FBAR Direct prepares and files your FBAR (FinCEN Form 114) on your behalf. You are responsible for reviewing all information for accuracy before submission to FinCEN. This article is for informational purposes only and does not constitute tax, legal, or financial advice.

FBAR Voluntary Disclosure: Current Options After OVDP Closed

The IRS closed its Offshore Voluntary Disclosure Program (OVDP) on September 28, 2018. OVDP was the main path for taxpayers in the United States with hidden foreign bank and financial accounts to come into tax compliance. Its closure left many taxpayers unsure about how to disclose offshore assets and foreign financial account holdings.

However, three paths remain today. The IRS Updated Voluntary Disclosure Practice — the offshore voluntary disclosure path for willful conduct — handles cases where taxpayers knew about their duty but did not file. The streamlined filing compliance procedures serve non-willful taxpayers. The delinquent FBAR submission procedures cover filers with no unreported income. Each path has different penalties, rules, and levels of protection.

As a result, picking the wrong program can lead to rejected filings. It can also trigger full penalties for FBAR violations under 31 USC 5321(a)(5) or a referral to criminal prosecution.

What Is the History of FBAR Voluntary Disclosure Programs?

The IRS has run several offshore voluntary disclosure programs since 2009. Each one came in response to growing international tax enforcement. The voluntary disclosure program OVDP was the best known. It collected over $11 billion. This history shows why today's three options exist.

2009 Offshore Voluntary Disclosure Initiative (OVDI)

The IRS launched its first initiative in 2009 after UBS records revealed thousands of hidden Swiss bank accounts. The 2009 OVDI imposed a 20% penalty on the highest account balance over six years. Over 15,000 taxpayers applied. The IRS collected $3.4 billion in back taxes and penalties.

2011 and 2012 OVDI/OVDP Programs

The IRS reopened the initiative in 2011 with a 25% penalty. Then, it launched the permanent Offshore Voluntary Disclosure Program in 2012. The OVDP penalty started at 27.5% of the highest balance. However, it rose to 50% for accounts at banks under IRS criminal investigation.

OVDP Closure in 2018

The IRS closed OVDP on September 28, 2018. Applications had dropped from 18,000 in 2011 to fewer than 600 in 2017. FATCA and the Common Reporting Standard made hiding offshore accounts much harder. As a result, the IRS did not replace OVDP. Instead, it pointed taxpayers to three existing paths.

How Does the IRS Updated Voluntary Disclosure Practice Work?

The Updated Voluntary Disclosure Practice is the current IRS program for willful FBAR violations. IRS Criminal Investigation manages this program. It gives protection from criminal prosecution through a closing agreement. Taxpayers must request preclearance, file six years of returns, and pay all taxes owed with negotiated penalties.

Here are the steps to complete the IRS voluntary disclosure practice:

Request preclearance from IRS Criminal Investigation. This confirms you are not under audit.
Gather six years of records — bank statements, tax returns, and income documents for your foreign accounts.
Prepare tax returns for all six years to report income from foreign assets or accounts.
File six years of FBARs (Report of Foreign Bank and Financial Accounts, FinCEN Form 114) through the BSA E-Filing system.
Write a truthful narrative that explains your foreign financial assets and why prior returns did not report the income.
Pay all taxes, interest, and civil penalties as agreed with IRS examiners.

The IRS reviews each case on its own facts. There is no fixed penalty rate like OVDP had.

What Are the Penalties Under the Voluntary Disclosure Practice?

The practice imposes a civil fraud penalty under 26 USC 6663. This equals 75% of the unpaid tax for one year. The IRS also assesses willful FBAR penalties under 31 USC 5321(a)(5)(C) for five years. The total FBAR penalty is usually capped at 50% of the highest balance.

These penalties are steep. However, the trade-off is that you avoid criminal prosecution. Specifically, accepted filers receive a closing agreement that resolves their criminal liability.

Who Should Use the Voluntary Disclosure Practice?

Use this path when:

Your FBAR violations were willful or you cannot certify non-willful conduct
You filed returns that omitted foreign income you knew about
You used foreign bank accounts to hide income or assets from the IRS
You need to avoid criminal prosecution under 31 USC 5322
A tax attorney advises the streamlined procedures carry risk given your facts

Do not use it if your conduct was truly non-willful. The streamlined filing compliance procedures charge 5% for domestic filers or zero for qualifying expats.

