Delinquent FBAR Submission Procedures: Who Qualifies, How They Work, and What to Do If You Don’t

Discovering that you should have been filing Foreign Bank Account Reports (FBARs) for several years can be stressful. You may worry about penalties, whether the IRS will investigate, and how to correct the problem without making your situation worse.

The good news is that the IRS has established procedures that may help eligible taxpayers catch up on missed FBAR filings without incurring FBAR penalties.

One option is the Delinquent FBAR Submission Procedures. This procedure is designed for a specific group of taxpayers: people who failed to file required FBARs but properly reported the income from their foreign accounts on their U.S. tax returns and paid all applicable taxes.

However, not everyone qualifies. If you omitted foreign income, have already been contacted by the IRS about your delinquent FBARs, or may have acted willfully, you may need to consider a different approach.

In this guide, Tax Attorney Chad Silver, founder of Silver Tax Group, explains how the Delinquent FBAR Submission Procedures work, who may qualify, and what other options may be available if the procedure does not fit your circumstances.

1. What Is an FBAR, and Why Does It Matter?

FBAR stands for Foreign Bank Account Report. The official filing is FinCEN Form 114, submitted electronically through the Financial Crimes Enforcement Network’s Bank Secrecy Act (BSA) E-Filing System.

Although the IRS enforces FBAR requirements, the report is filed with FinCEN rather than attached to your federal income tax return.

Generally, a U.S. person must file an FBAR if they have a financial interest in, or qualifying signature or other authority over, foreign financial accounts whose combined maximum value exceeds $10,000 at any point during the calendar year.

The filing threshold applies to the combined value of qualifying accounts. It does not matter whether the balance exceeds $10,000 at the end of the year.

For example, if your foreign accounts have a combined value of $12,000 in July but the balance drops below $10,000 by December, you may still have an FBAR filing requirement for that year.

Depending on the circumstances, reportable accounts may include foreign bank accounts, brokerage accounts, and certain other financial accounts. Not every foreign asset or investment is automatically an FBAR-reportable account, so the applicable rules must be reviewed.

Failing to file a required FBAR can lead to significant civil penalties. The consequences depend on the circumstances, including whether the violation was non-willful or willful.

However, a missed filing does not automatically mean the maximum penalty will be imposed. The IRS has procedures that may allow eligible taxpayers to correct certain reporting failures.

2. What Are the Delinquent FBAR Submission Procedures?

The Delinquent FBAR Submission Procedures provide a way for eligible taxpayers to submit overdue FBARs when they have otherwise met their U.S. tax obligations.

The procedure is generally intended for people who:

• Were required to file FBARs but did not submit them.
• Properly reported all income from their foreign accounts on their U.S. tax returns.
• Paid all tax due on that income.
• Have reasonable cause for the failure to file the FBARs.
• Have not been contacted by the IRS about the delinquent FBARs or become subject to an applicable civil examination or criminal investigation.

When a taxpayer satisfies the IRS’s requirements, the IRS states that it will not impose FBAR penalties under this procedure.

That potential relief is important, but it is not an automatic amnesty program. Taxpayers must meet the applicable conditions and provide an appropriate explanation for the late filings.

For official information, see the IRS Delinquent FBAR Submission Procedures.

3. Who Qualifies for Delinquent FBAR Submission Procedures?

Eligibility depends on the taxpayer’s filing history, income reporting, reason for the delay, and contact with the IRS.

Requirement 1: You missed required FBAR filings

The procedure is intended for taxpayers who had an FBAR filing obligation but did not file the required reports.

Generally, taxpayers submit delinquent FBARs electronically through FinCEN’s BSA E-Filing System for the applicable years.

Requirement 2: You reported all foreign account income and paid the tax due

This is one of the most important requirements.

The procedure is generally designed for people who reported all income from their foreign financial accounts on their U.S. tax returns and paid the applicable tax.

For example, suppose you inherited a savings account in Portugal. You reported the interest earned by the account on your U.S. tax returns and paid the tax due, but you did not know that a separate FBAR was required.

Your circumstances may fit the general profile of a taxpayer who should evaluate the Delinquent FBAR Submission Procedures.

By contrast, if you failed to report interest, dividends, or other taxable income generated by a foreign account, this procedure generally will not resolve the entire compliance problem.

You may need to consider the Streamlined Filing Compliance Procedures or another appropriate option.

Requirement 3: You have reasonable cause for the late filing

Taxpayers must provide an explanation for why the FBARs were not filed on time.

The explanation should be truthful, specific, and consistent with the facts. Depending on the circumstances, relevant details may include how the account was acquired, what you understood about your reporting obligations, whether you received professional advice, and how you discovered the filing requirement.

Simply stating that you did not know about FBARs does not guarantee that the IRS will accept the explanation.

Requirement 4: You have not been contacted about the delinquent FBARs or become subject to an applicable examination or investigation

The procedure is generally intended for taxpayers who come forward before the IRS contacts them about their delinquent FBARs and who are not under a relevant civil examination or criminal investigation.

