The Report of Foreign Bank and Financial Accounts (FBAR) is required by the Bank Secrecy Act (BSA). The statutory and regulatory authority for the FBAR requirements are in Title 31 Section 5314 of the United States Code and the related regulations under 31 CFR 1010.306, Filing of reports, 31 CFR 1010.350, Reports of Foreign Financial Accounts, and 31 CFR 1010.420, Records to be Made and Retained by Persons Having Financial Interests in Foreign Financial Accounts. The Secretary of the Treasury delegated the authority to the IRS to administer civil compliance with Title II of the BSA to the Director, Financial Crimes Enforcement Network (FinCEN). FinCEN redelegated the authority to interpret the law, examine for compliance, and enforce penalties for violations of the FBAR requirements. Each business operating division (BOD) within the IRS works its own FBAR cases.

The Surface Transportation and Veterans Health Care Choice Improvement Act of 2014, Public Law 114-41, changed the due date for FBAR reports due for calendar year 2016 and subsequent years to April 15th. FinCEN granted filers failing to meet the FBAR annual due date of April 15th an automatic extension to October 15th each year. When the FBAR due date falls on a Saturday, Sunday, or legal holiday, the due date is delayed until the next business day.

FBAR rules emanate from 31 USC 5314, Records and Reports on Foreign Financial Agency Transactions, and related regulations under 31 CFR 1010.350, Reports of Foreign Financial Accounts.

The Director, SB/SE Examination, Specialty Policy, is the executive responsible for the FBAR program.

The BSA Policy Program Manager has shared responsibility with the Program Manager, SB/SE HQ Exam, Exam Quality and Technical Support, Offshore and Entities Team and the Program Manager, Offshore Compliance Initiatives, Withholding and International Individual Compliance (WIIC), Large Business and International Division (LB&I) to provide oversight in administering the FBAR program. This oversight supports development and implementation of strategies to address non-compliance.

IRS examiners and technical support from each BOD within IRS are responsible for identifying and addressing issues related to FBAR non-compliance.

IRS Office of Chief Counsel provides guidance and clarification on interpreting laws related to FBAR provisions.

Program Goals: To fulfill service-wide responsibility of the FBAR program and to ensure compliance operations are efficient and effective by improving and creating uniformity in conducting FBAR examinations across operating divisions.

Program Reports: Information regarding the reporting of program objectives are included, but not limited to:

Program Effectiveness: Periodic program reviews are conducted to:

Periodic Review: The BSA Policy Program Manager is responsible for reviewing the information in this IRM to ensure accuracy and promote consistent tax administration.

See Exhibit 4.26.17-1 for a list of commonly used acronyms and their definitions.

In this section of the Internal Revenue Manual, whenever the terms "extend" , "extended" , "extending" , "extension" , or "extensions" are used in reference to a statute of limitations or the period of assessment for a penalty for failing to file an FBAR or for failing to keep records, the definition of such term includes a waiver of the statute of limitations defense.

In this section of the Internal Revenue Manual, whenever the terms "assessment statute" , "statute date" , or "statute" , are used in reference to a statute of limitations or the period of assessment for a penalty for failing to file an FBAR or for failing to keep records, the definition of such term includes the time period for which a filer has waived his/her statute of limitations defense.

In this section of the Internal Revenue Manual, whenever the term "filer" is used, the definition of such term includes a US person required to file the FBAR that does not file the FBAR.

This section should be read together with IRM 4.26.16, Report of Foreign Bank and Financial Accounts (FBAR), for a complete understanding of FBAR law and procedures. See the following for additional information:

A Title 26 examination may contain or obtain information that may also be relevant to a Title 31 FBAR examination. For example:

Examples of examinations conducted under Title 26 include, but are not limited to, income tax, international information return penalty investigations and Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, examinations.

If the information indicating potential FBAR noncompliance is from a Title 26 examination that information is considered "return information" and is protected by IRC 6103, Confidentiality and Disclosure of Returns and Return Information. As such, that information cannot be used or disclosed in a Title 31 FBAR examination unless a determination is made that the two statutes, Title 26 and Title 31, are related. For an in-depth discussion of the related statute determination, its basis in IRC 6103, the factors in making the determination and its effect, see IRM 4.26.14, Disclosure.

If the statutes are related, then Title 31 is considered "tax administration" under the "related statute" portion of the definition of tax administration in IRC 6103 and all information gathered as part of the investigation is considered return information protected by IRC 6103. See IRM 9.3.1.4.3.1.1.2(4), Related Statute Determination.

