Delinquent FBAR Submission Procedures
Contents
Delinquent FBAR Submission Procedures
Delinquent FBAR Submission Procedures: The FBAR is due at the same time a Taxpayer’s tax return is due. The FBAR filing deadline is on automatic extension. Therefore, a person has until October to file their FBAR (FinCEN Form 114) and they do not need to file any extension form to take advantage of the extension. If the FBAR is not filed timely, then it is considered late. And, in recent years, the Internal Revenue Service and U.S. Government as a whole have taken a very aggressive position in foreign accounts compliance. That does not mean you will be automatically penalized for filing a late FBAR, but late submissions should be done timely and correctly. Otherwise, the filer may be subject to even higher penalties — especially if an FBAR Quiet Disclosure is involved.
New IRS Updated Procedures
As provided by the IRS:
Taxpayers who do not need to use either the IRS Criminal Investigation Voluntary Disclosure Practice or the Streamlined Filing Compliance Procedures to file delinquent or amended tax returns to report and pay additional tax, but who:
-
-
-
have not filed a required Report of Foreign Bank and Financial Accounts (FBAR) (FinCEN Form 114, previously Form TD F 90-22.1),
-
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
-
should file the delinquent FBARs according to the FBAR instructions.
-
-
Steps to Resolve delinquent FBARs
As further provided by the IRS:
-
-
Review the instructions
-
Include a statement explaining why you are filing the FBARs late
-
File all FBARs electronically at FinCEN
-
On the cover page of the electronic form, select a reason for filing late
-
If you are unable to file electronically, contact FinCEN’s Regulatory Help line at 1-800-949-2732 or 1-703-905-3975 (if calling from outside the United States) to determine possible alternatives to electronic filing.
-
The IRS will not impose a penalty for the failure to file the delinquent FBARs if you properly reported on your U.S. tax returns, and paid all taxes on, the income from the foreign financial accounts reported on the delinquent FBARs, and you have not previously been contacted regarding an income tax examination or a request for delinquent returns for the years for which the delinquent FBARs are submitted. FBARs will not be automatically subject to audit but may be selected for audit through the existing audit selection processes that are in place for any tax or information returns.
In other words, if the only reason for the delinquency procedure is the non-filed FBAR, then DFSP should avoid penalties.
Alternatives to Delinquent FBAR Submission Procedures
The Internal Revenue Services has developed various FBAR Amnesty Programs for past due FBAR. These are collectively referred to as Offshore Tax Amnesty or Voluntary Disclosure.
There are 5 main options for Taxpayers to get into compliance for late or delinquent filed FBAR.
Each program has its own set of pros and cons, and not all taxpayers will qualify for every program available.
Rather, it is based on the taxpayers’ specific facts and circumstances.
Some of the more common programs, include:
Can I Just Start Filing FBAR This Year Instead?
No, unless the current year is the first-year you had an FBAR Reporting requirement. If you had a prior year reporting requirement, but only begin to start filing in the current year (Filing Forward) it is illegal. In the world of offshore disclosure, this is referred to as an FBAR Quiet Disclosure.
The IRS has warned taxpayers that if they get caught in a FBAR Quiet Disclosure situation, it may lead to willful penalties and even a criminal investigation by the IRS Special Agents.
Our FBAR Lawyers Represent Clients Worldwide
Our FBAR Lawyer team specializes exclusively in international tax, and specifically IRS offshore disclosure for delinquent FBAR filing.
Contact our firm today for assistance.
