TITLE: The IRS Has Quietly Removed Its FBAR Penalty Reassurance — What UK-Based Founders Need to Know
What the IRS changed in September 2026
The IRS FBAR page now states that:
Filing an FBAR late or not at all is a violation and may subject you to penalties.
It also advises taxpayers who have not been contacted by the IRS and are not under investigation to file late FBARs as soon as possible to minimise potential penalties.
This replaces the clearer public-facing assurance previously associated with the Delinquent FBAR Submission Procedures. That earlier language stated that certain taxpayers would not face a penalty where they:
- Properly reported the income from the foreign account.
- Paid the associated US tax.
- Had not been contacted by the IRS about the relevant years.
The removal does not change the FBAR filing obligation or the statutory penalty framework. It does mean you should no longer treat the previous public assurance as an automatic, programme-based protection.
The current IRS FBAR guidance now places greater emphasis on prompt filing, accurate records, and the facts surrounding each case.
The FBAR requirement remains unchanged
You generally need to file FinCEN Form 114, commonly called an FBAR, when all of the following apply:
- You are a US person.
- You have a financial interest in, or signature authority over, at least one foreign financial account.
- The combined maximum value of those accounts exceeded $10,000 at any time during the calendar year.
A US person can include:
- A US citizen.
- A US resident for FBAR purposes.
- A corporation formed in the United States.
- A partnership or LLC created under US law.
- Certain trusts and estates.
The account does not need to generate taxable income to be reportable. This is important. Reporting the income on your US tax return does not remove the separate FBAR obligation.
You must file the FBAR electronically through the FinCEN BSA E-Filing System. It is not filed with your federal income tax return.
Key FBAR deadlines for international sellers
The standard FBAR deadline is April 15 following the calendar year being reported.
An automatic extension runs until October 15. You do not need to request this extension.
For example:
- The 2025 FBAR was due on April 15, 2026.
- The automatic extended deadline is October 15, 2026.
- A complete filing after October 15 may be considered late.
Special disaster relief notices or limited extensions for specific categories of filers can apply. Always check the latest IRS and FinCEN notices before relying on a different deadline.
If you have not filed a required 2025 FBAR and are not under IRS contact, civil examination, or criminal investigation, act before the October deadline where possible.
Why this matters to UK-based US LLC owners
A US LLC is generally a US entity for FBAR purposes. Its federal income tax classification does not automatically remove its reporting obligations.
Consider this example.
Example 1: US LLC with a UK bank account
A UK-based founder owns a Delaware LLC. The LLC receives ecommerce revenue into a UK business bank account before transferring funds to its US payment processor.
If the LLC had a financial interest in the UK account and the combined maximum value of its foreign accounts exceeded $10,000 during the year, the LLC may have an FBAR filing obligation.
The founder is not automatically required to file a personal FBAR simply because they own the LLC. Their personal obligation depends on their own status as a US person and their personal interest or authority over reportable accounts.
This distinction matters. Review the entity and the individual separately.
Example 2: US citizen living in the UK
A US citizen lives in Manchester and sells products through Amazon and Shopify. They use UK bank accounts to receive or hold business funds.
If the person is a US person and the maximum combined value of reportable foreign accounts exceeded $10,000 during the year, an FBAR may be required. This can apply even if the person has already included the business income on their US tax return and paid the relevant tax.
Example 3: Multiple accounts below $10,000
A US-based ecommerce company has:
- A Canadian account with a maximum balance of $6,500.
- A UK account with a maximum balance of $4,000.
- An Australian account with a maximum balance of $2,000.
No single account exceeds $10,000. However, the combined maximum values exceed the threshold. The aggregate test may therefore create an FBAR filing obligation.
Penalties are possible, but not automatic
The IRS states that civil penalties depend on the facts and circumstances. The main categories are:
- Non-willful violations: The statutory maximum is $10,000 per violation, adjusted for inflation.
- Willful violations: The statutory framework allows a penalty up to the greater of an inflation-adjusted $100,000 or 50% of the account balance at the time of the violation.
- Criminal violations: Serious cases may involve criminal penalties.
The IRS Internal Revenue Manual confirms that examiners have discretion. They may consider whether a warning letter and corrected filings are sufficient to improve future compliance.
The Internal Revenue Manual also states that a penalty should not be asserted where:
- The failure was not willful.
- The failure was due to reasonable cause.
- Accurate delinquent or amended FBARs are filed.
This is helpful, but it is not the same as a guaranteed penalty exemption. You should document your circumstances rather than rely on a general assumption that tax payment alone resolves the issue.
Follow this action checklist
Use the following checklist if you believe an FBAR may be missing.
1. Identify every relevant US person
Review each individual and entity separately. Include US LLCs, corporations, partnerships, US citizens, and US residents where applicable.
Do not assume that living outside the United States removes the obligation.
2. List every foreign financial account
Include foreign bank, securities, brokerage, and other reportable financial accounts. Consider accounts held in the UK, EU, Canada, Australia, and other countries.
Review accounts connected with:
- Ecommerce operations.
- Marketplace settlements.
- International payment flows.
- Foreign subsidiaries.
- Business reserves.
- Founder or director signature authority.
3. Calculate the maximum annual values
Use the highest value of each account during the calendar year. Then convert the figures into US dollars using the
