison.
It’s important to note that this is not common; most people only ever face civil penalties. Criminal charges are generally only pursued if an individual egregiously files false FBARs, knowingly and willfully fails to file over a period of years, or engages in crimes like money laundering.
Misconceptions About FBAR Penalties
There are several misconceptions that can muddy the waters when it comes to FBAR filing. Many people believe that they do not have to file an FBAR if they live abroad. However, U.S. citizens or residents living abroad must still file if they meet the reporting requirements. Another pervasive myth is that all foreign accounts must be reported, and this misconception can lead to people filing even when they do not need to.
If your accounts are among the several exceptions laid out by the IRS, they do not need to be included in your calculations. Many think that they don’t need to report accounts if they are not income-generating. Whether or not you earn interest or dividends from an account, it must be included on your FBAR if it is not on the list of exclusions.
How to Catch Up on Late FBAR Filings
There are several options available to U.S. persons with foreign accounts over $10,000 but have not filed FBARs.
- Streamlined foreign offshore procedures – For taxpayers living outside the country who did not report income or pay tax related to foreign accounts.
- Streamlined domestic offshore procedures – For taxpayers living in the United States who did not report income or pay tax related to foreign accounts.
- Delinquent FBAR submission procedures – For taxpayers who didn’t file an FBAR but did not have income from their foreign accounts or already reported the income related to the foreign accounts.
- Criminal Voluntary Disclosure Practice – For taxpayers who willfully failed to file an FBAR.
You may also need to file a reasonable cause statement to request penalty relief. A tax attorney can help you determine the best option for your situation. You need to ensure that you choose carefully, as the benefits and requirements of each of these options vary significantly. Keep reading for more details.
Streamlined Filing Compliance Procedures
Streamlined filing compliance procedures essentially allow someone to file their FBARs late and, if applicable, pay the taxes associated with the undisclosed assets by indicating that their violations were not due to willful conduct on their part.
Requirements
To use this option, you must meet the following requirements:
- Conduct was not willful: This means that the failure was due to negligence or mistake, not an intentional avoidance of required filings.
- A civil examination has not been initiated: You can’t use these procedures if the IRS has initiated a civil examination, even if It’s unrelated to the failure to disclose foreign financial assets.
- Must have valid TIN: The individual filing must have a valid Taxpayer Identification Number.
Penalties
Taxpayers living abroad will not be subject to late filing, late payment, accuracy, or FBAR penalties. Taxpayers living in the United States will not face accuracy-related penalties, information return penalties, or FBAR penalties. However, during the covered period, they will incur a Title 26 miscellaneous offshore penalty of 5% of the highest aggregate value of their undisclosed account(s).
However, in both cases, if the IRS discovers that the failure to file was willful or that the taxpayer did not report all of their income/assets in the newly filed or amended returns, the IRS may assess penalties or even recommend criminal charges.
However, taxpayers who have previously filed delinquent/amended returns must pay previous penalties assessed.
How to file under the streamlined procedures
If you live out of the country, you must file or amend the last three years of returns to show any income related to the undisclosed assets. If you live in the United States, you cannot use the streamlined procedures unless you already filed a return – so you should amend the last three years of returns to show the undisclosed income. Then, in both cases, you should file the last six years of FBAR reports.
In red at the top of your tax returns, note “Streamlined Foreign Offshore Procedures” or “Streamlined Domestic Offshore Procedures”. You must make this note to ensure that the IRS processes your return under these procedures – if not, you may face unnecessary penalties. The IRS will not notify you that they received the return, nor will they notify you when they have completed processing the return.
Audit risk
Note that the IRS indicates that returns and FBARs submitted under streamlined procedures may have their information cross-checked with information from financial institutions, financial advisors, and other sources. It is extremely important to ensure that your filings are accurate and complete.
Delinquent FBAR Submission Procedures
You may use the Delinquent Submission Procedures if the following are true:
- You’re not required to file delinquent or amended tax returns using the Streamlined Procedures.
