IRS Ended the Delinquent FBAR Procedures: Attorney Guide

You are closing your late father’s estate and find a Swiss account he opened in your name in 2019; the interest was small and you reported it, but no FinCEN Form 114 was ever filed. A year ago the fix was a web page: file the six late FBARs, tick a box, and the IRS said in writing it would not penalize you. That page is gone, and what replaced it is a sentence about facts and circumstances.

What disappeared this summer

For years the IRS kept a page titled Delinquent FBAR Submission Procedures.

A taxpayer who had not been contacted about the missing FBARs and was not under examination or investigation could file the late reports.

The IRS stated it would not impose a penalty if the taxpayer had properly reported and paid tax on all income from the accounts. This applied only if the taxpayer had not previously been contacted about an income tax examination or asked to file delinquent returns.[1].

That address now returns a 404. The Internet Archive’s last capture of the live page, last reviewed by the IRS on February 19, 2026, is dated June 23, 2026; its next capture, on July 16, 2026, is the IRS 404 page. We have found no IRS release announcing the change.

The IRS’s main FBAR page, revised July 30, 2026, now carries the agency’s whole public position: a late FBAR “may subject you to penalties,” “assertion of penalties depends on facts and circumstances,” and a taxpayer the IRS has not contacted “should file late FBARs as soon as possible to keep potential penalties to a minimum” [2].

In April 2026 the IRS had already revised its Delinquent International Information Return Submission Procedures so that penalties on late Forms 3520, 5471 and 8938 “may be assessed in accordance with existing procedures,” with reasonable cause reviewed afterward [3].

The IRS has not said late filers will be penalized. It has stopped saying they will not be.

The statute did not move

The penalty is set forth in 31 U.S.C. § 5321(a)(5). For a non-willful violation, the maximum penalty is $10,000, adjusted for inflation. However, subsection (B)(ii) provides that no penalty “shall be imposed” if the violation was due to reasonable cause and the account balance was properly reported.

For a willful violation the ceiling rises to the greater of $100,000, adjusted, or 50 percent of the balance, and the reasonable cause exception falls away [4].

The Internal Revenue Manual, revised August 26, 2025, carries the same rule. Section 4.26.16.3.11, still headed Delinquent FBAR Filing Procedures, tells examiners a penalty “will not be asserted” where the failure was not willful, was due to reasonable cause, and the account was properly reported on the late FBAR. Section 4.26.16.5.2.1 adds that an examiner may find the facts “do not justify asserting a penalty” and close with a warning letter, Letter 3800 [5].

The deleted page was never the source of relief; it repeated what the statute and the manual already required. What you lost is certainty, not a defense. Reasonable cause is now something you prove, year by year, to an examiner who may read your statement after a penalty has been proposed.

The 2026 numbers

FinCEN last adjusted the FBAR table on January 17, 2025, setting the non-willful maximum at $16,536 and the willful floor at $165,353 [6] [7].

There was no 2026 adjustment: on April 17, 2026 the Office of Management and Budget issued Memorandum M-26-11 cancelling the year’s adjustments government-wide, because the October 2025 CPI-U was never produced during the fall 2025 lapse in appropriations, and told agencies to keep the 2025 levels [8] [9].

Sources: [7] [8] [4] [10]

Two qualifiers. The non-willful penalty runs per report, not per account: in Bittner v. United States, handed down February 28, 2023, the Supreme Court held five to four that a taxpayer who filed five late FBARs covering 272 accounts faced a maximum of $50,000, not the $2.72 million assessed [11], and the manual caps total non-willful penalties across all open years at 50 percent of the highest aggregate balance.

Criminal exposure sits in a different statute: willful failure to file carries up to $250,000 and five years under 31 U.S.C. 5322(a), rising to $500,000 and ten years where certain other laws are violated at the same time [12]. The six-year assessment period in 31 U.S.C. 5321(b) runs from the violation date, which for 2016 and later years is April 15 of the following year [5].

A 2020 FBAR can still be penalized until April 2027. File every year still open, not only the years you remember.

Four fact patterns, four paths

What replaces the deleted page is a choice among three paths, plus the case where the choice has already been taken from you. Three questions settle it: was all the income reported, where did you live, and could anyone fairly call the omission willful.

