Voluntary Disclosures for Offshore Account Reporting Violations: 2025 End-of-Year Update

The federal Foreign Account Tax Compliance Act (FATCA) and Bank Secrecy Act (BSA) establish separate reporting requirements for U.S. taxpayers who hold qualifying offshore accounts. If a taxpayer fails to comply with the offshore account disclosure requirements under FATCA or the BSA (or both), this can trigger civil or criminal penalties depending on the circumstances involved. As New Jersey offshore tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, explains, taxpayers who are in violation of these statutes must promptly assess their options for coming into compliance:

Remedying Offshore Account Disclosure Violations in 2025

The IRS takes offshore account disclosure violations very seriously. It routinely targets taxpayers suspected of noncompliance in both civil tax audits and criminal tax fraud investigations. Civil penalties start at $10,000 per violation (but can be significantly higher), while criminal prosecution can lead to substantial fines and prison time.

With this in mind, when taxpayers are behind on their offshore account disclosures, they must focus on coming into compliance as quickly as possible. By taking a proactive approach, taxpayers can mitigate their liability while also protecting themselves going forward. Generally speaking, taxpayers have two options for proactively resolving offshore account disclosure violations under FATCA and the BSA.

The IRS’ Streamlined Filing Compliance Procedures

Eligible taxpayers can use the IRS’ streamlined filing compliance procedures to resolve non-willful offshore account disclosure violations. The IRS defines a non-willful violation as one which is “due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law.” While submitting streamlined filings does not allow taxpayers to avoid penalties altogether, it does provide the opportunity to come into compliance while eliminating the risk of facing an audit or investigation related to the violation at issue.

IRS CI’s Voluntary Disclosure Practice

IRS CI’s Voluntary Disclosure Practice provides a means for taxpayers to proactively resolve willful FATCA and BSA violations. Here, too, taxpayers must be prepared to pay what they owe (subject to any negotiation with the IRS), but coming into compliance through a voluntary disclosure can help ensure that they will not face criminal charges related to the violation in the future. Similar to streamlined filings, voluntary disclosures are subject to strict eligibility criteria, and taxpayers must ensure that they meet these criteria before filing.

The Filing Deadlines for Offshore Disclosures Have Passed for 2025

The filing deadlines under FATCA (IRS Form 8938) and the BSA (the FBAR) have passed for 2025. As a result, taxpayers who haven’t filed in 2025 are now behind. If you need to know more about submitting a streamlined filing or voluntary disclosure to resolve a delinquent offshore account disclosure, you should consult with an experienced offshore tax attorney promptly.

Schedule an Appointment with New Jersey Offshore Tax Attorney Kevin E. Thorn

To schedule an appointment with New Jersey offshore tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 201-842-7696 or tell us how we can reach you online. We will arrange for you to speak with Mr. Thorn in confidence as soon as possible.