If you forgot to file the FBAR, don't panic! The Delinquent FBAR Submission Procedures are one way to fix this mistake without penalties.
Many taxpayers are simply unaware of their FBAR filing requirement—sometimes for several years. Or you might have faced health issues or other extenuating circumstances that caused you to file the FBAR late. You're not alone, and Gordon Law is here to help. For more than 10 years, we've helped taxpayers understand their FBAR requirements and fix past mistakes.
The Delinquent FBAR Submission Procedures are a fairly simple and straightforward way to file late FBAR forms. Qualifying taxpayers will not face any penalties for their failure to file. Read on to learn whether you qualify, how to submit, and what to know before you start!
What are the Delinquent FBAR Submission Procedures?
The Delinquent FBAR Submission Procedures are an FBAR amnesty program. They allow taxpayers who have unintentionally failed to file an FBAR to correct their oversight. This process is specifically for those who do not owe any additional tax related to their foreign accounts and have not been contacted by the IRS about their delinquent FBARs.
Benefits of Delinquent FBAR Submission Procedures
- One of the primary benefits of using the Delinquent FBAR Submission Procedures is that it allows you to avoid the severe penalties typically associated with late FBAR filing.
- These procedures are simpler than the alternatives, including streamlined filing and the Voluntary Disclosure Program.
By following the delinquent FBAR filing procedures, you can meet your filing requirements without the fear of facing financial consequences, as long as you meet the eligibility requirements.
Who's eligible?
To be eligible for the Delinquent FBAR Submission Procedures, you must meet the following criteria:
- You have not been contacted by the IRS about your delinquent FBARs.
- You have reported all your income on your U.S. tax returns, including foreign income from the account(s) that triggered an FBAR filing requirement.
- You have paid all the taxes due on your income.
- Your failure to file was not due to willful neglect.
If you're not eligible for the Delinquent FBAR Submission Procedures, check out the alternative FBAR amnesty programs below.
Pro Tip: If you have a filing requirement for additional offshore tax forms, such as the FATCA (Form 8938) or Form 3520, then you may need to use the Delinquent International Information Return Submission Procedures, as well.
FBAR late filing steps: How to use Delinquent FBAR Submission Procedures
- Verify Your Eligibility: Ensure that you meet the requirements for this process; there are several programs available for FBAR amnesty, so it's important to apply for the correct one. Our experienced FBAR lawyers can help ensure you're eligible.
- Prepare the FBAR for Previous Years: The IRS will look at up to 6 years of prior-year FBARs. Forms are submitted through an online filing system, but we recommend preparing your information beforehand to avoid mistakes. Learn more about how to file the FBAR here.
- Prepare a Reasonable Cause Statement: You must prepare a reasonable cause statement to explain why you didn't file the FBAR on time. The statement should be clear and concise, without providing unnecessary detail.
- File Late FBARs Online: Once you've gathered your materials, file your delinquent FBARs and your reasonable cause statement through the BSA E-Filing System. Be sure to save a copy of each completed form, along with the confirmation message.
Acceptable reasons for filing the FBAR late
When using Delinquent FBAR Submission Procedures, you must ensure the IRS will accept your reasonable cause statement. Some acceptable reasons for filing the FBAR late include:
- Lack of Knowledge: You were unaware of the FBAR filing requirement despite making reasonable efforts to comply with tax laws. This is more plausible if you are a U.S. person living abroad or if the foreign accounts were newly inherited.
- Incorrect Professional Advice: You received incorrect advice from a tax professional who failed to inform you about the need to file an FBAR. Since most tax professionals are not familiar with international tax forms, this happens much more often than you might think!
- Health Issues: Serious illness or incapacitation at the time of the filing deadline made it impossible for you to file the FBAR on time.
- Natural Disasters: You were affected by a natural disaster or other catastrophic event that disrupted your ability to file on time.
- Family or Personal Emergencies: Significant family emergencies or personal issues, such as a death in the family or an unforeseen financial crisis, might be considered valid reasons for delay.
Need help crafting your reasonable cause statement? Speak with one of our experienced FBAR lawyers! The call is confidential and there's no obligation to hire.
Other FBAR amnesty programs
As we mentioned above, the Delinquent FBAR Submission Procedures are only available for those who don't owe additional tax on their foreign income; are not required to file additional offshore tax forms; and were non-willful in their failure to file.
If you don't qualify for this filing procedure, here are other FBAR amnesty programs to consider:
- IRS Streamlined Procedures: Streamlined
procedures are an option if you owe additional tax on your foreign
income; they require amended tax returns in addition to late FBAR
filing. Non-willful conduct is a key requirement of IRS streamlined
procedures.
- The Streamlined Domestic Offshore Procedures are available to U.S. residents, while the Streamlined Foreign Offshore Procedures are available to those living abroad.
- Delinquent International Information Return Submission Procedures: As you might guess from the name, the Delinquent FBAR Submission Procedures are only for filing late FBARs. For additional offshore tax forms, such as FATCA, Forms 3520 and 3520-A, or Form 8858, there's a similar process known as Delinquent International Information Return Submission Procedures.
- Voluntary Disclosure Program: If your failure to file the FBAR was willful, then consider the IRS Voluntary Disclosure Program, formerly known as OVDP. This is the only amnesty program available for willful conduct.
We highly recommend consulting an experienced international tax professional about your options. A wrong step in the application process could result in losing your non-willful status. Plus, FBAR filing is complicated, so you can get more peace of mind by hiring a professional to prepare these forms.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