Your facts	Path	What you file	What it costs
Income reported, only the FBAR missed, non-willful	Late FBARs with a reasonable cause statement	Form 114 for every open year, reason “Other”, 750-character explanation	No penalty if reasonable cause is accepted; examiner discretion if not
Lived abroad in one of the last three years, foreign income unreported, non-willful	Streamlined Foreign Offshore	3 years of returns, 6 years of FBARs, Form 14653	Tax and interest only; no FBAR, accuracy or information return penalties
U.S. resident, returns filed, foreign income unreported, non-willful	Streamlined Domestic Offshore	3 years of Form 1040-X, 6 years of FBARs, Form 14654	Tax, interest and 5% of the highest aggregate year-end balance
Conduct an examiner could call willful	Voluntary Disclosure Practice	Form 14457 Part I, then Part II within 45 days; six years of returns and FBARs	Tax, interest, accuracy and FBAR penalties each year; a signed acknowledgment of willfulness
IRS has already written, or an examination is open	None of the above	A defense inside the examination	Reasonable cause, mitigation guidelines and Appeals are what remain

Sources: [5] [10] [13] [14] [15]

Reasonable cause is a record

The manual borrows the Title 26 standard: reasonable cause exists when the violation occurred “despite an exercise of ordinary business care and prudence.” The examiner weighs the nature of the violation, the balances, your conduct and cooperation, and whether a warning letter would achieve compliance [5].

None of that turns on a 750-character box on FinCEN’s form. It turns on what you can show if asked.

Sources: [4] [5] [15]

Civil willfulness, in the manual, is a knowing violation, a reckless one, or “a conscious effort to avoid learning about a legal duty” [5]. A ticked “No” on Schedule B is the fact that most often moves a file across that line. If it is in your returns, do not file a reasonable cause statement on your own.

Streamlined still works, at a price

The Streamlined Filing Compliance Procedures were untouched by the removal; the IRS revised their pages on July 10 and 11, 2026 and kept the terms.

Both versions require a certification, on Form 14653 or 14654, that the failures were non-willful, meaning “negligence, inadvertence, or mistake” or a good-faith misunderstanding of the law. Both close once an examination of any year has begun, and the IRS neither acknowledges receipt nor signs a closing agreement [15].

The foreign version is the better bargain: no U.S. abode and at least 330 full days outside the United States in any one of the three most recent years, then tax and interest and no penalty [13].

The domestic version costs 5 percent of the highest year-end aggregate value of the foreign financial assets across the covered years [10]. On a $600,000 account that is $30,000, bought with a certainty the reasonable cause path cannot offer.

For a U.S. resident with any unreported foreign income, even a few hundred dollars, the 5 percent is usually worth paying. The FBAR penalties are waived and the certification forecloses the willfulness argument unless an examiner later finds fraud.

Voluntary disclosure is for willfulness

The Criminal Investigation Voluntary Disclosure Practice is not a penalty-reduction program for the careless.

The IRS page says willfulness “is not simply making a mistake” and sends non-willful errors to amended or delinquent returns. It is timely only if the IRS has not started an examination, received information about you from a third party, or acquired it through a search warrant or grand jury subpoena.

Under the framework put out for comment through March 22, 2026, the disclosure period is six years, FBAR and accuracy penalties apply to each year with no deviation, you sign a statement acknowledging the willful failure, and you pay in full [14]. The price is high because the product is different: a closed door on prosecution.

Filing late, correctly, this month

For the reader in the opening paragraph, whose returns are complete, this is the sequence.

1. Check for IRS contact. Any letter about the account or notice of examination closes every program. If there is one, stop and get counsel first.
2. Pull every return for the open years. Confirm the foreign income is on each one and read the Schedule B answer. That answer settles the path.
3. Reconstruct the balances. Year-end and high-balance statements for every account and year; the manual’s caps are computed from them.
4. Write the reasonable cause record first. A dated chronology, the preparer file, the account documents. Then distill it into the 750 characters the form allows under “Other.”
5. File every open year in one sitting through the BSA E-Filing System and keep the BSA identifiers. Partial filings read as a choice.

Sources: [2] [5] [12]

What not to do: wait for the IRS to restore the page. Nothing in the July 30 revision suggests a replacement [2], and each month of waiting is one in which a bank’s FATCA report can put the account in front of the IRS first. The first contact ends the choice.

This article is for general informational purposes only and does not constitute legal advice. Outcomes depend on the facts of each matter and no result is guaranteed. Reading it does not create an attorney-client relationship with Dilendorf Law Firm. Prior results do not guarantee a similar outcome. Attorney Advertising.