What To Do if You Missed the October 15 FBAR Deadline

The deadline to file FBARs for the 2020 tax year expired on October 15, 2021. For taxpayers who missed the deadline, simply filing late can have significant negative consequences. However, there are a few options available for remedying delinquent FBAR filings—including one option that eligible taxpayers can use to avoid penalties entirely. US International Tax Advisors, explains:

3 Potential Options if You Missed the FBAR Filing Deadline

Taxpayers who failed to file their 2020 FBARs by October 15, 2021 have three main options. Each option is available under different circumstances, and choosing the right option is critical for securing protection against unnecessary liability. The three main options for remedying delinquent FBAR filings are:

1. Statement of “Reasonable Cause”

The IRS “[does] not penalize those who properly report[] a foreign account on a late-filed FBAR if the IRS determines there was reasonable cause for late filing.” The IRS assesses taxpayers’ claims of “reasonable cause” on a case-by-case basis taking into account whether:

• There are “significant mitigating factors with respect to the failure;” or,
• The failure “arose from events beyond the filer’s control.”

Federal regulations provide two examples of “significant mitigating factors”:

• “The fact that prior to the failure the filer was never required to file the particular type of return or furnish the particular type of statement with respect to which the failure occurred;” or,
• “The fact that the filer has an established history of complying with the information reporting requirement with respect to which the failure occurred.”

Events that the IRS may consider “beyond the filer’s control” include:

• Unavailability of relevant business records due to a supervening event, and
• Certain actions of the IRS and IRS agents.

Submitting a late FBAR based on “reasonable cause” can be risky, as the IRS can simply disagree that reasonable cause exists and impose the standard penalties for delinquent filings. As a result, taxpayers who believe they may have grounds to avoid penalties for a delinquent filing should consult with a Maryland FBAR attorney prior to moving forward.

2. Streamlined Filing Compliance Procedures

The IRS’ Streamlined Filing Compliance Procedures provide a way for taxpayers to remedy non-willful filing violations. If you accidentally missed the October 15 FBAR deadline, you may be able to use these procedures to mitigate your liability and avoid an IRS audit or investigation.

3. Voluntary Disclosure Practice

IRS CI’s Voluntary Disclosure Practice is an option for U.S. taxpayers who willfully ignored their FBAR filing obligations. Similar to submitting a statement of “reasonable cause,” submitting a voluntary disclosure can be risky—because it does not guarantee immunity from prosecution. However, under the right circumstances, submitting a voluntary disclosure can mitigate the consequences of a delinquent FBAR filing, and it can protect taxpayers who might otherwise be at risk for facing criminal charges.

Schedule an Appointment with US International Tax Advisors

If you need to know more about the options for remedying delinquent FBAR filings, we encourage you to contact us promptly. To schedule an appointment with US International Tax Advisors, call 844-796-8565 or contact us confidentially online today.