What Are the Streamlined Filing Compliance Procedures?

The streamlined filing compliance procedures help taxpayers whose failure to file was non-willful. Non-willful means negligence or a good-faith mistake about the law. This program is a lower-cost path back into tax compliance.

Filers submit three years of amended tax returns and six years of late FBARs. Domestic filers (SDOP) pay a 5% penalty on the highest balance. In contrast, expats (SFOP) pay no penalty at all.

However, the streamlined procedures do not give criminal prosecution protection. If the IRS finds your conduct was willful, it can reject the filing and assess full penalties. See FBAR Willful vs Non-Willful Penalties for details.

What Are the Delinquent FBAR Submission Procedures?

The delinquent FBAR submission procedures apply to a taxpayer who failed to file FBARs but reported all income on their tax returns. If no income went unreported, you may file the late FBARs through FinCEN's BSA E-Filing system. Include a note explaining why each Report of Foreign Bank and Financial Accounts is late.

The IRS generally does not impose penalties under this path. It applies when all income was reported and the IRS has not contacted you yet. This path does not require amended returns since there is no unreported income to fix.

How Do the Three Current FBAR Voluntary Disclosure Options Compare?

The three current FBAR voluntary disclosure options differ in key ways. The Updated Voluntary Disclosure Practice covers willful cases. The streamlined procedures cover non-willful cases. The delinquent FBAR procedures cover filers with no unreported income. The right choice depends on your facts. A tax professional can help you avoid costly mistakes.

Feature	Voluntary Disclosure Practice	Streamlined (SDOP/SFOP)	Delinquent FBAR
Conduct	Willful or uncertain	Non-willful only	Non-willful, no unreported income
Criminal protection	Yes — closing agreement	No	No
Returns required	6 years	3 years	None
FBARs required	6 years	6 years	All delinquent years
FBAR penalty	Up to 50% of highest balance	SDOP: 5%; SFOP: None	Generally none
Income tax penalty	75% fraud (1 year)	None beyond tax and interest	None
Preclearance	Yes — IRS Criminal Investigation	No	No

Who Qualifies for Each FBAR Voluntary Disclosure Program?

Each FBAR voluntary disclosure program has specific rules. A taxpayer who picks the wrong program risks rejection, full penalties, or a criminal referral. Before you disclose offshore accounts to the IRS, confirm which program fits. The number of years with hidden accounts also affects which path is best.

Voluntary Disclosure Practice Eligibility

The IRS voluntary disclosure practice is open to any taxpayer not under criminal investigation. You must get preclearance from IRS Criminal Investigation first. The IRS will deny it if you are already a subject of an investigation related to your offshore bank accounts or foreign assets.

Streamlined Procedures Eligibility

The streamlined filing compliance procedures require a signed statement under penalty of perjury that your conduct was non-willful. You must not be under IRS civil examination or criminal investigation. Both US residents and foreign-based citizens can use this path. You must also file information returns as part of the process.

Delinquent FBAR Procedures Eligibility

These procedures require that all foreign income was properly reported on your original returns. The IRS must not have contacted you about missing filings. You must not be under civil examination or criminal investigation.

Does FBAR Voluntary Disclosure Provide Criminal Prosecution Protection?

Yes, but only the Updated Voluntary Disclosure Practice gives this protection. The streamlined procedures and delinquent FBAR procedures offer none. For taxpayers facing willful violations, this is the key factor. It can mean the difference between a fine and federal criminal charges.

When IRS Criminal Investigation accepts your disclosure, the Department of Justice will not prosecute you. Criminal penalties under 31 USC 5322 include fines up to $250,000 and prison up to five years.

In contrast, the streamlined procedures offer no such shield. If the IRS finds willful conduct, it can refer your case for criminal investigation. A false non-willful certification is itself a federal offense. Therefore, consult a tax attorney before choosing your path.

When Should You Use Each FBAR Voluntary Disclosure Option?

The right FBAR voluntary disclosure option depends on three factors: willfulness, unreported income, and criminal risk. Each option targets a different taxpayer profile. Picking the wrong one means higher penalties or lost criminal protection.

