Catching Up on Missed FBARs: The Delinquent Filing Procedure & Your Safest Path Forward

Missing FBAR Deadlines? Here's What You Need to Know

If you have unreported foreign bank accounts and have missed your FBAR (Foreign Bank Account Report) deadlines, you are not alone—but immediate action is essential. The good news: the IRS and FinCEN offer a structured Delinquent FBAR Submission Procedure that can help you come into compliance with significantly reduced penalties compared to willful violations. This guide walks you through the process, the rules, and how to navigate this sensitive situation safely.

What Is an FBAR and Who Must File?

The Foreign Bank Account Report (FBAR) is a disclosure form required by FinCEN (Financial Crimes Enforcement Network), not the IRS. If you are a U.S. citizen, resident alien, or other specified U.S. person, and you have a financial interest in or signature authority over foreign financial accounts with an aggregate value exceeding $10,000 at any time during the calendar year, you must file an FBAR.

"Financial accounts" include:

• Bank accounts
• Investment accounts
• Savings and loan associations
• Credit unions
• Brokerages
• Mutual funds and similar holdings

The FBAR is filed annually with FinCEN by April 15th (with an automatic extension to October 15th), and it is separate from your federal income tax return.

Why Missing FBARs Is Serious—But Fixable

Failing to file FBARs can result in substantial civil and criminal penalties. However, the IRS recognizes that many taxpayers—especially expats, business owners, and those with inherited accounts—may discover years later that they missed filings. Rather than forcing you into criminal prosecution, the IRS offers a structured path to catch up: the Delinquent FBAR Submission Procedure.

The key difference:

• Willful non-compliance: penalties can reach 50% of the highest account balance per year.
• Non-willful (using the delinquent procedure): significantly reduced penalties, typically 5% or less per year.

The Delinquent FBAR Submission Procedure: Step by Step

#### Eligibility Requirements

You are generally eligible to use the delinquent procedure if:

1. You have not been contacted by the IRS or FinCEN regarding your FBAR non-compliance.

2. You are not under criminal investigation related to foreign accounts or tax evasion.

3. You have unreported foreign income or unreported FBARs (or both).

If you have already received a notice or subpoena, or if you suspect you are under investigation, you should consult a tax attorney immediately before filing anything.

#### Filing Delinquent FBARs

Once you determine you are eligible, the process involves:

1. File all missing FBARs with FinCEN. These are filed electronically via the FinCEN Filing System (FINCEN.gov).

• Use form FinCEN Form 114 (formerly TD F 90-22.1).
• Include all years for which you failed to file (typically 6 years of back filings, though FinCEN may require more in some cases).
• Mark each form as "DELINQUENT" in the appropriate field.

2. File all missing U.S. tax returns (Forms 1040) for those same years, reporting all worldwide income, including foreign-source income.

• Include any foreign tax credits you are entitled to.
• Report capital gains, interest, dividends, and other income from foreign sources.

3. Pay any back taxes owed, including interest and, under the delinquent procedure, a reduced civil penalty.

4. Going forward, file FBARs and amended tax returns timely every year.

#### The Reasonable Cause Statement

You will likely be asked to provide a Reasonable Cause statement explaining why the FBARs and returns were not filed. This does not need to be elaborate, but should be honest and straightforward. Common reasons include:

• Lack of awareness that the accounts must be reported.
• Reliance on incorrect professional advice.
• Recent inheritance or acquisition of a foreign account.
• Language barriers or confusion about filing requirements.

Do not claim "I didn't think it was required" as your sole reason if you are a savvy business owner; the IRS will question credibility. Instead, focus on honest, specific facts.

Penalties Under the Delinquent Procedure

Under the IRS Delinquent FBAR Submission Procedures, the civil penalty for non-willful violations is typically:

• 5% of the highest aggregate balance of all unreported foreign accounts in the most recent year of non-compliance, per year of delinquency (generally capped at 6 years unless FinCEN determines otherwise).

For example, if your highest balance in any year was $200,000 and you were delinquent for 6 years, the penalty could be approximately $60,000 total (5% × $200,000 × 6)—still significantly less than willful penalties.

Back taxes and interest are separate and still due.

How We Help: The Missed FBAR Specialist Service

Filing delinquent FBARs involves coordination across three entities (the IRS, FinCEN, and potentially foreign tax authorities), careful documentation, and strategic timing to minimize risk. At Next Tax Source, our team specializes in missed FBAR filings. We:

• Assess your situation to confirm eligibility for the delinquent procedure.
• Reconstruct account histories by gathering bank statements and account confirmations.
• Prepare and file all delinquent FBARs electronically with FinCEN, clearly marked as delinquent.
• Prepare amended returns for all missing years, ensuring proper foreign income reporting.
• Draft a credible Reasonable Cause statement tailored to your circumstances.
• Coordinate with your CPA or tax preparer (if you have one) to ensure consistency.
• Manage correspondence with the IRS and FinCEN if questions arise.

Our licensed CPAs and Enrolled Agents review and sign off on every filing, ensuring accuracy and reducing the risk of further complications. Learn more about our missed FBAR filing service and how we can help you catch up safely.

