“Delinquent FBAR Filing Procedures”

There has been considerable commentary—and some concern—about the IRS’s removal, around the end of June 2026, of its longstanding webpage titled “Delinquent FBAR Filing Procedures.” The IRS originally created those procedures in 2014.

The disappearance of the webpage is noteworthy. But it may not be nearly as important as some commentators suggest.

The IRS and Department of Justice have spent enormous resources over the last decade and a half identifying, assessing, litigating, and collecting billions of dollars in international information-reporting and FBAR penalties. See, penalty information amounts in the National Taxpayer Advocate, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020, 2023 and 2025 Annual Reports to Congress and TIGTA reports, including Additional Actions are Needed to Address Non-Filing and Non-Reporting Compliance Under the Foreign Tax Compliance Act (Apr. 2022) This enforcement effort grew out of the offshore banking investigations beginning with UBS and the broader legislative response that culminated in FATCA  in 2010.

TIGTA report: $157 Billion of Potentially Unreported Foreign Accounts?

As the TIGTA reports:  “Foreign financial institutions (FFI) are required to File IRS Form 8966, FATCA Report, to report information about financial accounts in which U.S. taxpayers hold certain ‘ownership interests.'”

TIGTA noted that foreign financial institutions report U.S.-owned financial accounts to the IRS on Form 8966, FATCA Report, while U.S. taxpayers separately report specified foreign financial assets on Form 8938.  The disparity identified by TIGTA was enormous.

For 2017 and 2018, taxpayers reported (on their IRS Form 8938) approximately $6.6 billion and $15.9 billion, respectively, while foreign financial institutions reported (on IRS Form 8966) approximately $106.8 billion and $173.0 billion.

From these figures, TIGTA concluded that the data indicated potential unreported or underreported foreign bank-account values of approximately $157 billion.

That conclusion deserves considerable skepticism. Among other questions: how many of those reported foreign assets belong to lawful permanent residents—“green card” holders—who actually reside overseas and may qualify as residents of a treaty country under an applicable U.S. income tax treaty?

That was precisely the type of residency issue presented in my case of  Aroeste v. United States, Case No. 22-cv-00682-AJB-KSC (S.D. Cal. 2023).

Importantly, for these individuals residing overseas with a green card, they must be concerned about being deemed a “covered expatriate” by application of the treaty law.  See, Can You Lose Your Green Card Just by Living Outside the United States?

Why FBAR Exposure Remains Serious

Account holders and their advisors nevertheless have good reason to take FBAR exposure seriously.  Federal courts have increasingly accepted a relatively low threshold for establishing a “willful” FBAR violation. The government generally needs to prove its civil FBAR case only by a preponderance of the evidence, and courts have repeatedly held that willfulness can include recklessness or willful blindness, rather than requiring proof that the taxpayer deliberately intended to violate the FBAR statute.

See, among others, United States v. Reyes (2d Cir. 2026); Bedrosian (3d Cir.); Horowitz (4th Cir.); Kelly (6th Cir.); Rum and Schwarzbaum (11th Cir.); and Norman and Kimble (Federal Circuit).

That is where the real concern lies, not simply in the disappearance of an IRS webpage.

The IRS Removed the Webpage—Not Its Internal Guidance in the IRM (the IRS’ “Bible”)

The IRS removed the public-facing “Delinquent FBAR Filing Procedures” webpage, but the same guidance remains in the Internal Revenue Manual (IRM) to still encourage late filed FBAR filings.  The same language is found in the IRM, which is the most important since revenue agents and managers “are responsible for adhering to the content of this IRM”.  See, IRM 4.26.16.1(i).

The IRM continues to provide that an FBAR penalty should not be imposed when:

1. the violation was due to reasonable cause; and
2. accurate delinquent or amended FBARs are filed to correct the prior violations.

