Quick overview

If you have unreported foreign bank accounts or other foreign financial assets, coming forward voluntarily is almost always better than waiting for an IRS or FinCEN inquiry. The IRS and Treasury offer several formal paths for disclosure that can limit penalties, avoid criminal referral in non-willful cases, and put your tax record back in order. Which option fits depends on whether the non-reporting was willful, where you live, and how complete your records are.

Why voluntary disclosure matters now

Main voluntary disclosure pathways (current as of 2025)

  1. Streamlined Filing Compliance Procedures
  • Two tracks: Streamlined Domestic Offshore Procedures (for U.S. residents) and Streamlined Foreign Offshore Procedures (for taxpayers living outside the U.S.).
  • Designed for non-willful conduct: you must certify that the failure to file and pay was due to non-willful conduct.
  • Typically requires filing three years of amended or original federal income tax returns with full information, six years of FBARs (FinCEN Form 114), and payment of any tax plus interest. Penalties are generally reduced or eliminated for non-willful cases under the Streamlined rules. (IRS Streamlined: https://www.irs.gov/individuals/international-taxpayers/streamlined-filing-compliance-procedures)
  1. Delinquent FBAR Submission Procedures
  • For taxpayers who failed to timely file one or more FBARs and have a reasonable cause for the failure. No penalty is assessed if the IRS accepts the reasonable cause explanation and there is no indication of willful conduct.
  • Typically requires filing the delinquent FBAR(s) electronically (FinCEN Form 114) and attaching an explanatory statement to the returns. (FinCEN BSA E-Filing: https://bsaefiling.fincen.treas.gov/)
  1. Delinquent International Information Return Submission Procedures
  • Use this for late Forms 5471, 3520, 3520-A, 8865, or 8938 where there is no tax delinquency or willfulness. The IRS may accept late filings without penalty if there is reasonable cause.
  • Separates reporting fixes for international information returns from FBAR/Streamlined remedies.
  1. Limited or targeted remedies and private letter options
  • In narrow circumstances and complex cases, taxpayers may pursue other remedies (e.g., closing agreements or specific negotiations with the IRS) with professional representation.

Important note: The Offshore Voluntary Disclosure Program (OVDP) that many taxpayers remember was formally closed to new submissions. That program is not available now; taxpayers should evaluate Streamlined or delinquent procedures instead (IRS Streamlined guidance).

(For a practical primer on FBAR basics and when to file, see our internal guide: Reporting Foreign Bank Accounts and FBAR Basics: https://finhelp.io/glossary/reporting-foreign-bank-accounts-and-fbar-basics/.)

Who qualifies for which path?

  • Non-willful omissions: Streamlined procedures are the primary remedy. Non-willful generally means you did not intentionally hide assets or evade tax. The Streamlined procedures require a signed certification of non-willfulness.
  • Willful omissions: There is no automatic safe harbor for willful conduct. Historically, willful cases were handled under OVDP; since OVDP closed, willful cases require careful legal strategy. Willful failures can expose you to large civil FBAR penalties (up to 50% of the account balance per violation) and potential criminal charges. (IRS FBAR penalties: https://www.irs.gov/individuals/international-taxpayers/foreign-bank-and-financial-accounts-reporting-fbar)
  • Reasonable cause: If you can demonstrate reasonable cause for failing to file (e.g., serious illness, reliance on incorrect professional advice documented in writing), the Delinquent FBAR Submission or Delinquent International Information Return procedures may be acceptable.
  • U.S. expats vs. U.S. residents: If you live outside the U.S., the Streamlined Foreign Offshore Procedures apply; if you live in the U.S., the Streamlined Domestic Offshore Procedures apply. (IRS Streamlined guidance)

Step-by-step disclosure workflow (practical checklist)