The determination of whether the two statutes are related is documented on Form 13535, Report of Foreign Bank and Financial Accounts Related Statute Memorandum (RSM) and signed by the designated official. Two situations arise:

For purposes of the RSM, the "designated official" is as follows:

Within IRS, only SB/SE Examination – Specialty, BSA has authority to conduct Title 31 examinations that do not originate from a Title 26 examination. As such, this section is applicable only to BSA.

If the examiner is conducting an examination under the BSA, Form 13535, Report of Foreign Bank and Financial Accounts Related Statute Memorandum (RSM), is not required to start an FBAR examination. This is because no information from a tax examination or other IRC 6103, Confidentiality and Disclosure of Returns and Return Information, protected source is involved.

In accordance with IRM 4.26.6, Bank Secrecy Act Examiner Responsibilities for BSA Examinations, and IRM 4.10.5, Examination of Returns, Required Filing Checks, examiners should make appropriate inquiries in all BSA examinations to detect potential FBAR violations. Document these general inquiries in the BSA case file. Avoid action that may constitute an FBAR examination if an FBAR examination has not yet been initiated.

If there appears to be no FBAR violation, the FBAR examination is not initiated and no separate FBAR case file is set up.

Upon identification of a potential FBAR violation that warrants further investigation, the examiner will prepare Form 13536 requesting to start the FBAR case. A separate FMD is required for each year and each person or entity potentially required to file an FBAR.

The following fields are required to be completed on Form 13536 to start the FBAR examination when there is no RSM:

Prepare a memorandum explaining that the FMD is to be used by CTR Operations as an originating document, like an RSM, but that no RSM is prepared for this case because no Title 26 information is used.

Submit the FMD and memo to the group manager (GM). It may be submitted via secure, encrypted email.

The GM will review the FMD and memo for completeness and accuracy.

Within 3 business days of receipt of an approved FMD, the examiner must:

The examiner will create a physical FBAR case file in accordance with IRM 4.26.17.2.4 and proceed with the FBAR examination.

The original approved FMD, memorandum, and a copy of the email submission to CTR Operations must be retained in the FBAR case file.

Upon receipt of the approved FMD, CTR Operations will enter the FMD information into the FBAR database, establishing a record of the FBAR examination.

Because TE/GE does not use the Examination Returns Control System (ERCS), this section does not apply to TE/GE personnel.

ERCS is the system used for controlling and monitoring FBAR examinations, including statutes, and charging direct examination time. FBAR information is not available on the Audit Information Management System (AIMS), commonly accessed via Integrated Data Retrieval System (IDRS).

Examiners are required to establish FBAR examination ERCS controls for the same year and individual or entity for which an RSM or FMD was submitted to CTR Operations to establish a case on the FBAR database. Joint ERCS controls are not appropriate for FBAR cases.

Every FBAR examination case controlled on ERCS must have a corresponding record in the FBAR database. Every open record in the FBAR database under the jurisdiction of SB/SE and LB&I Examination, including Technical Services, must be controlled on ERCS.

For examiners that use Form 5345-D to establish examination controls on ERCS, prepare it in accordance with IRM 4.26.17.2.3.1.

Examiners in SB/SE Examination – Specialty, BSA refer to IRM 4.26.17.2.3.

LB&I Issue Management System (IMS) users, use the following information in IMS case setup:

All other examiners, follow the normal procedures for establishing a new case on ERCS, using applicable codes in accordance with IRM 4.26.17.2.3.2.

A copy of the approved Form 5345-D or other ERCS control request document must be kept in the FBAR case file.

Though rare, there may be situations where the Exam group must re-establish controls on ERCS for corrective action, such as to secure a statute extension, or when Appeals returns a case to the group. Refer to existing procedures for re-establishing penalty records on ERCS. Contact your local AIMS/ERCS analyst, or FBAR coordinator/analyst for further assistance.

If an FBAR examination is initiated, the examiner will set up a separate FBAR case file, one for each individual/entity under FBAR exam. A separate case file is required for each spouse under FBAR examination.

Multi-year FBAR examinations for the same individual/entity can use the same FBAR case file; a separate file is not required for each year.

Title 26 statutes of limitation do not apply to FBAR examinations, which are governed by Title 31 laws.

The statute of limitations on assessment of civil FBAR penalties is six years from the date of the violation.

The statute of limitations to initiate litigation to collect the assessment of civil penalties is two years from the later of:

The statute of limitations on FBAR criminal penalties is five years from the date the offense is committed.

To facilitate tracking of the statute of limitations, each FBAR year under examination requires a separate RSM and ERCS controls (if required). See IRM 4.26.17.2.1 and IRM 4.26.17.2.3.

