The Delinquent FBAR Submission Procedures are one of several options available to taxpayers with unreported foreign financial accounts
Do you need to file an FBAR?
If you are a US citizen or tax resident, you may have a foreign bank account reporting obligation. Form finCEN 114, Report of Foreign Bank and Financial Accounts (also commonly known as the Foreign Bank Account Report, or “FBAR”) is required to be filed annually by “each United States person having a financial interest in, or signature or other authority over, a bank, securities, or other financial account in a foreign country.
A United States person includes U.S. citizens, green card holders, and resident aliens who meet the substantial presence test or who elect to be treated as residents.
It also includes entities. Corporations, partnerships, limited liability companies, trusts, and estates formed under the laws of the United States or any state are all United States persons for this purpose. See 31 CFR 1010.350(b).
If the aggregate value (total value) of all reportable accounts exceeds at any point in the calendar year exceeds $10,000, all accounts must be reported.
Example: Bob has 5 foreign bank accounts. He determines the maximum value of each account during the calendar year and adds those amounts together. Bank A peaked at $1,000, Bank B at $3,000, Bank C at $0, Bank D at $5,000, and Bank E at $2,000, for an aggregate of $11,000. Bob has an FBAR filing requirement and must report all 5 accounts, including the account that never held a balance.
Reportable foreign financial accounts include:
- Bank accounts
- Securities accounts
- Insurance or annuity policies with a cash surrender value
- Brokerage and commodity futures or options accounts
- Foreign mutual funds and similar pooled funds with a regular net asset value and regular redemptions
Do you qualify for the Delinquent FBAR Submission Procedures?
You must meet these requirements to qualify for these procedures:
- You do not need to file delinquent or amended tax returns to report and pay additional tax,
- You have not already filed a required FBAR,
- You are not under a civil examination or a criminal investigation by the IRS, and
- You have not already been contacted by the IRS about the delinquent FBARs
How many years should you file?
You should prepare delinquent FBARs for all tax periods for which the statute of limitations remains open.
What do I write in the statement for reasonable cause?
There’s no copy and paste language for a reasonable cause statement. It is unique to each client’s specific matter.
Is there a penalty for filing late?
A penalty can be imposed for the failure to timely file an FBAR whether or not there is unreported income. 31 USC 5321(a)(5)(B) reaches any violation of the filing requirement.
That said, taxpayers who use these procedures and meet their terms are not penalized. Here’s the language from the IRS:
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.
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.
There is, however, a penalty for not filing if the IRS contacts you before you’ve had a chance to file the delinquent FBARs.
- Nonwillful. Under 31 USC 5321(a)(5)(B), a penalty may be imposed on any person who violates or causes any violation of the FBAR filing and recordkeeping requirements. The statutory $10,000 is adjusted annually for inflation for violations after November 2, 2015, and is $16,536 for penalties assessed in 2026. Following Bittner v. United States, 598 U.S. 85 (2023), the penalty is assessed per form, not per account. No penalty applies where the violation was due to reasonable cause and the account balance was properly reported.
- Willful. Under 31 USC 5321(a)(5)(C), a penalty may be imposed on any person who willfully violates or causes any violation of the FBAR filing and recordkeeping requirements. The ceiling is the greater of $100,000, adjusted for inflation and $165,353 for penalties assessed in 2026, or 50% of the balance in the account at the time of the violation, per account, per year
Do you need a tax attorney for the Delinquent FBAR Submission Procedures?
Not necessarily, if you’re absolutely certain that there are no related issues on your tax returns. Oftentimes, clients think that they just have missed FBAR filings. We sometimes uncover related errors and omissions on the tax returns, in which case the Delinquent FBAR Submission Procedures are not appropriate.