Late Foreign Bank Account Reporting and Foreign Account Tax Compliance Act Filings: Streamlined vs. Delinquent Procedures

For U.S. taxpayers with international assets, missing an FBAR or FATCA filing can be an overwhelming discovery. Whether you lived abroad for years or recently learned that your foreign accounts must be reported, the IRS offers several paths to get back into compliance — primarily through the Streamlined Filing Compliance Procedures and the Delinquent FBAR/FATCA Submission Procedures. Let’s break down how they differ, who qualifies, and how to approach the right one for your situation.

What Are FBAR and FATCA?

Before diving into the procedures, it’s essential to understand what each filing entails: FBAR (Foreign Bank Account Report) — Officially FinCEN Form 114, it reports foreign financial accounts (like bank accounts, pension plans, and brokerage accounts) when their aggregate value exceeds $10,000 at any time during the year. It’s filed separately through the Financial Crimes Enforcement Network (FinCEN), not the IRS. FATCA (Foreign Account Tax Compliance Act) — Reported via Form 8938 with your tax return, FATCA requires reporting of specified foreign financial assets if they exceed thresholds (e.g., $50,000 for single filers living in the U.S., or $200,000 for those living abroad). FATCA focuses on the ownership of assets, while FBAR focuses on control or signature authority.

1. Streamlined Filing Compliance Procedures (SFCP)

This program is designed for taxpayers who failed to report foreign income and accounts due to non-willful conduct — meaning the failure was due to negligence, inadvertence, or a misunderstanding of filing obligations.

Eligibility:

• Must certify under penalty of perjury that the noncompliance was non-willful.

• Must have a valid Taxpayer Identification Number (SSN or ITIN).

• Cannot be under IRS civil examination or criminal investigation.

Two Variants:

• Streamlined Domestic Offshore Procedures (SDOP): For U.S. residents. Requires 3 years of amended tax returns and 6 years of FBARs. A 5% miscellaneous offshore penalty applies to the highest aggregate account balance.

  
  

• Streamlined Foreign Offshore Procedures (SFOP): For taxpayers who lived outside the U.S. for at least 330 full days during one or more of the relevant years. Also requires 3 years of returns and 6 years of FBARs. No penalty applies if the taxpayer meets the foreign residency requirement.

  
  

Key Benefits:

• Protects against accuracy and failure-to-file penalties.

• Offers closure for multiple years of unreported accounts.

• Provides a clear compliance path with reduced penalties.

  
  

2. Delinquent FBAR and FATCA Submission Procedures

If your failure to file was not tied to unreported income and all your taxes were otherwise correct and paid, you may qualify for the delinquent submission routes instead.

Delinquent FBAR Submission Procedures:You may file late FBARs with a reasonable cause statement explaining why they were not filed on time. No penalty is imposed if the IRS agrees your noncompliance was non-willful and there was no tax deficiency. However, if the IRS finds your failure was willful, penalties can be severe — up to 50% of the account balance per year.

Delinquent FATCA (Form 8938) Submission Procedures:File your missing Forms 8938 with an amended tax return, along with a reasonable cause statement. If no additional tax is owed, penalties are often waived.

Caution:These delinquent submission options have become less predictable since 2022. The IRS reviews submissions more closely and may no longer automatically waive penalties without strong reasonable cause.

Which Option Should You Choose?

Scenario	Recommended Procedure
Forgot to file FBARs but all income was reported	Delinquent FBAR Procedures
Missed both income and foreign asset reporting	Streamlined Filing Procedures
Lived outside the U.S. during the noncompliance years	Streamlined Foreign Procedures (no penalty)
U.S. resident with foreign income	Streamlined Domestic Procedures (5% penalty)
Uncertain or potential willfulness	Seek professional legal and tax guidance before filing

Both FBAR and FATCA penalties can escalate quickly — but the IRS continues to favor voluntary disclosure over enforcement when taxpayers act proactively. If you’ve discovered unreported foreign accounts or missed FATCA filings, you don’t have to navigate this alone.

At MKHS Tax Group, we specialize in international compliance filings, including Forms 8938, 8621, 3520/3520-A, 5471, and FBARs under the streamlined and delinquent programs. Let’s help you understand more, stress less, and file with confidence.

For personalized guidance, reach out to info@mkhstaxgroup.com