Filing a late FBAR: which way back fits your situation

Most people catching up on an FBAR have hidden nothing. They simply never knew it existed: the architect who lived in the US for a few years as a child, the engineer with a green card tucked away in a drawer, the family where only one partner is American and the joint account was never reported to anyone. US law provides ways back for exactly these cases, and which one fits comes down to a single question you should answer before anything else. This page sorts out the options, explains the penalties the law provides and shows how many years count. What the FBAR is and who files it is covered under FBAR: reporting foreign accounts.

1The first question: is only the FBAR missing?

Before you touch a single form, work out exactly what is missing. There are two basic cases, and they lead to different procedures.

Case one: You filed a US tax return every year, reported all income from your accounts in Europe and paid whatever tax resulted, often zero because the tax paid in your home country was credited. You just never filed the FBAR. In that case a report is missing, but no tax.

Case two: You never filed a US tax return, or your returns left out the interest, dividends and fund income from Europe, or forms such as 8938, 5471 or 8621 are missing. Then income and returns are missing, and the FBAR is only part of the problem.

The distinction matters because the Streamlined procedures are not designed for case one at all. The IRS describes its target group as taxpayers who failed to report income from a foreign financial asset and pay the tax due on it, and who may also have failed to file an FBAR. If you reported everything and only forgot the FBAR, you take a simpler route.

The IRS overview of options for undisclosed foreign financial assets lists three procedures: the IRS Criminal Investigation Voluntary Disclosure Practice, the Streamlined Filing Compliance Procedures and the procedures for delinquent international information returns. It no longer lists a separate procedure called the Delinquent FBAR Submission Procedures; the former IRS page on it is no longer available. The route for case one is described by the IRS Taxpayer Advocate Service, as set out in the next section.

2Only the FBAR is missing: file late with an explanation

For case one, the route is unspectacular. As long as the IRS is not examining you, is not conducting a criminal investigation and has not yet contacted you about a missing FBAR, you file the missing FBARs through the normal process in FinCEN's BSA E-Filing System. On the first page of the form you pick a reason for the delay from the list, or choose "Other" and explain the circumstances in your own words. An FBAR counts as late if it arrives after October 15 of the following year.

The IRS Taxpayer Advocate Service describes the outcome like this: the IRS will not impose a penalty for the late FBARs if you correctly reported the income from the accounts on your US tax return, paid the tax on it, and the IRS has not yet contacted you about an examination or missing returns for the years in question. The Internal Revenue Manual, the examiners' internal handbook, says the same from the other side: no penalty is assessed for an account if the failure was non-willful, due to reasonable cause and the account is correctly reported on the late FBAR.

The explanation is not a formality. It is where you set out why you did not know about the obligation, and it should fit your life story: when you acquired US citizenship, how long you have lived in Europe, who prepared your returns so far and when you learned about the requirement. How many years you file depends on what is missing; the statutory period for assessing a penalty is six years.

3Returns are missing too: the Streamlined Foreign Offshore Procedures

For case two, the IRS created the Streamlined Filing Compliance Procedures, first offered on September 1, 2012 and expanded since. For Americans living in Europe, the relevant version is the one for taxpayers outside the US: the Streamlined Foreign Offshore Procedures.

3.1Who can use them

• Non-willful: You certify that the failure was not willful. The IRS defines non-willful conduct as negligence, inadvertence or mistake, or conduct resulting from a good-faith misunderstanding of the requirements of the law.
• Residence outside the US: US citizens and green card holders qualify if, in at least one of the last three years for which the filing deadline has passed, they had no abode in the US and were outside the US for at least 330 full days. For joint returns, both spouses must meet the requirement. The IRS gives the example of someone born in the US who moved to Germany with their parents at age five and has lived there ever since.
• No ongoing examination: If the IRS has opened an examination for any tax year, even one unrelated to foreign assets, the procedure is closed to you. The same applies in the case of a criminal investigation.
• Valid taxpayer ID: For US citizens, that is the Social Security Number. If you do not have one, sort it out before the procedure begins.

3.2What you file

For each of the last three years for which the filing deadline has passed, you file a complete return including all information returns such as Form 3520, 5471 and 8938, or an amended return if you had already filed one. At the top of the first page of every return and information return, you write "Streamlined Foreign Offshore" in red. Add the signed certification on Form 14653 with your account of why the failure was not willful. You pay the full tax and statutory interest along with it. The documents go to the IRS on paper; the IRS does not accept electronic filing under this procedure.

For each of the last six years for which the FBAR deadline has passed, you file the missing FBARs electronically through BSA E-Filing, with the reason "Other" and the text "Streamlined Filing Compliance Procedures". This means the FBARs you actually should have filed, not six FBARs at any cost.

3.3What you gain

If you are eligible and meet all requirements, according to the IRS you are not subject to failure-to-file or failure-to-pay penalties, accuracy-related penalties, information return penalties or FBAR penalties. This also holds if one of the returns is later selected for examination, for the amounts you reported in it. Tax and interest remain due. There is no acknowledgment of receipt and no closing agreement; the returns are processed like any other return. After that, the IRS expects you to file normally every year.

