New Procedures Announced for Unfiled FBARs

The IRS has provided new filing procedures for certain taxpayers with delinquent FBARs, allowing them to avoid penalties without participating in the various voluntary compliance programs. The FBAR is the Foreign Bank and Financial Accounts form used to disclose the existence of all foreign bank, brokerage, and certain other asset accounts, as well as the highest balance in each account for the year. This form is required when the aggregate highest balance of all accounts exceeds $10,000 at any time during the year.

Penalties for noncompliance are harsh – the greater of $100,000 or 50% of the highest balance in each account for each year an FBAR was required but not filed. The new procedures will allow certain delinquent taxpayers to come into compliance without penalty.

In general, eligible taxpayers:

• Have not previously filed the required FBARs
• Are not under a civil examination or a criminal investigation by the IRS
• Have not already been contacted by the IRS about the delinquent FBARs
• Have properly reported on all US tax returns, and paid tax on, the income from the foreign bank accounts
• Have not been previously contacted by the IRS for either an income tax audit or requested to file delinquent tax returns for the years the delinquent FBARs are being filed.

Due to the severity of the potential penalties and the focus the IRS continues to have on FBAR compliance, extreme caution must be taken prior to availing oneself of this new guidance.

Got questions? Connect with an experienced Aprio advisor today.

Schedule a Consultation