If the IRS has already contacted you about the missing FBARs, or an applicable examination or investigation is underway, do not assume that this procedure remains available.

The nature and scope of the contact matter. Not every IRS letter necessarily has the same effect, so the actual notice and circumstances should be reviewed before determining eligibility.

4. How the Delinquent FBAR Submission Process Works

If you believe you qualify, the process generally involves several steps.

Step 1: Review your foreign accounts and filing history

Identify the foreign financial accounts you held or had qualifying authority over during the relevant years.

Determine which years required an FBAR and whether the reports were filed. You should also review your U.S. tax returns to confirm that the income from those accounts was properly reported and the tax due was paid.

If the review reveals omitted income or other missing international tax forms, you may need a broader compliance strategy.

Step 2: Determine which years need to be filed

FBAR filing obligations are subject to specific recordkeeping and limitation rules. Taxpayers generally need to review the applicable six-year period, but the relevant years should be determined from the actual filing history and circumstances.

Do not assume that every case requires precisely the same number of reports without checking the applicable rules.

Step 3: Prepare and electronically submit the delinquent FBARs

Prepare the required FinCEN Forms 114 using accurate information about the accounts and the relevant reporting years.

Submit the forms electronically through the BSA E-Filing System and follow the current instructions for identifying the reports as delinquent.

Step 4: Include an explanation for the late filings

The submission should include a statement explaining why the FBARs were not filed on time and establishing the relevant facts supporting reasonable cause.

The explanation should not minimize, conceal, or mischaracterize what happened. If you are unsure how your conduct should be described, consider obtaining professional advice before making a statement to the government.

Step 5: Retain records and address any other compliance issues

Keep copies of the submitted FBARs, supporting financial records, and the explanation provided.

If you discover that income was omitted or another required form was not filed, you may need to address that issue separately. Submitting delinquent FBARs alone does not correct an inaccurate income tax return or automatically resolve other international reporting obligations.

5. Real-World Examples: Who May Qualify and Who May Need Another Option?

The following hypothetical scenarios illustrate how the rules may apply. Actual eligibility depends on the complete facts.

Scenario 1: An inherited foreign account with fully reported income

Maria is a U.S. citizen who inherited a savings account in Portugal. She reported the interest income on her U.S. tax returns and paid the tax due, but she did not realize she also needed to file FBARs.

The IRS has not contacted her about the missing reports, and she has a reasonable explanation for the late filing.

Maria may be a candidate for the Delinquent FBAR Submission Procedures. She should verify her eligibility and follow the IRS’s submission requirements before filing.

Scenario 2: Foreign income was omitted from tax returns

David lived in Germany and maintained a local bank account. He did not file FBARs and also failed to report the interest income on his U.S. tax returns because he did not realize that U.S. citizens generally report worldwide income.

The Delinquent FBAR Submission Procedures would not ordinarily address his entire problem because the income was not properly reported.

If his failures were non-willful and he meets the other eligibility requirements, the Streamlined Filing Compliance Procedures may be worth evaluating.

Scenario 3: The IRS has already contacted the taxpayer

Susan receives a notice from the IRS specifically concerning her delinquent FBARs.

Even if she reported all her foreign account income and believes her failure was an honest mistake, she should not assume she can still use the Delinquent FBAR Submission Procedures.

The nature of the notice and any examination or investigation must be reviewed. She may need professional help determining how to respond and what compliance options remain available.

Scenario 4: The facts suggest possible willful conduct

Tom deliberately concealed a foreign account and omitted related income to keep the assets away from the IRS.

His circumstances raise materially different concerns from those of someone who simply misunderstood the filing rules. He should seek advice from an experienced tax attorney about potential civil and criminal exposure and whether a voluntary disclosure option is appropriate.

He should not assume that a procedure designed for non-willful conduct is suitable for his case.

6. What If You Do Not Qualify for Delinquent FBAR Submission Procedures?

Being ineligible for the Delinquent FBAR Submission Procedures does not automatically mean that no options remain.

The right alternative depends on why the filings were missed, whether income was omitted, whether the conduct was willful, and whether the IRS has already made contact.

Option 1: Streamlined Domestic Offshore Procedures

The Streamlined Domestic Offshore Procedures may be available to eligible U.S. taxpayers residing in the United States whose failures to report foreign income or submit required international information returns resulted from non-willful conduct.

Generally, a qualifying taxpayer must submit the most recent three years of required amended tax returns and related information returns, along with the most recent six years of required delinquent FBARs.

The taxpayer must also pay the tax and interest due and a miscellaneous offshore penalty calculated under the program’s rules. The penalty is generally 5% of the applicable penalty base, which is not necessarily the same as simply taking 5% of one account’s current balance.

See the IRS guidance on Streamlined Domestic Offshore Procedures.

Option 2: Streamlined Foreign Offshore Procedures

The Streamlined Foreign Offshore Procedures may be available to eligible taxpayers who meet the IRS’s specific non-residency requirements and whose failures resulted from non-willful conduct.