- You are not under civil examination or criminal investigation by the IRS.
- You haven’t been contacted by the IRS about the late FBARs.
Like all other FBARs, your delinquent FBARs must be submitted online via the BSA E-Filing System. You need to provide a reason for why the return is filed late with the delinquent filing.
Here’s an example. Say that you have a foreign bank account that was over the reporting threshold. You earned interest from the bank account, which you properly reported on your tax return but did not file an FBAR. As long as the IRS hasn’t contacted you yet, you qualify for the delinquent submission procedures. However, if you hadn’t reported that interest on your tax return, you would need to look into another option.
Criminal Investigation Voluntary Disclosure Practice
If the failure to report foreign accounts was willful, you may need to get back into compliance through the Voluntary Disclosure Practice. This option is for people who may have committed a tax crime and want to get back into compliance with the IRS.
You must contact the IRS before they contact you, and in exchange for coming forward voluntarily, you reduce the risk of criminal charges. Note that the IRS advises taxpayers to consult with an attorney before taking advantage of this program.
What is the Offshore Voluntary Disclosure Program?
The Offshore Voluntary Disclosure Program was an old program that helped taxpayers catch up on unfiled FBARs. This program ended at the end of 2018 and has not been revived since.
Submitting a Reasonable Cause Statement
Submitting a statement of reasonable cause essentially involves telling the IRS that you should not be charged penalties for your delinquent FBAR because you had reasonable cause not to file. You must be able to show that there were significant mitigating factors leading to your failure to file or events beyond your control that kept you from filing. Additionally, you must be able to prove that you acted in a responsible manner before, during, and after your failure to file.
What are the mitigating factors under this definition? Potential mitigating factors include:
- Never having needed to file that form prior to the failure to file.
- A history of complying with information reporting requirements.
- No history of previous penalties for failure to file.
- If the filer has a history of penalties, their error rate decreases each year.
Events beyond the filer’s control include an unavailability of business records for the time period in question and actions taken by the IRS or an IRS agent.
Note that the examples listed above are not an exhaustive list of reasons—the IRS will assess each reasonable cause letter on its own merits, not by checking its contents against a list.
Record Keeping and Best Practices
How can you maintain accurate records to avoid getting behind on FBAR filings in the future? Some best practices to consider include:
- Refreshing yourself on FBAR requirements and other tax laws each year ahead of tax season: Tax law does change from time to time, and not having to file one year doesn’t mean you’ll never have to file in the future. A quick search or talk with your accountant or tax expert each year can help you stay on top of your requirements.
- Keep records of all foreign accounts: Maintain accurate records from month to month. Ensure that your records include the account’s max balance during the month, the bank’s name, and the account number. As soon as you hit the filing cap—currently $10,000—add filing your FBAR to your calendar.
- Set an annual reminder: If you regularly have to file the FBAR, set calendar reminders to help you avoid delinquent filings. Some taxpayers find it helpful to set a reminder for April 15—the original deadline—and October 15, just in case you miss the first deadline.
What if I forgot to file Form 8938?
If you are required to file an FBAR, you may also be required to file Form 8938. This form requests information about specified foreign assets, such as foreign partnerships. It has a longer list of assets than the FBAR but has much higher reporting thresholds. Check out Form 8938 requirements now, or contact us for help with all of your unfiled international information returns.
Get Help With Delinquent FBARS Now
The stakes are high (and expensive) if the IRS realizes you have not been filing your FBARs. The options listed here can be overwhelming, and mistakes can potentially cost you thousands of dollars in penalties. But we can help.
If you’ve failed to file one or more FBARs, don’t panic. You have options, and odds are good that at least one is a good fit for you. Turn to the team at Wiggam Law to explore your options and take the first step toward compliance. To get help now, schedule a consultation or call us at (404) 233-9800.