I'm Late on FBARs. Do I Just File Them, or Do I Need Streamlined? It Depends on Whether the Income Was Reported

The FBAR is filed with FinCEN, separately from the tax return, and a US person who has filed complete and accurate returns every year can still have missed it, because the return never asked for it directly. For that person, the IRS's Delinquent FBAR Submission Procedures apply: file the missed FBARs electronically with a short explanation, and the IRS will not impose a penalty, provided all the income from the accounts was reported and the taxpayer is not under examination. For a person who also missed income from the accounts (the TFSA's earnings, the Canadian interest, the PFIC distributions), the delinquent FBAR procedure is unavailable, and the FBARs belong in a streamlined submission with the amended returns. The question that sorts the two is whether every dollar the accounts earned was on the returns.

Key takeaways

• Delinquent FBAR Submission Procedures: for taxpayers who are not under examination, have not been contacted by the IRS about the FBARs, and have reported and paid tax on all income from the foreign accounts. File the delinquent FBARs through FinCEN's system, select "Other" as the reason for late filing, and enter a brief explanation. No penalty.
• Streamlined: for taxpayers who also omitted income (or information returns) for the accounts. The FBARs are part of the streamlined package (six years) with the amended returns (three years) and the certification.
• The test: was all income from the foreign accounts reported? An RRSP with the treaty deferral properly claimed counts as reported. A TFSA whose earnings were never on the 1040 does not. Canadian mutual funds whose distributions were reported but whose PFIC forms were missing are a middle case (the delinquent international information return procedure).
• Six years: the FBAR statute of limitations is six years from the due date; the delinquent FBARs to file are the six most recent (earlier years are closed).
• Signature authority accounts (a parent's account, an employer's) with no income to the taxpayer are the clearest delinquent-FBAR case.
• Do not file late FBARs quietly without the explanation; the reason field is what invokes the procedure.

The Delinquent FBAR Submission Procedures

The IRS states the conditions: the taxpayer has not filed a required FBAR; is not under a civil examination or criminal investigation; has not already been contacted by the IRS about the delinquent FBARs; and has properly reported on US tax returns, and paid all tax on, the income from the foreign financial accounts reported on the delinquent FBARs. The taxpayer files the FBARs electronically through the BSA E-Filing System, checks "Other" as the reason for filing late, and provides an explanation (a sentence or two: "Taxpayer was unaware of the FBAR filing requirement; all income from the accounts was reported on timely filed US income tax returns"). The IRS will not impose a penalty for the failure to file the FBARs if the income was reported and the taxpayer is not under examination.

The procedure covers the FBAR only. It does not address missing Forms 8938, 3520, 5471, or 8621; those have their own delinquent procedure (the Delinquent International Information Return Submission Procedures) with a reasonable-cause statement.

The income test

"All income from the accounts" means every account on the late FBARs earned income that appeared on the returns. In a Canadian file:

• RRSP, RRIF, LIRA: the income is deferred under the treaty; if the deferral was properly claimed (or automatically applies under Rev. Proc. 2014-55 for an eligible individual), the income is treated as reported. An RRSP on a late FBAR passes.
• Chequing and savings: the interest had to be on Schedule B. If it was, passes; if not, fails.
• TFSA: the earnings are US income every year; a TFSA never on the 1040 fails the test, and the account also needs Forms 3520 and 3520-A.
• Brokerage with Canadian mutual funds: the distributions had to be on the return and the funds are PFICs requiring Form 8621; if distributions were reported but 8621s were not, the income test passes (income reported) but the information return is delinquent (the DIIRSP procedure).
• Signature authority: a parent's account the taxpayer can sign on produces no income to the taxpayer; passes.

A file where every account passes uses the delinquent FBAR procedure. A file where any account fails the income test goes to streamlined (the amended returns pick up the income; the FBARs go in the package).

"Mostly reported"

A taxpayer who reported everything except $200 of interest on a small account has technically failed the income test. The IRS's procedure is binary, but the practical answer is proportionality: amend the returns for the years the interest was omitted (a small adjustment), file the FBARs under the delinquent procedure with an explanation noting the amended returns, and document it. Where the omission is material (TFSA earnings, PFIC income, unreported Canadian dividends), the streamlined submission is the correct and safer route.

Six years

FBAR penalties are subject to a six-year statute of limitations from the due date. The delinquent FBARs to file are those for the six most recent years for which the due date has passed; earlier years are outside the penalty window and are not filed. For a submission in September 2026, that is the 2020 through 2025 FBARs.

What not to do

Filing late FBARs with no explanation (leaving the reason blank or choosing something other than "Other" with the explanation) does not invoke the procedure; the IRS may treat the filing as an ordinary late FBAR and assess penalties. Filing late FBARs while an examination is open is outside the procedure. Filing FBARs for accounts whose income was omitted, without amending the returns, is a partial quiet disclosure of the kind the IRS discourages.

Worked example

A US citizen in Ottawa has filed complete 1040s every year with a Canadian preparer who reported her salary, Canadian interest, and dividends, and claimed the RRSP deferral on Form 8833, but never filed an FBAR. Her accounts: an RRSP ($300,000), a chequing account ($8,000), a savings account ($45,000; interest reported), and her mother's account on which she has signature authority.

• Income test. RRSP: deferred, treated as reported. Chequing and savings: interest reported. Mother's account: no income to her. Passes.
• Procedure. Delinquent FBAR Submission Procedures: six FBARs (2020 to 2025) filed through FinCEN with "Other" and the explanation. No penalty. No streamlined submission.
• Contrast. Add a TFSA whose $3,000 a year of earnings was never on the 1040: fails; the file becomes a streamlined foreign submission (three amended returns adding the TFSA income with Forms 3520 and 3520-A; six FBARs including the TFSA; Form 14653).

Official sources

The IRS states that it "will not impose a penalty for the failure to file the delinquent FBARs if you properly reported on your U.S. tax returns, and paid all tax on, the income from the foreign financial accounts reported on the delinquent FBARs, and you have not previously been contacted regarding an income tax examination or a request for delinquent returns for the years for which the delinquent FBARs are submitted." — Internal Revenue Service, Delinquent FBAR Submission Procedures, https://www.irs.gov/individuals/international-taxpayers/delinquent-fbar-submission-procedures

The IRS states that a US citizen or lawful permanent resident meets the non-residency requirement where, "in any one or more of the most recent three years for which the U.S. tax return due date (or properly applied for extended due date) has passed," the individual "did not have a U.S. abode and the individual was physically outside the United States for at least 330 full days." Eligible taxpayers "will not be subject to failure-to-file and failure-to-pay penalties, accuracy-related penalties, information return penalties, or FBAR penalties." — Internal Revenue Service, U.S. Taxpayers Residing Outside the United States, https://www.irs.gov/individuals/international-taxpayers/us-taxpayers-residing-outside-the-united-states

Practitioner note

The delinquent FBAR procedure is the good outcome, and the TFSA is what takes it away. We go account by account: if every dollar was on the returns, six FBARs with a sentence of explanation and no penalty; if a TFSA or a brokerage account's income was missed, the same FBARs go into a streamlined package with the amended returns. The mistake is filing the FBARs alone when the income was not reported, which is a quiet disclosure with the FBAR's own penalty exposure attached.

See also: If you are a US citizen or green card holder in Canada catching up, start with what you still owe the IRS, and browse every cross-border tax topic guide, organized by situation.

Next step

Fairlight prepares the account-by-account income test, the delinquent FBAR submission where it applies, and the streamlined submission where it does not. See cross-border pricing or book a call.