Qualifying submissions generally involve the most recent three years of required tax returns and information returns, along with the most recent six years of required FBARs.

Eligible taxpayers who properly complete the procedure may receive relief from covered penalties, including FBAR penalties. They must still pay any tax and interest due.

The eligibility test is more specific than simply living abroad for a certain number of days. The applicable residency rules, filing history, and other requirements must be reviewed.

See the IRS guidance on Streamlined Foreign Offshore Procedures.

Option 3: Delinquent International Information Return Submission Procedures

FBARs are not the only forms involved in international tax compliance.

Depending on the facts, taxpayers may also have missed information returns such as Form 5471 for certain foreign corporations, Form 3520 for certain foreign gifts and transactions with foreign trusts, or Form 3520-A for certain foreign trusts.

The IRS has separate guidance for delinquent international information returns. Reasonable-cause relief may be available in appropriate cases, but the treatment of these returns is not identical to the Delinquent FBAR Submission Procedures, and penalty relief is not automatic.

A taxpayer should identify each missing form and evaluate the requirements that apply to it.

Option 4: IRS Criminal Investigation Voluntary Disclosure Practice

When a taxpayer’s conduct may have been willful, the IRS Criminal Investigation Voluntary Disclosure Practice may be relevant.

This is distinct from the streamlined procedures, which require non-willful conduct. A voluntary disclosure may have potential benefits, but it does not guarantee immunity from prosecution, eliminate all penalties, or guarantee a particular resolution.

Because this option can involve serious legal consequences and detailed procedural requirements, taxpayers should obtain advice from a qualified tax attorney before proceeding.

7. Why Quiet Disclosure Can Be Risky

Some taxpayers try to correct past noncompliance by simply filing old FBARs or amended tax returns without using an applicable disclosure procedure.

This approach is often called a “quiet disclosure.”

It is not an official IRS amnesty program and does not, by itself, establish eligibility for penalty relief. Filing old reports without addressing the underlying tax issues may leave important problems unresolved and can expose the taxpayer to further scrutiny.

The appropriate correction strategy should account for all relevant facts, including omitted income, other unfiled forms, possible willfulness, and any existing IRS contact.

Do not assume that filing a stack of old forms automatically resolves the problem—or that using a formal procedure automatically guarantees a favorable outcome.

8. Understanding the Difference Between Non-Willful and Willful Conduct

The distinction between non-willful and willful conduct can be central to determining which compliance options are available.

Non-willful conduct may involve negligence, inadvertence, mistake, or a good-faith misunderstanding of the law. Willfulness can involve intentional violations and, in some circumstances, reckless disregard of a known legal obligation.

Consider two examples:

• A taxpayer maintains a foreign account, does not realize a separate FBAR is required, reports the account’s income correctly, and later discovers the filing obligation.
• A taxpayer deliberately conceals a foreign account and takes steps to hide income or assets from the IRS.

These examples illustrate different circumstances, but actual cases can be more complicated. Knowing about an account does not automatically mean the taxpayer knew about the FBAR requirement, and a mistaken Schedule B answer does not automatically prove willfulness.

Conversely, signing a tax return without reviewing foreign account questions or disregarding clear warning signs may be relevant evidence, depending on the circumstances.

Some compliance procedures require taxpayers to certify that their conduct was non-willful under penalties of perjury. That certification should be accurate and supported by the facts.

If you are uncertain how your conduct should be characterized, seek qualified legal advice before making a certification to the IRS.

9. Get Guidance Before Choosing a Disclosure Procedure

Choosing a compliance procedure requires more than counting missed FBARs.

You may need to evaluate your income tax returns, account records, foreign income, other information returns, prior communications with the IRS, and the circumstances that led to the missed filings.

An incorrect submission can fail to resolve the underlying issue or leave you exposed to additional questions and penalties.

Silver Tax Group handles tax matters involving FBAR compliance, offshore disclosures, and IRS disputes. If you have foreign accounts and are unsure which procedure applies, professional guidance may help you understand the requirements and evaluate your options.

Visit Silver Tax Group to learn more about the firm’s services and request a consultation.

Final Takeaway: The Right Procedure Depends on Your Circumstances

The Delinquent FBAR Submission Procedures may provide a path to compliance for taxpayers who failed to file required FBARs but properly reported their foreign account income, paid the tax due, and meet the other IRS requirements.

If you also omitted foreign income, may have acted willfully, or have already received an IRS notice concerning the issue, a different strategy may be necessary.

Before filing anything, review your reporting history, identify all missing forms, and understand the requirements of the procedure you intend to use.

Disclaimer: This article is for general informational purposes only and does not constitute legal or tax advice. Eligibility for delinquent FBAR procedures, streamlined filing, voluntary disclosure, or penalty relief depends on the applicable rules and the facts of each case. Consult a qualified tax professional about your circumstances.

For more information about FBAR compliance and offshore tax issues, visit Silver Tax Group and follow the firm’s educational content for additional tax guidance.