When does the Statute of Limitations Run Against the U.S. Government Regarding FBAR Filings?
The law that created the foreign bank account report (“FBAR”) filings is different from the federal tax law. The tax law is Title 26 and the Bank Secrecy Act, which creates FBAR requirements is Title 31. The laws are very different and have very different obligations and rights.
One of the important differences, is the time frame in which the government can assess penalties. This law, according to its expansive terms (some would say extraterritorial application) applies to United States citizens residing outside the U.S. It also applies to most LPRs residing outside the U.S. See, FOREIGN BANK ACCOUNT REPORTS – 2011 REGULATIONS EXTEND RULES TO MANY UNAWARE PERSONS, published in the International Tax Journal.
The statute of limitations is the time frame in which the government has to asses penalties for not complying with the law. These time periods are different under Title 31 versus Title 26.
The failure to file an income tax return, means the time period against the IRS to make tax assessments against the USC or LPR residing overseas will never lapse. See, When the U.S. Tax Law has no Statute of Limitations against the IRS; i.e., for the U.S. citizen and LPR residing outside the U.S.
In contrast, Title 31 the Bank Secrecy Act, does have a time period against the U.S. federal government, even if the FBAR was never filed. The time period for civil assessments of penalties is 6 years. Importantly, a USC or LPR living overseas could become criminally liable for willfully not filing such FBAR form, which has different legal consequences.
All FBARs must now be filed electronically. The filing of the FBAR form is not with the IRS, but rather with FinCEN. It must now be filed electronically on Form 114, Report of Foreign Bank and Financial Accounts through the BSA E-Filing System website. The electronic form supersedes TD F 90-22.1 (the FBAR form that was used in prior years).
The laws of many countries outside the U.S. often conclude that the enforcement of these FBAR penalties in the home country of the USC violates the laws of that country (e.g., Canada). See the thoughtful article of Calgary based tax attorney Roy Berg – IRS says FBAR penalties not collectible under Canada-US Treaty?
Finally, there are also statute of limitations for criminal charges brought by the government for FBAR violations. The law gets much more complex in this area, including if the taxpayer is residing outside the U.S.; where the time period can be tolled/suspended in favor of the government. See, Jack Townsend’s thoughts –
Statutes of Limitations for FBAR Noncompliance Related to Tax Noncompliance (3/12/13)
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March 27, 2014 at 3:21 pm
[…] Fortunately, for Mother Teresa and the executor of her estate, there was a 6 year statute of limitations against an assessment of FBAR penalties against her individually, over such non-U.S. accounts. When does the Statute of Limitations Run Against the U.S. Government Regarding FBAR Filings? […]
April 1, 2014 at 3:08 am
[…] When does the Statute of Limitations Run Against the U.S. Government Regarding FBAR Filings? […]
April 1, 2014 at 6:48 pm
[…] Afortunadamente, para la Madre Teresa y el albacea de su herencia, había un Periodo de Prescripción de 6 años contra una evaluación de las sanciones FBAR contra ella individualmente, sobre esas cuentas en los Estados Unidos. ¿Cuándo es que el Periodo de Prescripción corre en contra del gobierno de los Estados Unidos resp… […]
April 2, 2014 at 2:31 pm
[…] have put a number of posts regarding FBARs – foreign bank account reports. See, When does the Statute of Limitations Run Against the U.S. Government Regarding FBAR Filings? and USCs and LPRs Living Outside the U.S. – Key Tax and […]
April 3, 2014 at 3:03 pm
[…] 1. Statute of Limitations. There is a statute of limitations whether or not an FBAR was filed. Hence if a USC neglected to file an FBAR for the year 2006, for instance, the time period for the government to assess penalties has lapsed. See, When does the Statute of Limitations Run Against the U.S. Government Regarding FBAR Filings? […]
April 9, 2014 at 1:22 am
[…] Ver, ¿Cuándo la prescripción corre en contra del gobierno de los Estados Unidos respecto a la presenta… […]
April 11, 2014 at 9:44 pm
[…] He puesto un número de “Posts” respecto a las FBARs – Reportes Informativos de Cuentas Bancarias en el Extranjero. Vea, ¿Cuándo la prescripción corre en contra del gobierno de los Estados Unidos respecto a declaracion… […]
April 15, 2014 at 7:39 pm
[…] 1. Prescripción. Existe una Prescripción habiendo o no presentado una FBAR. Por lo tanto, si un CEU no presento su FBAR para el año 2006, por ejemplo, el período de tiempo para que el gobierno evalúe sanciones ha caducado. Ver, ¿Cuándo la prescripción corre en contra del gobierno de los Estados Unidos respecto a declaracion… […]
May 2, 2014 at 5:41 am
[…] Does any provision in the IRS announcement mean the FBAR penalties could not apply for failure to file. The short answer is – NO! See, When does the Statute of Limitations Run Against the U.S. Government Regarding FBAR Filings? […]