All the Many FBAR Late Filing Procedures

The FBAR or Foreign Bank and Financial Account Reporting or FinCen Form 114 is a form which many U.S. taxpayers are unaware and unfamiliar with and thus many of them become noncompliant and delinquent. However there are a number of different delinquent FBAR late-filing procedures U.S. taxpayers can go through to become compliant.

Delinquent FBAR Submission Procedures or DFSP

A Taxpayer can qualify for the DFSP when they correctly reported any income on their tax return but non-willfully failed to report an FBAR or non-willfully failed to include an account on a filed FBAR. When a taxpayer is not required to file any other delinquent form other than the FBAR, he or she may qualify for DFSP and generally will not have to pay a penalty for prior years of noncompliance. To do so, a Taxpayer can file the delinquent FBAR with an explanation regarding the FBAR’s late filing.

Delinquent International Information Return Submission Procedures or DIIRSP

Generally these procedures apply when a Taxpayer correctly reports income and does not owe any tax but non-willfully fails to file required international reporting forms. When filing the delinquent forms late however, it must be accompanied by a statement of reasonable cause as to why the Taxpayer is filing late and the Taxpayer must certify that any entity the returns are being filed for did not engage in tax evasion. Before November 2020, U.S. taxpayers going through this procedure would not be penalized if they filed delinquent forms under the DIIRSP. However the IRS in November 2020 changed such rules and now it is not a guarantee that U.S. taxpayers will not be penalized if they filed the necessary delinquent forms. Our firm has still had great success with the old and new DIIRSP program.

To learn more about DIIRSP go to:

Streamlined Domestic Offshore Procedures or SDOP

The SDOP are for Taxpayers who are not qualified as foreign residents, non-willful, and filed their original tax returns on time. Under the SDOP a U.S. taxpayer may choose to pay a 5% Title 26 Miscellaneous Offshore Penalty instead of other delinquent FBAR and FATCA penalties. Our firm has successfully filed more than 300 SDOP program submissions.

To learn more of SDOP go to: https://patellawoffices.com/blog/planning-for-tax-minimization/new-streamlined-domestic-offshore-procedures-sdop-is-a-game-changer-2/ 

Streamlined Foreign Offshore Procedures or SFOP

To be eligible for this program, a Taxpayer must be qualified as a foreign person and be non-willful. If the Taxpayer qualifies, he or she can avoid all offshore penalties under this procedure. Our firm has still had great success with the SFOP program.

To learn more about SFOP go to: 

IRS Voluntary Disclosure Program

Between 2009 to 2018 there used to be a program called the Offshore Voluntary Disclosure Program for Taxpayers with undisclosed foreign income and assets. In 2018 the IRS closed this program and expanded the VDP Program. The new VDP Program is primarily for taxpayers who are considered willful or are unable to certify that they are non-willful. Through this program, Taxpayers have a high chance of avoiding criminal prosecution. In extremely rare cases, it could impact a person’s immigration status, however this is extremely rare.

To learn more about the VDP go to:

Reasonable Cause Submission

This is not an actual IRS voluntary disclosure program but something a Taxpayer can submit to avoid or minimize penalties. If a taxpayer can show there was reasonable cause and he or she was not willfully negligent in missing the filing of delinquent FBARS or other international reporting forms, he or she can avoid or minimize the penalties usually received.

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