The October 15 FBAR Filing Deadline Has Passed. What Now?

On October 1, 2021, the Internal Revenue Service (IRS) issued a reminder that the automatic extension for annual FBAR filings expires on October 15. As the IRS notes, “[t]hose who don't file an FBAR when required may be subject to significant civil and criminal penalties that can result in a fine and/or prison.” So, if you missed the deadline to file your FBAR for 2020, what should you do now? Boston international tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, explains:

What Should You Do if You Missed the FBAR Filing Deadline?

Missing the deadline to file an FBAR can have immediate consequences. Penalties accrue immediately; and, the longer it takes a taxpayer to remedy a delinquent filing, the more the taxpayer may owe.

There is an exception for circumstances in which a taxpayer has “reasonable cause” for a failure to file. As the IRS explains, “[t]he IRS will not penalize those who properly reported a foreign account on a late-filed FBAR if the IRS determines there was reasonable cause for late filing.” However, before filing a delinquent FBAR and claiming “reasonable cause,” there are some important considerations to take into account:

• Not being aware of your obligation to file an FBAR does not constitute “reasonable cause.” This is considered either a negligent or non-willful violation of the FBAR filing requirement. While claiming that your filing delay was negligent or non-willful can protect you from criminal prosecution, it will not protect you from penalization entirely.
• The IRS judges “reasonable cause” on a case-by-case basis. There is no bright-line rule for when a delayed FBAR filing is excused. In order to determine whether you have grounds to claim “reasonable cause,” you will need to discuss your situation with an experienced Boston international tax attorney.
• If you claim “reasonable cause” and the IRS disagrees, you can face the full consequences of making a delinquent FBAR filing. Depending on the circumstances at hand, this could mean facing civil or criminal penalties. Civil penalties can include tens or hundreds of thousands of dollars in fines, while criminal penalties can include hundreds of thousands of dollars in fines and years of federal imprisonment.

If you don’t have grounds to claim “reasonable cause,” the options you have available will depend on the reason why you failed to file an FBAR by October 15. Voluntary disclosure may be your best option, but you will need to decide whether to file under the IRS’s streamlined filing procedures or IRS CI’s Voluntary Disclosure Practice. These programs have different eligibility criteria and different potential consequences, and you will need to work with an experienced Boston international tax attorney to decide which option to pursue.

Request a Consultation with Boston International Tax Attorney Kevin E. Thorn

If you missed the deadline to file your 2020 FBAR, we encourage you to contact us for more information. To request a consultation with Boston international tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, call 617-692-2989, email ket@thornlawgroup.com or contact us confidentially online today.