Key Timing Considerations

• Do not delay. The longer you wait, the greater the risk of IRS discovery before you self-report.
• The IRS has a statute of limitations of six years to assess tax on unreported income, and longer if the underreporting exceeds 25% of reported income.
• FinCEN may require filings going back further than six years if there is evidence of continuing non-compliance.

Once you file your delinquent FBARs and amended returns, you have taken a major step toward compliance. Future filings are typically routine.

Common Scenarios

Scenario 1: You inherited a foreign account.

You may not have realized you needed to file an FBAR until you inherited the account or discovered it later. The delinquent procedure applies; focus your Reasonable Cause statement on the timing of inheritance and your subsequent discovery of the reporting requirement.

Scenario 2: Your accountant told you it wasn't required.

If you relied in good faith on professional advice and can document it (email, engagement letter, etc.), this is a strong reasonable cause argument. Include copies of that correspondence with your filing.

Scenario 3: You are a U.S. expat who moved abroad and lost track of filing deadlines.

This is extremely common. Explain the move, any change of address, and the difficulty of staying current with U.S. rules while living overseas. If you have since filed other U.S. returns, mention that to show good faith.

Scenario 4: You operate a business with business bank accounts overseas.

If the accounts are in the name of a foreign corporation or entity, the analysis becomes more complex and may involve FATCA (Foreign Account Tax Compliance Act) considerations as well. Consult with a specialist.

FATCA and Form 8938: Related but Separate

If your foreign assets exceed certain thresholds (which vary by tax year and whether you are a U.S. resident), you may also be required to file Form 8938 (Statement of Specified Foreign Financial Assets) with your tax return. This is separate from the FBAR but covers overlapping accounts. When you file your amended returns, we ensure both forms are completed correctly.

After You File: What to Expect

Once your delinquent FBARs and amended returns are filed:

1. FinCEN processes FBARs silently; you typically receive no confirmation letter or response unless there is an issue.

2. The IRS processes amended returns and may take 3–6 months to assess any additional tax, interest, and civil penalties.

3. You may receive IRS correspondence asking clarifying questions (e.g., about account ownership, source of funds). Your tax professional will respond.

4. Once assessed, you can pay in full or set up a payment plan with the IRS.

5. Going forward, file on time every year. No more delinquent filings.

Willful vs. Non-Willful: Why It Matters

The delinquent procedure assumes non-willful non-compliance—that is, you did not intentionally or with reckless disregard fail to file. If the IRS or FinCEN determines that your non-compliance was willful (for example, you knew of the requirement but deliberately hid accounts), penalties jump dramatically and criminal prosecution becomes a serious risk.

Factors considered in willfulness:

• Your education and sophistication as a taxpayer.
• Prior IRS contact about FBARs or foreign accounts.
• Complexity of your financial situation.
• Steps taken to conceal accounts.
• Whether you reported income from the accounts on your tax return.

If you have any doubt about whether your situation qualifies as non-willful, consult a tax attorney before filing.

The Bottom Line

Missing FBAR deadlines is a serious compliance matter, but it is not insurmountable. The IRS has created a straightforward delinquent filing procedure that offers substantial penalty relief if you act proactively. Waiting longer only increases risk and potential penalties. The time to catch up is now.

Our team at Next Tax Source has successfully guided hundreds of U.S. business owners and expats through missed FBAR filings, helping them come into compliance and regain peace of mind. If you have unreported foreign accounts or missed FBAR deadlines, we are here to help.

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Next Steps

If you have unreported foreign bank accounts or missed FBAR deadlines, contact us today for a confidential consultation. Our licensed CPAs and Enrolled Agents will assess your situation, confirm your eligibility for the delinquent procedure, and guide you through every step. Book a consultation with our missed FBAR specialists now.

Frequently asked questions

Can I file delinquent FBARs if the IRS has already contacted me?

No. If you have received an IRS or FinCEN notice or are under investigation, you are no longer eligible for the delinquent procedure. You must consult a tax attorney immediately. Attempting to file delinquently after contact may be viewed negatively and could increase penalties or trigger criminal prosecution.

How far back must I file delinquent FBARs?

The IRS typically requires 6 years of back FBARs under the delinquent procedure, though FinCEN may require more if there is evidence of continuing non-compliance. We will review your specific history and file as far back as necessary to bring you into compliance.

What is the difference between an FBAR and Form 8938?

The FBAR is filed with FinCEN and is required if you have foreign accounts exceeding $10,000. Form 8938 is filed with your tax return and is required if your foreign assets exceed higher thresholds (varying by year and residency status). Many filers must complete both for overlapping accounts.

Will filing delinquent FBARs trigger an audit?

Filing delinquent FBARs and amended returns does carry some risk, but voluntarily coming into compliance is generally viewed more favorably than being discovered by the IRS. The risk is substantially lower than ignoring the problem and waiting for IRS discovery.

Can I file delinquent FBARs myself, or do I need a professional?

You can file yourself, but the process is complex and involves coordinating filings across multiple agencies, reconstructing account histories, and drafting reasonable cause statements. Mistakes can be costly. We recommend working with a specialist to ensure accuracy and maximize penalty relief.