See, IRM 4.26.16. Report of Foreign Bank and Financial Accounts (FBAR)

The critical point is that filing a delinquent FBAR does not itself establish reasonable cause or eliminate a potential penalty, but notification of the government is required if you go down this path.

IRM 4.26.16. Report of Foreign Bank and Financial Accounts (FBAR) Is the Delinquent Procedure

IRM 4.26.16.3.11 continues to describe the delinquent FBAR filing procedures. Among other things, it instructs taxpayers to file delinquent FBARs electronically, using the instructions applicable to the year being reported, and to provide the reason why the FBAR was filed late.

Most importantly, the IRM states that a penalty will not be asserted for an account “if it is determined” that:

• the failure was not willful;
• the failure was due to reasonable cause; and
• the account was properly reported on the delinquent FBAR.

The words “if it is determined” are crucial.  Who makes that determination?  See my case of Jones v. United States, No. 19-CV-4950 (C.D. Cal. 2020), as a cautionary tale.

Ultimately, the IRS makes this determination which starts the government machinery running.  Its not the account holder, the person with signature authority, or the taxpayer’s advisor; no matter how convinced they are of their reasonable cause and their facts.

The More Important Question (Implied Above): Should You File a Late FBAR at All?

This is the question that deserves considerably more attention.

Whether someone should file a delinquent FBAR depends entirely upon the person’s particular facts and circumstances. Filing late is not automatically the safest course.

One of the most important considerations is the six-year FBAR statute of limitations under 31 U.S.C. § 5321(b)(1). That limitation period is fundamentally different from certain Title 26 international information-reporting rules, where the assessment period can remain open under IRC § 6501(c)(8).

Accordingly, before filing a delinquent FBAR, an account holder should understand at least two competing questions:

• What are the consequences of filing late?
• What are the consequences of not filing at all?

Those questions cannot responsibly be answered without examining the particular years involved, when the six-year limitations period expires, the underlying income-tax filings, what the taxpayer knew, all of the surrounding facts, what advice was received, and whether the government might characterize the conduct as willful or reckless.

Bittner Changed the Economics of FBAR Enforcement

The Supreme Court’s decision in Bittner v. United States, 598 U.S. 85 (2023), significantly changed the strategic landscape.

The Court held that the non-willful FBAR penalty applies on a per-report, rather than per-account, basis. That substantially reduced the government’s potential penalties in all non-willful cases involving numerous foreign accounts.

As a practical matter, Bittner also changed the economics of FBAR enforcement. I had the privilege of working on the ACTEC amicus brief filed in Bittner – which was cited in both the majority opinion by Justice Gorsuch and the dissent by Justice Barrett – See Brief for American College of Trust and Estate Counsel as Amicus Curiae 5–7.

In my view, the IRS now has a greater incentive to focus its enforcement resources on cases in which it believes it can establish willfulness through reckless disregard or willful blindness, thereby potentially supporting the much larger willful FBAR penalty.

These Are the IRS’s Own Rules

It is also important to distinguish the statute from the IRS’s administrative procedures.

I sometimes refer to these as the IRS’s “Monopoly rules.” They are the government’s administrative rules for handling delinquent FBARs; they are not themselves statutory safe harbors enacted by Congress.

That distinction matters.

The IRM says a penalty will not be asserted “if it is determined” that reasonable cause exists and the other requirements are satisfied. But “reasonable cause” is not defined in the FBAR statute itself, Title 31.

Instead, courts and the government have borrowed concepts developed under Title 26, including the Supreme Court’s familiar “ordinary business care and prudence” standard. See United States v. Boyle, 469 U.S. 241 (1985); see also Moore v. United States, No. C13-2063RAJ (W.D. Wash. 2015), and United States v. Ott, No. 2:18-cv-12174 (E.D. Mich. 2019).

Filing Late Does Not Erase the Original Violation

This point is sometimes overlooked.

Once an FBAR filing deadline has passed without the required report being filed, subsequently filing the FBAR does not somehow erase the historical failure.

