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What To Do If You Are Late Filing Your FBARs



Venar Ayar

If you miss the April 15 FBAR filing deadline, you’ll receive an automatic six-month filing extension.  For delinquent FBARs from prior tax years, you should use one of the offshore disclosure methods to file your late FBARs.

FBAR Filing Requirements

FBARs are due at the same time as your tax return on April 15.  However, you don’t file your FBAR with your 1040 Form.  Instead, you must e-file it through the Financial Crimes Enforcement Network’s e-filing system.

If you miss the deadline, you’ll receive an extension until October 15.  You don’t need to request this filing extension, and you won’t be charged any penalties as long as you submit your FBAR by the extended due date.

Delinquent FBARs

If you miss the October 15 deadline, your FBAR is now officially late.  You could face penalties up to $10,000 per non-willful violation, with much steeper penalties for willful violations.

You have three main options in these situations:

  • Submit the delinquent FBARs with a reasonable cause statement
  • Use the Streamlined Compliance Procedure
  • Use the new Offshore Disclosure Program

There are some significant differences between each of these options.  Before you use any of them, you should discuss the following issues with a tax attorney:

  • Did you report the income from your foreign accounts on your tax return?
  • How many years of delinquent FBARs do you have, and how many unreported accounts?
  • What was the highest aggregate foreign account balance during the period you should have been filing FBARs?
  • What was your reason for failing to file your FBARs?

Your attorney will also have to determine how likely it is that the IRS considers your noncompliance to be willful.  The Offshore Disclosure Program is the only option that provides protection from criminal prosecution in cases of willful conduct.

Correct Your FBAR Noncompliance

You have several options for filing your late FBARs or other information returns.  Once the IRS decides to examine your tax returns or initiate a criminal investigation, you’ll lose your ability to make a voluntary disclosure.  Act quickly and consult with a tax attorney to discuss your options.

Executive Summary
  • If you miss April 15 filing deadline, you will receive an automatic six-month filing extension
  • FBAR Filing Requirements
    • FBARS are also due on April 15th, just like your tax returns.
    • FBAR must be filed separately from other tax returns.
    • If you miss the deadline, you will receive an automatic extension until October 15 and you will receive no penalties as long as the FBAR is filed by the October deadline
  • Delinquent FBARs
    • If you neglect to file by October 15 (at the latest), your FBAR is officially late and you will be subject to penalties, regardless of whether or not the violation was willful or non-willful.
    • Check out our other recent blog about what to do if you have missing FBARs.  In addition to the options discussed in this other blog, you also have the option of submitting the missing FBAR(s) with a reasonable cause statement.
      • There are several significant differences between your options.  Talk to a tax attorney before doing anything.
  • Correct Your FBAR Non-compliance
    • Be sure to act fast when correcting your non-compliance;  once the IRS decides to examine your tax returns or initiate a criminal investigation, your ability to make a voluntary disclosure goes out the window.

Have a question? Contact Venar Ayar.

 

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Venar Ayar

2 thoughts on “What To Do If You Are Late Filing Your FBARs

  1. A more objective discussion of Delinquent FBARs is found on the IRS site here:

    https://www.irs.gov/individuals/international-taxpayers/delinquent-fbar-submission-procedures

    which in part (read the complete description) reads:

    “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 tax 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.”

    For the average taxpayer (who often did not even know about FBAR) this is a most saner way to view this problem. (Those who are willful are not likely reading Tax Connections.)

  2. Avatar Bjorn Slijpers says:

    Does the author discuss how the IRS might discover accounts that have not been reported in a timely fashion on FBARs?

    For those who live outside the US and wish not to file either US tax returns nor FBARs, these deadlines should not be a concern.

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