Use the Voluntary Disclosure Practice when:

You knew about the FBAR requirement and did not file
You omitted foreign income from tax returns on purpose
You need criminal prosecution protection
Your accounts were at banks under IRS scrutiny or audit

Use the Streamlined Procedures when:

Your failure to report was due to negligence or good faith misunderstanding
You can certify non-willful conduct under penalty of perjury
You want the lowest penalty (5% SDOP or 0% SFOP)

Use the Delinquent FBAR Procedures when:

All foreign income was properly reported on original returns
Only the FBAR filings are missing
The IRS has not contacted you about the missing filings

If none of these fits, consult a qualified tax professional. See FBAR Penalties: What Happens If You Don't File for the full penalty structure.

Why Should You Work With a Tax Professional for Voluntary Disclosure?

Voluntary disclosure decisions carry major legal and financial risks. A wrong choice can mean paying much higher penalties or losing criminal protection. A false non-willful certification is a federal offense. Therefore, these are not decisions to make alone.

A qualified tax attorney or CPA with international tax experience can:

Evaluate whether your conduct meets the IRS definition of non-willful
Prepare the preclearance request for the voluntary disclosure practice
Draft the certification statement or disclosure narrative
Calculate the correct penalties and tax liability under each program
Coordinate amended tax returns with late FBAR filings
Represent you before IRS Criminal Investigation during an audit

Unfortunately, the IRS does not advise on which program to use. The burden falls on the taxpayer. Each case depends on the taxpayer's own facts.

Frequently Asked Questions

Below are common questions about FBAR voluntary disclosure and the offshore voluntary disclosure options that remain after OVDP closed. These answers cover how the programs work, what penalties apply, and how to come into compliance with FBAR filing rules.

What is FBAR voluntary disclosure?

FBAR voluntary disclosure is the process of proactively reporting undisclosed foreign accounts to the IRS and FinCEN before the government finds the violation. The Updated Voluntary Disclosure Practice handles willful cases. The streamlined filing compliance procedures serve non-willful taxpayers. Both require filing late FBARs through the BSA E-Filing system.

Is the OVDP still available?

No. The IRS closed OVDP on September 28, 2018. Taxpayers who need to disclose foreign accounts must now use the Updated Voluntary Disclosure Practice, the streamlined procedures, or the delinquent FBAR submission procedures.

What penalties does the Updated Voluntary Disclosure Practice impose?

The IRS imposes a 75% civil fraud penalty on unpaid tax for one year under 26 USC 6663. It also assesses willful FBAR penalties under 31 USC 5321(a)(5)(C) for five years. The total FBAR penalty is typically capped at 50% of the highest account balance.

Can I switch between voluntary disclosure programs?

Generally, no. Once you begin the voluntary disclosure practice, you cannot switch to the streamlined procedures. If the IRS rejects your streamlined filing as willful, you cannot enter the voluntary disclosure practice later. Choose carefully with professional guidance.

Do I need a tax attorney for voluntary disclosure?

The IRS does not require legal help. However, the process involves IRS Criminal Investigation, penalty talks, and questions about willfulness. A tax attorney gives you attorney-client privilege that protects what you say about criminal liability.

What happens if the IRS contacts me first?

If the IRS opens an exam or criminal investigation before you submit, you lose access to all three programs. Timely action is key. Delay risks losing reduced penalties and criminal protection.

How long does the process take?

The Updated Voluntary Disclosure Practice typically takes 12 to 24 months. The streamlined procedures process within 6 to 12 months. The delinquent FBAR procedures are fastest since they need only late filings.

Is there a deadline to make a voluntary disclosure?

There is no fixed deadline. However, the IRS can close these programs at any time. Each day you delay raises the risk that the IRS contacts you first through FATCA or CRS data. Once contacted, voluntary disclosure is no longer available. For first-time filers, see the FBAR First-Time Filer Guide.

Take Action Before Options Narrow

Take action before your FBAR voluntary disclosure options narrow further. The IRS has closed these programs before without notice. The three current paths remain open today, but they may not stay open. Each day of delay raises the risk that the IRS contacts you first.

Let FBAR Direct prepare your filing — you review and approve before we submit to FinCEN. We handle FinCEN Form 114 for all required calendar years and coordinate with your tax professional on the broader disclosure strategy. See how it works.

Tax regulations change frequently. Always verify current requirements at IRS.gov or FinCEN.gov. For advice specific to your situation, consult a qualified tax professional. This article is current as of March 26, 2026.