How to Fix a Missed FBAR Filing: Your Options and the Risks to Understand

Missed an FBAR filing? You’re not alone. Many U.S. taxpayers discover that they should have reported foreign financial accounts but failed to do so. What matters next is understanding your options and choosing an appropriate way to address the problem.

I’m Attorney Chad Silver, founder of Silver Tax Group. We help taxpayers in the United States and abroad address past FBAR filing errors, evaluate potential penalties, and navigate complex foreign account compliance issues.

In this article, we’ll explain several approaches to correcting missed FBAR filings, when different IRS compliance procedures may be relevant, and why legal advice can be important if your situation involves potential willful noncompliance.

1. Quiet Disclosure: Why It Can Be Risky

A quiet disclosure generally refers to submitting delinquent FBARs or amended tax returns without using an applicable IRS compliance or disclosure procedure.

Some taxpayers take this approach because they hope to correct past mistakes without drawing attention to them. However, simply submitting late forms does not automatically resolve all potential tax liabilities or protect a taxpayer from penalties or further scrutiny.

The IRS has warned that quiet disclosures may be identified and examined. Depending on the circumstances, a review could lead to additional questions, an audit, or other enforcement action.

That does not mean every late filing will trigger an investigation. It means taxpayers should not assume that submitting old forms quietly will guarantee a particular outcome.

Before choosing how to correct missed filings, consider the reason for the noncompliance, whether foreign income was reported correctly, and whether a formal compliance procedure may be appropriate.

2. Streamlined Filing Compliance Procedures: For Eligible Non-Willful Cases

If you failed to file required FBARs because of non-willful conduct, you may qualify for the IRS’s Streamlined Filing Compliance Procedures.

These procedures are designed for eligible taxpayers whose failure to report foreign financial assets or pay related taxes resulted from non-willful conduct.

For qualifying taxpayers, the process generally involves:

• Submitting the required tax returns or amended returns for the most recent three years for which the filing deadline has passed.
• Filing delinquent FBARs for the most recent six years for which the FBAR deadline has passed.
• Providing a certification explaining why the noncompliance was non-willful.
• Meeting the program’s other applicable eligibility and submission requirements.

The applicable procedure differs depending on whether you qualify for the Streamlined Foreign Offshore Procedures or the Streamlined Domestic Offshore Procedures.

For eligible taxpayers who meet the requirements, these procedures can provide a path to resolving certain past reporting issues. The foreign procedures generally provide relief from certain failure-to-file and failure-to-pay penalties, while the domestic procedures generally involve a miscellaneous offshore penalty calculated under the program’s rules.

However, eligibility is not automatic. A taxpayer’s history, conduct, prior IRS contact, and other facts can affect whether the procedures are available.

3. The IRS Voluntary Disclosure Practice: For Potentially Willful Noncompliance

What if you knew about your reporting obligations but deliberately failed to comply?

In that situation, the Streamlined Filing Compliance Procedures may not be appropriate. Taxpayers with potential criminal tax exposure may need to evaluate the IRS’s Criminal Investigation Voluntary Disclosure Practice with an experienced tax attorney.

This process is distinct from the streamlined procedures and is intended for taxpayers who may have engaged in willful tax noncompliance and seek to make a voluntary disclosure under the applicable rules.

Depending on the circumstances, addressing the matter may involve:

• Disclosing relevant foreign accounts and financial activities.
• Preparing delinquent or amended tax returns and required information reports.
• Calculating and addressing unpaid taxes, interest, and applicable penalties.
• Providing complete and accurate information as required by the process.

The voluntary disclosure process has specific eligibility and procedural requirements. It does not guarantee immunity from criminal prosecution, eliminate all penalties, or ensure that the IRS will accept a disclosure.

If you believe your conduct may have been willful, consider consulting a qualified tax attorney before submitting filings or making statements to tax authorities.

4. How Far Back Do You Need to File?

The number of years involved depends on the procedure and the taxpayer’s circumstances.

Under the Streamlined Filing Compliance Procedures, taxpayers generally submit three years of tax returns or amended returns and six years of FBARs, subject to the program’s specific requirements.

Other situations may require a different approach. The applicable filing periods, the years involved, and the treatment of additional reporting obligations should be reviewed before deciding what to submit.

Gathering complete financial records can help you and your adviser identify missing accounts, calculate balances, determine whether foreign income was reported, and assess which procedure may be appropriate.

5. Why the Reason for Missing an FBAR Matters

Not all missed FBAR filings are alike.

For example, a taxpayer may have been unaware of the requirement, misunderstood which accounts needed to be reported, or relied on a preparer who did not identify the issue. In other situations, a taxpayer may have known about the filing requirement and intentionally chosen not to comply.

These circumstances can have different legal implications.

The distinction between non-willful and willful conduct is fact-specific. It is important to provide accurate information about what happened rather than assume that a particular label or explanation automatically qualifies you for a program.

6. When Should You Consult an FBAR Tax Attorney?

Professional advice may be particularly important when:

• You have missed FBAR filings for multiple years.
• You have substantial foreign financial accounts or complicated overseas investments.
• You may have failed to report foreign income on your tax returns.
• You are uncertain whether your conduct could be considered willful.
• You have received a notice or inquiry from the IRS or another government agency.
• You are considering a formal disclosure procedure and need help evaluating eligibility.

An experienced tax attorney can help you understand the relevant requirements, assess potential risks, and determine what options may be available. If criminal exposure is a concern, legal advice before making disclosures can be especially important.

A CPA or other tax professional may also play a valuable role in preparing returns and financial calculations. The appropriate professional team depends on the complexity and risk involved.

7. How Silver Tax Group Can Help

At Silver Tax Group, we help taxpayers evaluate missed FBAR filings, understand potential compliance issues, and develop an appropriate strategy for moving forward.

Our team can review your circumstances, help identify relevant filing obligations, and explain the potential benefits and limitations of available compliance procedures.

If you’re behind on FBAR filings, do not assume that ignoring the issue will make it disappear. At the same time, do not assume that every missed filing will result in criminal prosecution or the maximum available penalty.

The best next step is to understand your situation and evaluate your options based on the facts.

Contact Silver Tax Group to request a confidential FBAR strategy consultation.

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We help clients evaluate their compliance options, implement an appropriate filing strategy, and provide legal representation when necessary.

Don’t guess, don’t ignore the problem, and don’t make assumptions about your eligibility for relief. Get informed guidance before deciding how to proceed.