The procedure is covered in detail under Streamlined Procedure: catching up on US taxes without penalties and in the article Everything you need to know about Streamlined Filing.

4Other situations, other routes

Resident in the US. If you do not meet the foreign residence requirement, you can use the Streamlined Domestic Offshore Procedures. There is a penalty there: 5 percent of the highest aggregate value of the foreign assets that should have been reported on an FBAR or on Form 8938.

Only information returns are missing. If you reported all your income but forgot returns such as Form 5471 for your European company or Form 8938, the IRS offers its procedure for delinquent international information returns. You file the missing returns with an amended return and can attach a reasonable cause statement for each one. Unlike with a late FBAR, the IRS says here that penalties may be assessed without considering the statement, in which case you submit it again on request. For the other filings a foreign company triggers, see Your own foreign company as a US citizen.

Willfulness. If you knew your obligations and deliberately ignored them, the Streamlined procedures are not for you. For these cases the IRS points to the Voluntary Disclosure Practice run by its Criminal Investigation division. It requires a truthful, timely and complete disclosure plus payment of tax, interest and penalties, and it does not guarantee immunity from prosecution either. This is a case for an attorney, not a form.

5The penalties the law provides

FBAR penalties are set out in 31 U.S.C. 5321. The law sets maximum amounts that are adjusted for inflation every year; for penalties assessed on or after January 17, 2025, the amounts in the table apply.

Without willfulness, the penalty is at most $16,536 per violation. A violation means a missing or incorrect FBAR, not each account listed on it. The Supreme Court decided this in Bittner v. United States, and the Internal Revenue Manual expressly adopts it: a non-willful reporting violation can trigger only one penalty. So if you should have reported five accounts on one missing FBAR, you risk one penalty for that year, not five.

With willfulness, the maximum penalty rises to $165,353 or 50 percent of the account balance on the date of the violation, whichever is higher, and it is calculated per account. Under the Internal Revenue Manual, willfulness also includes willful blindness and reckless disregard of the obligation.

Examiners have discretion. Penalties have a ceiling but no floor. The Internal Revenue Manual provides that for non-willful violations, all penalties combined across all open years should not exceed 50 percent of the highest aggregate balance of the accounts involved. In many cases the examiner can send a warning letter, Letter 3800, instead of a penalty. And where there is reasonable cause and a complete late FBAR has been filed, no penalty is assessed for the non-willful violation.

6How many years count

You will come across three time periods, and each means something different.

Six-year statute of limitations. An FBAR penalty can be assessed within six years of the violation. For reporting years from 2016 onward, the Internal Revenue Manual places the violation on April 15 of the following year if no complete and correct FBAR was filed by October 15.

Six FBARs under Streamlined. The procedure requires the missing FBARs for the last six years whose deadline has passed, which covers the statute of limitations period. Tax returns, by contrast, you only file for three years.

Five years of record keeping. For every reported account, keep the records showing account number, institution, account type and maximum value for five years. For the years you are catching up on, get your bank statements before you start; without maximum values there is no correct FBAR.

7What to avoid

• Waiting for a letter. Both simple routes assume the IRS has not contacted you yet. An examination, even of a completely different year, shuts the door on the Streamlined procedures.
• Only fixing the present. If you simply start filing FBARs and returns next year and leave the earlier years alone, those years are still unresolved. If you previously filed late returns outside any of the procedures, the IRS says you can still use Streamlined, but penalties already assessed will not be abated.
• The wrong route. Filing only FBARs when income is also missing solves only part of the problem. Using Streamlined when only the FBAR was missing makes needless work.
• A statement that doesn't fit the story. What you write on Form 14653 or in your FBAR statement must match what your records show. It gets read, and the details can be checked against reports from banks.

Once everything is caught up, the deadline calendar for Americans abroad shows which deadlines apply going forward. If you have already received an IRS letter with a penalty on another return, that is a separate case; the page IRS letters and penalties explains your options.

In short

• First, work out whether only the FBAR is missing or your income and tax returns too; that decides the route.
• If only the FBAR is missing and everything else was correct, you file the missing FBARs with a statement; according to the Taxpayer Advocate Service, the IRS then imposes no penalty as long as it has not contacted you yet.
• If returns are missing too, the Streamlined Foreign Offshore procedure is designed for Americans living in Europe: three returns, six FBARs, Form 14653, tax and interest, no penalties.
• Without willfulness the maximum penalty is $16,536 per missing FBAR, not per account; with willfulness up to 50 percent of the account balance.
• An ongoing examination rules out Streamlined; earlier quiet filings of late returns do not.

How we help you

• Streamlined FilingCatch up on missed US tax returns and FBARs through the Streamlined procedure.
• US taxes for US citizens abroadForm 1040, FBAR and Streamlined for US citizens living in Europe.
• IRS letters and penaltiesMail from the IRS? We reply, request penalty relief and put things right.
• US Tax ConsultationYour US tax question, answered by people who know both sides.