A person may authorize a representative to receive information with respect to the FBAR examination by using Form 2848, Power of Attorney and Declaration of Representative, if an approved related statute memorandum has been secured. Line 3 on the Form 2848 should reflect "FBAR Examination" or "Matters Related to FBAR" .

For deceased individuals, Form 56, Notice Concerning Fiduciary Relationship, must include wording covering the FBAR examination.

Alternatively, a general power of attorney (POA) valid under state law may be used regarding the Title 31 investigation.

Regardless of the type of power of attorney, the original should be retained in the FBAR examination file.

The FMD should always be updated with POA information and submitted to CTR Operations. See Exhibit 4.26.17-2 for contact information.

Whenever a Form 13449, Agreement to Assessment and Collection of Penalties under 31 USC 5321(a)(5), is sent to CTR Operations for penalty assessment, a copy of all valid POAs should accompany it.

The examiner should notify the filer that an FBAR examination has started and document that notification in the Examiner’s Activity Record. Written notification is advised using Letter 4265, FBAR Appointment Letter, mailed to the filer’s last known address.

The following subsections discuss information document requests, formal document requests, summonses, and using FinCEN Query in FBAR examinations.

See IRM 4.10.2.9, Scheduling the Appointment: Overview, for general guidelines on scheduling appointments with filers. Adjust the procedures accordingly to meet the FBAR exam needs.

The third-party notification requirements set forth in IRC 7602(c), Notice of Contact of Third Parties, do not apply in FBAR cases, unless the examiner obtains information in the FBAR case that the examiner intends to use in the Title 26 case. In such cases, it would be a best practice for the examiner to comply with the requirements of IRC 7602(c),IRM 4.11.57, Third Party Contacts, and IRM 25.27.1, Third Party Contact Program. Otherwise, the examiner should follow third-party contact procedures in IRM 4.26.6.4.5, Lack of Records.

Examiner should interview the filer and, as needed, third parties.

If the designated official does not approve the RSM, the examiner will not ask interview questions or request documents related to FBAR matters in a non-BSA examination. See IRM 4.26.17.2.1.1 for more information. However, if the examiner is conducting an examination under the BSA, an RSM is not needed to examine for FBAR compliance. See IRM 4.26.17.2.2 for more details.

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For more information, see IRM 4.10.3.3, Interviews: Authority & Purpose, IRM 4.10.3.3.7, Interview Techniques, IRM 4.10.7.3.2, Oral Testimony, and Form 2311, Affidavit.

The examiner should follow guidelines in IRM 4.26.16, Report of Foreign Bank and Financial Accounts (FBAR), to arrive at the final FBAR penalty determination.

Fair and equitable outcome of the FBAR exam requires that the examiner:

See IRM 4.26.17.5.3 for additional information regarding FTA involvement in FBAR examinations.

The examination is closed "No Action" when no FBAR violation is found or the FBAR examination will not be continued. Follow all general closing procedures in IRM 4.26.17.4.

Written notification of the closure should not be provided to the subject of the FBAR examination.

Assemble the case file for closure in accordance with IRM 4.26.17.2.4.

Close the case file to the group manager.

The examiner may determine that there was a violation but that penalties are not warranted, after considering the facts and circumstances of the case. When no penalty is being asserted, the examiner will issue Letter 3800, Warning for Report of Foreign Bank and Financial Accounts (FBAR) Apparent Violations, with group manager and operating division FBAR coordinator concurrence. Letter 3800 should not be issued in years where:

If the determination is made to issue Letter 3800 in addition to following all general procedures in IRM 4.26.17.4, the examiner will prepare Letter 3800. Complete the violation information and recommendations. Recommendations may include: timely filing accurate FBARs and/or maintaining all required records. Include relevant authoritative citations. The group manager signs Letter 3800.

Issue Letter 3800 to the person in violation of the FBAR requirements and attach the approved written summary. See IRM 4.26.17.4. Retain a copy of Letter 3800 and the written summary in the file.

Letter 3800 gives the person in violation of the FBAR requirements 30 days to respond. The issuance of Letter 3800 is not a case closing action by itself but leads to the filer admitting and/or correcting errors.

Delinquent or incorrect FBARs.

Agreed/Unagreed.

Assemble the case file for closure in accordance with IRM 4.26.17.2.4.

Close the case file to the group manager.

If the examiner, after discussion with the group manager, determines that it is appropriate to assert an FBAR penalty and that a referral to Criminal Investigation is not appropriate or has been declined, the examiner will compute penalties in accordance with the FBAR penalty guidelines. See IRM 4.26.16.6, FBAR Penalties, for the FBAR penalty computation rules and penalty mitigation guidelines.

