What Are the IRS Delinquent FBAR Submission Procedures?

The Report of Foreign Bank and Financial Accounts, commonly known as the FBAR, is a tool used by the U.S. government to track foreign accounts and combat financial crimes. Many individuals who are required to file this form fail to do so, often out of simple unawareness of the requirement. The Internal Revenue Service (IRS) has established specific procedures to help these individuals come into compliance with the law. These pathways are designed to address different circumstances, from simple oversights to more complex situations involving unreported income.

FBAR Filing Requirements and Potential Penalties

A “United States person” is required to file an FBAR. This category includes U.S. citizens, residents, and various entities like partnerships or corporations created in the United States. The filing obligation is triggered if the combined value of all foreign financial accounts exceeds $10,000 at any point during the calendar year. This is an aggregate value, not an account-by-account threshold, so the maximum values of all foreign accounts must be added together.

The penalties for failing to file a required FBAR depend on whether the failure is deemed “non-willful” or “willful.” A non-willful failure, which can result from negligence or a mistake, can lead to a civil penalty. As of early 2025, this penalty can be as high as $16,536 for each year the FBAR was not filed. A 2023 Supreme Court case clarified that this penalty applies per unfiled report, rather than for each individual foreign account that was not reported.

A willful failure to file involves a conscious or intentional violation of a known legal duty. The civil penalty can be the greater of $165,353 or 50 percent of the total balance of the foreign accounts at the time of the violation. In addition to these financial penalties, willful violations can also lead to criminal prosecution, which may result in fines and imprisonment.

Information Required to Complete the FBAR

To complete the FBAR, officially known as FinCEN Form 114, you must gather specific information. For the filer, this includes your full name, U.S. taxpayer identification number (such as a Social Security Number or ITIN), and complete address.

For each foreign financial account, you will need to provide detailed records. This includes the full legal name of the financial institution and its mailing address. You must also report the account number or other designation and the type of account, such as a bank, securities, or other financial account.

To determine the “maximum account value,” you must find the highest value of each account during the calendar year in its local currency. You then convert that figure to U.S. dollars using the Treasury’s Financial Management Service exchange rate for the last day of the year. The form requires this maximum value to be reported in U.S. dollars.

Evaluating Your Delinquency Correction Options

The IRS provides several pathways to correct a delinquent FBAR filing, and the correct one depends on your situation. The simplest option is the Delinquent FBAR Submission Procedures. This program is for individuals who have no unreported income and have paid all their U.S. taxes. This path is appropriate if your only oversight was the failure to file the FBAR and the IRS has not already contacted you. No amended tax returns are necessary.

The Streamlined Filing Compliance Procedures are for taxpayers whose failure to file was non-willful but who also failed to report income from their foreign accounts. This program requires filing amended tax returns to report the income and pay any associated tax and interest. The program has two sub-programs: the Streamlined Foreign Offshore Procedures for U.S. taxpayers residing outside the country and the Streamlined Domestic Offshore Procedures for those residing within the U.S. Residency status affects the penalty structure.

The IRS Criminal Investigation Voluntary Disclosure Practice is for taxpayers whose failure to file was willful. This program allows individuals to voluntarily disclose their non-compliance to avoid potential criminal prosecution. It is a formal process involving extensive documentation and cooperation with the IRS. Due to the complexity, representation from a tax professional is recommended.

The Submission Process for Late FBARs

All delinquent FBARs are filed electronically using the FinCEN BSA E-Filing System. When completing FinCEN Form 114 for a past year, you must select the option within the system that indicates the reason for filing late.

For the Delinquent FBAR Submission Procedures, you must prepare the FBAR for each missed year and attach a statement explaining the reason for the late filing. This statement must provide a reasonable cause for the delay and confirm the failure was not intentional.

For the Streamlined Filing Compliance Procedures, you must file the delinquent FBARs electronically and also mail a package to the IRS. This package includes amended tax returns (Form 1040-X) for the relevant years, a certification form (either Form 14653 for domestic filers or Form 14654 for foreign filers) attesting to non-willful conduct, and payment for back taxes, interest, and penalties. After submitting the FBAR, you will receive a confirmation receipt from the BSA E-Filing system, which should be saved as proof of filing.