The water has already passed under the bridge.

A delinquent filing may become highly relevant to reasonable cause, mitigation, cooperation, and the government’s ultimate enforcement decision. But it does not make the original failure disappear.

Moore provides an important cautionary example.  An even more dramatic example arose in Jones v. United States, No. 19-CV-4950 (C.D. Cal. 2020), a case I represented as we prepared for a jury trial during the COVID period.

Mrs. Jones, an elderly widow, and her late husband’s estate challenged approximately $3.4 million in willful FBAR penalties. She had affirmatively disclosed her late filings to the IRS through the streamlined process after filing the delinquent FBARs. The government nevertheless pursued a willfulness theory based substantially on willful blindness.

The government argued willful blindness and Mrs. Jones (90+ years of age), ironically, was legally blind by the time the case was set to go to trial.

That is one reason the facts surrounding preparation and signing of the income-tax return can become just as important as the FBAR itself.

The lesson is important: coming forward and filing late does not itself immunize an account holder from an FBAR penalty examination.  It does not mean a revenue agent will come to the right result based upon the facts of your case.  It can be a bit like the lottery.

“Reasonable Cause” May Not Mean What You Think

What does it take for the IRS to conclude that reasonable cause does not exist?

Sometimes, not much.

A simple “mistake” or “oversight” does not necessarily constitute reasonable cause. The government generally looks for evidence that the person exercised ordinary business care and prudence but nevertheless could not comply.

Death, serious illness, destruction of records, fire, or natural disaster can support reasonable cause under appropriate circumstances. But even those facts do not automatically establish it.

Likewise, ignorance of the FBAR requirement ordinarily does not automatically establish reasonable cause. Even reliance on professional tax advice may be insufficient—particularly where the government contends that the advisor lacked appropriate international-tax expertise or that the taxpayer failed to provide the advisor with the relevant information.

Schedule B can also become critical evidence.

The Takeaway – Before You Dive In

The disappearance of the IRS webpage titled “Delinquent FBAR Filing Procedures” should not itself drive a taxpayer’s decision.

The underlying IRS guidance remains in the Internal Revenue Manual.

The much more important question is whether filing a delinquent FBAR is actually the appropriate strategy for the particular individual and the particular years involved.

That requires understanding the six-year FBAR statute of limitations, the taxpayer’s underlying filing history, the reason the FBAR was not timely filed, what the taxpayer knew, what professional advice was received, the information appearing on Schedule B and other returns, and the possibility that the government could characterize the conduct as reckless or willful.

Once a delinquent FBAR is filed, the filing—and the taxpayer’s explanation for filing late—cannot simply be taken back.

So be thoughtful when someone recommends entering the “Delinquent FBAR Filing Procedures” for a low low fee of just US$**99.99.

Understand why you are filing, what you are saying to the government, what years remain open, and what consequences may follow.

Dive in with your eyes wide open – and make sure you can see the bottom before you jump.

• Pathways to United States Citizenship – (USC): Focus on the EB-5

Every individual who ultimately becomes a naturalized U.S. citizen must first qualify for lawful permanent resident (“LPR”) status unless a narrow statutory exception applies. Although public attention frequently focuses on the EB-5 immigrant investor program, with the idea they are those with greater assets and income (contemplating taxes) EB-5 investors represent only a very small percentage of all individuals who become lawful permanent residents. Understanding the relative size of each immigration pathway is essential because every pathway ultimately raises many of the same U.S. tax issues—including worldwide income taxation, estate and gift taxation, and the tax consequences of later abandoning lawful permanent resident status or renouncing U.S. citizenship.