FBAR Counsel review is required in willful FBAR violation penalty cases. This review occurs after the group manager, operating division FBAR coordinator, and if applicable, Fraud Technical Advisor, have reviewed and concurred with the assertion of the willful violation penalty. See IRM 4.26.17.4.3.1.

An FBAR penalty can be eligible for Fast Track Settlement only if it has not been assessed. See IRM 4.26.17.4.3.4.1 for more information.

In all FBAR cases proposing penalties, the examiner will follow all general closing procedures found in IRM 4.26.17.4 and issue the FBAR report package which includes:

The examiner should solicit payment upon issuance of the FBAR report package. See IRM 4.26.17.4.4.

If insufficient time remains on the assessment statute of limitations to allow a 30-day response date for Letter 3709, the examiner should set a shorter response date that will still allow sufficient time for case closing procedures, processing and penalty assessment. Contact the FBAR coordinator for assistance in determining the appropriate response date.

If insufficient time remains on the assessment statute of limitations to allow a pre- assessment appeal hearing, the following statements should be included with Letter 3709:

In all FBAR cases proposing penalties, CTR Operations will:

Payment on the FBAR penalty must be evidenced by a separate check or money order payable to the United States Treasury and should include the taxpayer identification number (TIN) and year(s) for which the FBAR payment is made. Electronic payments are not available for FBAR penalties.

Because FBAR and the Title 26 payments are processed by different functions within the IRS, separate checks or money orders must be written for FBAR and Title 26 payments. The examiner should not issue a tax receipt form, such as Form 809, Receipt for Payment of Taxes, for the FBAR payment.

Under 31 USC 3717(b), Interest and Penalty on Claims, interest begins to accrue on the date a notice of penalty amount due (Letter 3708, Notice and Demand for Payment of FBAR Penalty) is first mailed by CTR Operations to the filer. However, 31 U.S.C. 3717(d) prohibits the charging of interest if the amount due on the claim is paid within thirty days from the date Letter 3708 is first mailed to the filer. The applicable interest rate is found at https://www.fiscal.treasury.gov/reports-statements/cvfr/index.html.

In addition to interest, a delinquency penalty of not more than 6 percent a year under 31 USC 3717(e)(2) applies to amounts remaining unpaid ninety days from the date a notice of the penalty amount due is first mailed to the filer.

When a payment is received, the examiner will:

Upon receipt of a closed case file, CTR Operations will review the case for payment of the penalty. If the penalty has been paid in full, CTR Operations will follow the FBAR procedures in IRM 4.26.17.4 and place the case file in the FBAR historic files. If the penalty is not paid in full, CTR Operations will:

All collection activity for FBAR penalties is handled by BFS and/or Department of Justice (DOJ), not by IRS. Any collection activity will consider the following:

Although the Department of Justice (DOJ) and BFS handle collection of judgments in FBAR cases, in cases where a related statute determination has been made, the IRS may provide certain assistance to DOJ related to collection. At the request of DOJ, the IRS may conduct follow-up investigations or determine collection potential. See IRM 25.3.5.3, General Responsibilities.

Refunds of FBAR penalty payments are not systemically issued, as Title 26 overpayments typically are. Generally, to obtain a refund, the person against whom the FBAR penalty was assessed must file a refund suit against the government in District Court. However, in agreed cases (including cases where a filer agrees with an assessment or to a settlement while the case is with Appeals, Counsel, or DOJ), CTR Operations may initiate a refund using Form 3753, Manual Refund Posting Voucher. See Exhibit 4.26.17-2 for CTR Operations contact information.

LB&I Issue Management System (IMS) users, follow regular IMS closing procedures. Ensure that the FBAR penalty is entered as a "Deficiency Amount" and not as a "Penalty" . All others follow the procedures below to close FBAR controls on ERCS.

When all information has been entered, ERCS will ask if all information is correct. When it is, enter Y to close the record. Managerial approval is not required in ERCS to close the record.

Send the physical case file to the proper location in accordance with IRM 4.26.17.4 and local procedure. For cases closing to CTR Operations, refer to Exhibit 4.26.17-2 for address and shipping information.

For appealed FBAR cases sent to Technical Services, ERCS controls will remain in a Technical Services status code until Appeals returns Form 3210 to Technical Services. When Appeals acknowledges receipt of the FBAR case, Technical Services will update the ERCS record to status 90. FBAR cases do not use Appeals status codes.

Examiners must not secure delinquent or amended FBARs in paper form.

To solicit electronic filing of delinquent or corrected FBARs, an FBAR examination for the applicable year(s) must be open. See IRM 4.26.17.2 for procedures to start an FBAR examination.