  1. Inventory your foreign accounts and assets
  • Identify all foreign bank, brokerage, custodial, and retirement accounts; check foreign-held life insurance or annuities; review trusts, partnerships, or foreign corporations where you had an interest.
  1. Gather documentation
  • Bank statements, account opening documents, wire receipts, tax returns, K-1s, correspondence with foreign institutions, and any prior FBARs or 8938 filings.
  1. Determine applicable forms and years
  • FBAR (FinCEN Form 114) covers accounts with aggregate maximum > $10,000 at any time in a calendar year.
  • Form 8938 (Statement of Specified Foreign Financial Assets) has separate filing thresholds; check current thresholds on the IRS Form 8938 page (IRS: https://www.irs.gov/forms-pubs/about-form-8938).
  1. Choose the disclosure path with professional advice
  • If the failure was truly non-willful and you meet residency/thresholds, Streamlined is often the least punitive path.
  • If there is a plausible reasonable-cause defense and limited FBAR exposure, consider delinquent filing procedures.
  1. Prepare and file returns and FBARs
  • File amended or original tax returns as required, complete FBARs electronically through FinCEN, and include required statements or certifications.
  1. Calculate and pay taxes, interest, and any required penalties
  • Streamlined may reduce or eliminate penalties in non-willful cases; delinquent submissions accepted for reasonable cause may avoid penalties. Always pay tax and interest due to minimize collection risk.
  1. Keep detailed supporting records
  • Maintain a compliance file documenting why you failed to file, the corrective steps taken, and communications with advisors. This helps if the IRS questions your intent.

Penalties and risks — what to expect

  • FBAR threshold: You must file an FBAR if you had a financial interest in or signature authority over one or more foreign financial accounts and the aggregate maximum value exceeded $10,000 at any time during the calendar year (FinCEN Form 114 requirements).
  • Civil FBAR penalties: For willful violations, the penalty can be the greater of $100,000 or 50% of the account balance per violation, and criminal prosecution is possible. For non-willful violations, civil penalties may apply but are often significantly smaller, and the IRS may waive penalties if reasonable cause is shown. (IRS FBAR guidance: https://www.irs.gov/individuals/international-taxpayers/foreign-bank-and-financial-accounts-reporting-fbar)
  • Tax penalties: If the unreported accounts generated income that should have been reported on U.S. returns, you may owe tax, plus accuracy-related penalties (20–40%) depending on the situation, and interest. Streamlined procedures generally require payment of tax and interest but offer penalty relief for eligible non-willful taxpayers.

Real-world context and practitioner note

In my practice over the past 15+ years, the majority of clients who proactively used Streamlined or delinquent procedures—especially those with clear documentation and a credible non-willful story—resolved their cases with manageable tax and interest bills and little or no civil penalty. Cases that involved willful concealment or complex offshore structures required tailored legal strategy and often resulted in more significant exposure.

Common mistakes and misconceptions

  • “If I didn’t know the law, I’m OK.” Ignorance may help in a non-willful Streamlined case, but it is not a guaranteed defense and does not eliminate filing obligations.
  • Relying on an old OVDP option. The OVDP is closed to new submissions; don’t assume you can enter OVDP today.
  • Missing Form 8938 thresholds. FBAR and Form 8938 are separate requirements with different thresholds—both can apply.
  • Failing to keep a clear contemporaneous record explaining the non-filing. That documentation often determines whether a disclosure qualifies as non-willful or reasonable cause.

Frequently asked short answers

  • Q: What triggers an FBAR filing? A: Aggregate foreign accounts exceeding $10,000 at any time in a calendar year (FinCEN Form 114).
  • Q: Can I avoid penalties if I come forward? A: Possibly—Streamlined procedures generally eliminate penalties for eligible non-willful filers; delinquent procedures may avoid penalties if reasonable cause is accepted. (IRS Streamlined guidance)
  • Q: Is criminal prosecution still a risk? A: Yes for willful concealment. Voluntary disclosure reduces but does not eliminate criminal exposure if your conduct was willful.

Internal resources (FinHelp) for further reading

Practical next steps

  1. Stop adding new accounts to the problem: avoid moving funds simply to evade detection.
  2. Inventory and document now—don’t delay gathering statements and correspondence.
  3. Consult a tax professional with offshore experience before submitting any disclosure. In my experience, the right sequencing and documentation can materially change the outcome.

Professional disclaimer

This article is educational and does not substitute for personalized legal or tax advice. Your facts may materially change which option is best. Consult a qualified tax attorney or CPA experienced in international voluntary disclosures before taking action.