The EB-5 visa has been a fixture of U.S. law since the early 1990s.  It was not until 2009 that a substantial number of EB-5 visas were issued in a given year, 4,218 to be exact.  Statistically, the  total  EB-5 visa leading to LPR status is  a fraction of the other categories as explained here.  For an excellent overview of the law and categories,  see  the  CRS  report-  Permanent Legal Immigration to the
United States: Policy Overview (Updated November 4, 2024)

• EB-5 Visa – to a “Green Card” then to United States Citizenship – (USC)

From the laws inception in 1992 through FY2004, there were only 6,024 EB-5 visas issued during that 12 year period.  That is an annual average of only approximately 500 persons.  See, the GAO Report on Immigrant Investors. As the program grew in popularity so too did the location of investors from around the world.  It was not until 2009 when the total number of investors started growing substantially.  Most significantly in 2009 when 4218 EB5 visas were issued, still less than 1/2 of the 10,000 allocated annually by the statute.

These numbers kept going at an annual pace especially starting in 2012, when 6,764 EB-5 visas were issued and then around 10K+/- annually for the last dozen years or so, up until the years that were impacted by a change in the law and a bit by COVID (2020 and 2021).  There are important tax consequences that can have unintended outcomes for individuals who get a green card:    See, Oops…Did I “Expatriate” and Never Know It: Lawful Permanent Residents Beware! International Tax Journal, CCH Wolters Kluwer, Jan.-Feb. 2014, Vol. 40 Issue 1, p9):

• Chinese Investors Have Dominated the total Group of EB-5 Investors

While investors come from most parts of the world, it is China that has dominated the total investment in EB-5 projects representing approximately 70% of total investors over the last 15 years.  See prior post which has a chart reflecting the total Chinese investors as a percentage of total –  Part II of Part II: The Gold Card – The U.S. Tax Costs – “It’s like the green card, but better and more sophisticated.”

The country-of-origin analysis is important because practitioners frequently advise clients from these jurisdictions regarding immigration planning, cross-border tax planning, and eventual expatriation planning with consequences in those countries.

I have compiled the total list of countries from which EB-5 visa investors came from as summarized in the Country of Origin global graphic for FYE 2024.  There are over 100 countries from which these investors came from, but again, China is the dominant country, followed by Vietnam, India, Taiwan and then South Korea as the countries with the greatest number of investors.  South Africa comes next, followed by Brazil and then Mexico, but each with less than 200 total investors, each country as follows:

The importance of this analysis is to help individuals (and their advisors) who fit into these categories, e.g., who have a pathway to a green card and then on to become a naturalized U.S. citizen, understand the potential “tax expatriation” consequences of their decisions over the long-run.

• • What are the U.S. “tax expatriation” consequences to individuals who go down these pathways, including to their dependent children, or spouses or any future beneficiaries who are “United States person”?

• • What are the tax expatriation consequences if the individual later decides they do not want to be a green card holder or a U.S. citizen and later wishes to abandon their lawful permanent residency status or formally renounce their U.S. citizenship?

These and many other questions should be considered, especially for long-term family planning.  Not just for the investor, but for their children and spouse, who may be eligible for the visa that can lead to LPR status and eventually to USC.  Facilitating younger children (under 21 years of age) is a common driver for EB-5 investors for families who want the United States to be a pathway for their children’s’ future.

• Why These Immigration Pathways Matter from a Tax Perspective

The purpose of this analysis extends beyond immigration statistics and EB-5 is only a small pathway.  For historical reference, see a prior post:  How Many Lawful Permanent Residents does the U.S. Receive (Per Year: 1820-2022)

Every pathway leading to lawful permanent resident status almost always subjects the individual to the comprehensive U.S. federal income tax system. Depending upon the individual’s assets, family structure, treaty residence, and future living plans, obtaining a green card will also have significant implications for:

• worldwide income taxation;
• estate and gift taxation;
• foreign trust reporting;
• information reporting obligations under various laws;
• controlled foreign corporation rules;
• PFIC reporting;
• exit tax planning; and
• long-term succession planning.

