What Is the FBAR Penalty Statute of Limitations?

A Report of Foreign Bank and Financial Accounts (FBAR) is a form required by the U.S. government for individuals with a financial interest in or signature authority over foreign financial accounts. The FBAR’s purpose is to provide transparency and combat tax evasion by tracking assets held abroad. For those who fail to file, the government has a limited window of time to act, known as a statute of limitations. This legal timeframe dictates how long the government has to identify a violation, assess a penalty, and collect that penalty.

The General Assessment Statute of Limitations

The time limit for the government to assess a penalty for failing to file an FBAR is governed by the Bank Secrecy Act (BSA), not the Internal Revenue Code. Under the BSA, the statute of limitations for assessing an FBAR penalty is six years from the date of the violation, as established in 31 U.S.C. § 5321. This six-year period applies to both non-willful and willful FBAR violations.

A non-willful violation is a result of negligence or an oversight, and the penalty is assessed per unfiled form. For 2025, the penalty for a non-willful violation is up to $16,536. A willful violation implies a conscious disregard of the filing requirement and carries much steeper penalties. For 2025, this is the greater of $165,353 or 50% of the account’s balance. These penalty amounts are adjusted annually for inflation. The Internal Revenue Service (IRS), which is delegated to enforce FBAR compliance, must make its assessment within this six-year timeframe or it loses the right to do so.

Determining the Statute’s Start Date

The six-year clock for the assessment statute of limitations begins on the “date of the violation.” For a failure-to-file violation, this date is the deadline by which the FBAR was required to be filed with the Financial Crimes Enforcement Network (FinCEN). The FBAR is due on the same day as the federal income tax return, April 15, though filers receive an automatic extension to October 15.

For an FBAR for the 2023 calendar year, the extended deadline was October 15, 2024. If a person fails to file by that deadline, the violation occurs on that date, and the six-year statute of limitations for the IRS to assess a penalty would expire on October 15, 2030. This interpretation has been clarified through federal court cases. In the case of United States v. Horowitz, the court affirmed that the violation date is the FBAR’s due date, not when the IRS discovers the non-compliance.

Extending the Statute of Limitations

The six-year statute of limitations for assessing an FBAR penalty can be extended if the taxpayer and the IRS mutually agree in writing. The IRS cannot unilaterally extend the deadline without the taxpayer’s consent, which is formalized through a specific consent form. A taxpayer might agree to an extension when an FBAR examination is underway and more time is needed to gather and present information.

This additional time can be used to demonstrate that the failure to file was non-willful or had reasonable cause, potentially leading to a reduced penalty. By agreeing to an extension, the taxpayer can continue a dialogue with the IRS and avoid a premature penalty assessment based on incomplete information.

The Statute of Limitations for Collection

A clear distinction must be made between the statute of limitations for assessing a penalty and the one for collecting it. Once the IRS has formally assessed an FBAR penalty within the six-year window, a new and separate time limit begins for the government to collect the debt. The government may start a civil action to recover an assessed FBAR penalty within two years from the date the penalty was assessed.

The assessment date is the date an authorized IRS official signs the necessary paperwork, such as Form 13448, Penalty Assessment Certification Summary, to formally record the liability. For example, if a violation occurred on October 15, 2020, the IRS would have until October 15, 2026, to assess a penalty. If the IRS assesses the penalty on June 1, 2026, a new two-year clock for collection via lawsuit starts on that date, running until June 1, 2028.

It is important to note that other collection methods, such as administrative offset against federal payments, may not have the same statutory limitation, potentially allowing collection to continue until the debt is paid.