FBAR Penalty Statutes of Limitations

What are the FBAR statute of limitations for penalty assessments?  What other FBAR statutes should I be concerned about?  If you have failed to file your FBAR, also known as FinCEN Form 114, you may be asking yourself these questions.  The article below will examine and discuss a few of the related FBAR statutes of limitations.

31 U.S.C. 5321(b)(1) and 5321(b)(2) provide the FBAR penalty assessment statute expiration date and collection statute expiration date, which is part of the Bank Secrecy Act.  The FBAR assessment statute expiration date is six (6) years from the due date of the FBAR, and this applies whether the failure to file the FBAR was willful or non-willful.  It is very important to note that you can also be assessed a penalty for failing to maintain required records.  The FBAR penalty statute of limitation for failing to maintain required records, whether willful or non-willful is also six years, but this statute only begins to run from the date the Internal Revenue Service first requests the records.

That being said, let’s apply these FBAR statute of limitations to an example.  Let’s assume Joe has foreign bank accounts in calendar year 2014 that exceed $10,000, and that for purposes of the FBAR filing, Joe is a U.S. Person.  Joe would thus have been required to file the FBAR (Report of Foreign Bank and Financial Accounts) on June 30, 2015.  Oooops, Joe was unaware of the FBAR filing requirement and did not file FinCEN Form 114.  The FBAR penalty assessment statute of limitations for failing to file the FBAR would expire June 30, 2021.

Now lets apply the FBAR statute of limitations for failing to maintain required records.  We will assume the same facts as above, but Joe also failed to maintain required records.  On April 1, 2016 and IRS or other examiner requested the applicable records to Joe’s foreign bank accounts.  The FBAR assessment statute of limitations for failing to maintain required records would expire on April 1, 2022.

Now that we have determined Joe’s FBAR statute of limitations for assessing a FBAR penalty, does the government have a statute of limitations to file suit?  Yes, there is a two (2) year statute for the government to file a civil action against Joe to recover an FBAR penalty.  However, there is no statute of limitations for the time period in which the government can receive payment from Joe by offsetting certain payments.

The above article has been prepared to provide information relating to FBAR statutes of limitation, but please remember to always discuss your specific facts and circumstances directly with your tax attorney or other counsel.  If you wish to speak with a tax attorney at The McGuire Law Firm, please feel free to contact us at any time.

Denver Tax Lawyer