Equally important, many lawful permanent residents eventually decide to return permanently to their country of origin or another foreign jurisdiction. Those individuals—and frequently their spouses and dependent children—must carefully consider the tax consequences of formally abandoning lawful permanent resident status or, after naturalization, renouncing U.S. citizenship.  The sooner individuals and their advisors realize these consequences, the better they can plan for important life decisions.

Those tax consequences are collectively referred to as the U.S. tax expatriation rules, and they form the principal subject of this website.

The legal pathways towards lawful permanent residency status can be broken down into the following categories and the EB-5 category is a fraction (only about 1%) of the total pool leading to LPR status:

A. Family-Sponsored Immigration

This is the most common pathway used for spouses, unmarried children who are under twenty-one years of age and parents of an adult U.S. citizen.  See, 8 U.S. Code § 1153(a).  The table below further breaks down immediate relatives (which has no cap) versus family preferences (F1-F4) which has strict statutory limits of the total issued.  See, U.S. Department of State, Visa Bulletin For June 2026, describing these limits including the per country limits.  Approximately 64% of all green card holders come through this family sponsored category according to the U.S. Department of Homeland Security, Office of Homeland Security Statistics (OHSS), Yearbook of Immigration Statistics, Table 6 (Persons Obtaining LPR Status by Type and Major Class of Admission).

B. Employment-Based Immigration (Including EB-5)

This category includes EB-1 through EB-5 categories that include individuals with extraordinary ability, certain professionals, other skilled workers. The  chart  I prepared  here  reflects  the total number of EB-5 visas issued cumulative. This chart reflects the total number of cumulative EB-5 visas that have been issued through the FYE 2024 of approximately 131K.  This does not take into consideration how many of these were issued to the principle investor versus spouses and children under twenty-one years of age.  See, 8 U.S. Code § 1153(b).

EB-1, EB-2 and EB-3 represent the greatest group of individuals who obtained LPR status (e.g., approximately 5X, each category compared to the EB-5 category).  See Yearbook of Immigration Statistics, Table 6.

For instance, annually the EB-1 through EB-3 categories are processing about 50K per year of each, and the EB-5 category is only 131K over most of its 25 year life (or about 10K per year – for more recent years). Approximately  16% of all green card holders come through these employment based preferences.

Table –  Approximate Decade-Average Share by Category, FY2014–FY2023

C. Diversity Immigrant Program

The annual diversity lottery, allocated by random selection, to natives of countries with historically low rates of immigration to the United States.  See, 8 U.S. Code § 1153(c).   The Attorney General plays a key role by statute in this determination.  There is a statutory maximum of 55,000 and only represents about 4% of all LPRs compared to the larger pool.  This program is on hold as of December 19, 2025 when the USCIS policy memorandum (PM-602-0193) directs officers to place an immediate hold on pending adjustment of status, ancillary benefits and associated waiver applications for individuals applying through the Diversity Immigrant Visa program.  [1, 2]

D. Humanitarian and Special Pathways: Refugees/Asylees

Several routes proceed outside the preference system (the three categories above). Refugees and asylees adjust under a specific statutory regime; self-petitioning abused spouses and children proceed under other provisions; victims of qualifying crimes and of trafficking can adjust from U and T nonimmigrant status; and certain children subject to qualifying juvenile-court findings can qualify, among others.  There are statutory limits placed on this group.

Whatever category one uses for LPR status, there will be important U.S. federal tax consequences to them and typically their family members.  That’s the large part of the focus on this forum where the author has written about the subject of how it all ties to “tax expatriation”.  As previously reported,   there are 3.88 million “LPR” individuals who are living outside the U.S. – per the 2024 report by the U.S. federal government.  Many of them live in a treaty country. See, Table 1 of the Homeland Security, Office of Immigration Statistics –  Estimates of the Lawful Permanent Resident Population in the United States and the Subpopulation Eligible to Naturalize: 2024, and Revised 2023.