With the FBAR (Form TD F 90-22.1) due on June 30th, many would-be filers are panicked about what the FBAR late filing penalties are. The great news is that there are no FBAR late filing penalties. The bad news, is that the penalties for not filing an FBAR can be some of the most draconian penalties in world. Confused about FBAR late filing penalties? Hopefully this article can help you through the strange rules of foreign bank account reporting with the IRS and US Treasury.
The FBAR is not part of the tax code: 131 USC § 5321 civil penalties
The first thing to understand is that the FBAR is not part of the tax code. That’s right. As we mentioned in our FBAR webinar (now on replay) the US tax code is located in Title 26 of the US code. Meanwhile, the FBAR stems from the Bank Secrecy Act of 1970 which is located in Title 31. So all the IRS FBAR late filing penalties for late filing of tax forms do not apply; we must look to Title 31 to see what late filing, more specifically, 31 USC 5321 to see what the penalties are for filing an FBAR late. And what do we find in Title 31? for late FBAR penalties? Nothing. The relevant section of 131 USC § 5321 of the is at the end of this article.
So then what is the big deal about FBAR late filing penalties?
The big deal is that there are massive penalties for not filing FBARs. And that because there is a due date, June 30th, we suppose any FBAR form filed one day late could be subject to the FBAR late filing penalties scheme above. FBAR late filing penalties are unlike the penalties for tax returns. For tax returns, there is both a penalty for not filing (Section 6651), and a penalty for late-filing (if a tax was due). [nbox type=”info”]
So to clarify (hopefully): There are no FBAR late filing penalties, just an FBAR non-filing penalty. And FBAR non filing penalties can be assessed if the FBAR is not filed timely on June 30th, that is, late.[/nbox]
So what are your risks for FBAR late filing penalties?
There is so much to this, we strongly recommend that you watch our FBAR penalty webinar:
And remember, FBARs are due in on June 30th, not postmarked June 30th
Here is an article on FBAR filing requirements. And also, if you want to file your FBAR online, this is a valuable new tool FinCEN has. It has made our own FBAR filing season the smoothest it has even been even though we have exponentially more offshore clients than we have had in the past.
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Relevant section of 131 USC § 5321
(5) Foreign financial agency transaction violation.—