During the FBAR examination, electronic filing of delinquent or corrected FBARs, as applicable, should be solicited unless a criminal referral is contemplated. If Letter 3800, Warning for Report of Foreign Bank and Financial Accounts (FBAR) Apparent Violations, is issued, see IRM 4.26.17.4.2 for additional solicitation procedures.

If the filer provides an original paper FBAR to the examiner, return the originals to the filer and instruct the filer to electronically file the delinquent or amended FBAR on FinCEN’s BSA E-filing System. The filer should also be instructed to provide a copy of the filing to the examiner. Additional filing information is provided in IRM 4.26.16.4.11, Delinquent FBAR Filing Procedures, and IRM 4.26.16.4.12, Amending a Filed FBAR. The examiner can also verify the filing on the FinCEN Query system within days of the electronic filing. See IRM 4.26.17.3.4.4 for details.

A copy of the delinquent FBAR or proof of filing should be placed in the case file.

The examiner must use FinCEN Form 113, BSA Summons, not the Title 26 summons in FBAR examinations that:

The FinCEN Form 113 is used to summon and require an individual to appear and give testimony and/or produce books, papers, records, and other data identified as essential to the civil enforcement requirements of the Currency and Foreign Transactions Reporting Act, as amended. See 31 USC 5311-5324, section 21 of the Federal Deposit Insurance Act (12 USC 1829b) and Title 1 of Public Law 91- 508 (12 USC 1951, et seq.). See IRM 25.5.11, Title 31 Bank Secrecy Act Summons, for additional information.

See IRM 4.26.8.4, FinCEN Form 113, BSA Summons, for additional information such as:

If indications and/or affirmative acts of intentional or willful FBAR violations are discovered, the examiner will discuss the potential violations with the group manager and operating division FBAR coordinator. A Fraud Technical Advisor (FTA) can assist the examiner in determining whether there was a willful violation and provide the examiner with information concerning referrals to Criminal Investigation.

If the decision is made to involve the FTA in the FBAR case, the examiner will complete Form 13639, Fraudulent Intent Referral Memorandum (FIRM), and forward to the FTA following local procedures. The FIRM documents the involvement of the FTA, the plan for developing the case with respect to the willfulness issue, and the referral recommendations of the FTA.

See IRM 25.1.12.3, Development of Willfulness, IRM 25.1.12.4, Referral Recommendations - Criminal Referral is Not Recommended, and IRM 25.1.12.5, Referral Recommendations – Criminal Referral is Recommended, for information regarding the FTA’s review and recommendations.

Refer to IRM 4.26.16, Bank Secrecy Act, Report of Foreign Bank and Financial Accounts (FBAR), for information regarding willfulness in FBAR violations.

For any related Title 26 examination, follow all applicable fraud development and referral procedures in IRM 25.1, Fraud Handbook, including completion of Form 11661, Fraud Development Recommendation - Examination, and a separate Form 2797, Referral Report of Potential Criminal Fraud Cases. Fraud referrals for FBAR examinations and Title 26 examinations cannot be combined on the same form.

The FBAR assessment statute of limitations is not impacted by the existence of civil or criminal fraud in an FBAR violation or in any related Title 26 violation. Thus, the two-digit alphabetic codes (alpha codes) in IRM 25.6.23-3, Instructions for Updating the Statute on AIMS, designating special statute situations, such as NN (substantial omission of items), or OO (fraud or false return), are not applicable to FBARs. See IRM 4.26.17.3.1 and the remainder of this IRM subsection for additional FBAR statute of limitations information and procedures.

Bankruptcy may occur before or after assessment of an FBAR penalty.

If the IRS examiner is notified or otherwise knows of a bankruptcy filing with respect to the person against whom an FBAR penalty is proposed but not assessed, the examiner will:

If the IRS examiner has reason to believe a person under FBAR examination has filed for bankruptcy, the examiner may contact local Counsel for assistance in determining whether the person has filed for bankruptcy.

If the FBAR penalty has been assessed and the debtor reports it as a debt in the bankruptcy petition and schedules, clerks of bankruptcy courts will send notices to:

The Bureau of the Fiscal Service will forward bankruptcy notices to CTR Operations.

CTR Operations will provide bankruptcy account information to the FBAR Penalty Insolvency Bankruptcy Specialist in the appropriate insolvency territory.

In bankruptcy cases without an FBAR penalty assessment, the territory insolvency specialist will determine if a proof of claim is warranted and, if so, prepare and mail a proof of claim.

Bureau of the Fiscal Service and the IRS insolvency unit will handle bankruptcy cases with an FBAR penalty assessment.