Purpose: This IRM section provides guidance to Appeals Technical Employees (ATEs) assigned a FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR), violation penalty case file in the Independent Office of Appeals (Appeals).

Audience: Appeals Technical Employees and Appeals Team Managers.

Policy Owner: Chief, Appeals.

Program Owner: Director, International Specialty Operations.

Contact Information: Appeals employees should follow established procedures on How to Contact an Analyst. Other employees should contact the Product Content Owner shown on the Product Catalog Information page for this IRM.

A United States person must file an FBAR (FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR)) if that person has a financial interest in, or signature, or other authority over, any financial account(s) outside of the United States and the aggregate value of the account(s) exceeds $10,000 at any time during the calendar year. Failure to file this form may result in civil and/or criminal penalties. The civil penalties may be appealed administratively.

FinCEN has introduced FinCEN Form 114a, Record of Authorization to Electronically File FBARs, for filers who submit FBARs jointly with spouses, or wish to submit them via third-party preparers.

Effective July 1, 2013, filers must electronically file the FBAR through FinCEN's Bank Secrecy Act (BSA) E-Filing System, unless an exemption from e-filing is granted.

Filings can be researched on the FinCEN Query System (FCQ). Penalty cases, assessments, and payments are recorded on a separate FBAR database maintained by the Small Business/Self-Employed (SB/SE) Specialty Examination, Bank Secrecy Act Examination, Currency Transaction Report (CTR) Operations unit.

Post-assessed FBAR cases in excess of $100,000 (excluding interest, penalties and administrative costs) cannot be compromised by Appeals without approval of the Department of Justice (DOJ). See 31 USC 3711(a)(2) and 31 CFR 902.1(a) and (b). Once assessed, the penalty becomes a claim of the U.S. government.

Pre-assessed FBAR penalties are eligible for Fast Track Settlement (FTS) only if the FBAR 30-Day Letter, Letter 3709, has not been issued to the filer. Refer to IRM 8.26.2, Fast Track Settlement for Small Business/Self Employed (SB/SE) Taxpayers.

Once FBAR penalties have been assessed, Alternative Dispute Resolution (ADR) is not available.

Rapid Appeals Process (RAP) is not available in any FBAR penalty case.

Post Appeals Mediation (PAM) is not available in any FBAR penalty case.

Refer to IRM Exhibit 4.26.16-2, FBAR Penalty Mitigation Guidelines for Violations Occurring After October 22, 2004, for mitigation threshold criteria and application for FBAR penalties.

There is no joint and several liability with FBAR penalty cases.

Interest on FBAR penalties does not accrue until the penalties are assessed and is charged only if full payment of the FBAR penalties is not made within 30 days of the date that notice of the amount due is first mailed to the debtor (Letter 3708, Notice and Demand for Payment of FBAR Penalty, or Letter 3708-A, Notice for Demand and Payment of FBAR Penalty after Appeal Denial). Letter 3708/3708-A is mailed by the CTR/BSA FBAR Coordinator.

Unagreed FBAR cases are closed immediately to CTR/BSA for assessment. A statutory notice of deficiency is not issued. For post-assessed cases, see IRM 8.11.6.9.3.

FBAR penalties may come to Appeals as stand-alone cases or together with a related income tax or international penalty case.

FBAR penalties are an Appeals Coordinated Issue and require a referral to International Operations prior to holding the first conference.

The FBAR penalty case will usually be received in Appeals as a pre-assessed case. However, in certain circumstances, Appeals will also conduct post-assessment hearings to consider FBAR penalty liability and collection. Whether the penalty is pre- or post-assessed when it comes to Appeals, it is considered the same penalty and only one appeal is available.

The venues available for challenging FBAR penalties are the United States District Courts and the Court of Federal Claims, not the United States Tax Court.

Qualified Offer (QO) procedures under IRC 7430 are not available for Title 31 FBAR Penalty cases.

First Time Abatement (FTA) - Effective with the Calendar year 2016 FBAR. FTA is available to the filer who failed to file the FBAR the first time an FBAR was required to be filed. The FBAR must be filed by the extended due date to be eligible for relief under this provision.

Automatic Filing Extension - Effective with the calendar year 2016 FBAR. An automatic 6-month extension to file is granted to 10/15/YY. There is no requirement to file an extension form.

Refer to additional FBAR resource materials:

The FBAR penalty is assessed or proposed on only one filer, even when a filer has elected married filing jointly status on their individual tax return or jointly owned foreign account. There should be one U.S. person under examination per FBAR case file.

For pre-assessed FBAR cases, Appeals requires 365 days remaining on the assessment statute of limitations at the time the administrative file is received in Appeals. Return cases with less than 365 days remaining on the assessment statute of limitations at the time the case is received by Appeals to the originating function as a premature referral; this will allow Examination to secure an assessment statute extension or cause the penalty to be assessed.

If a pre-assessed FBAR case is being returned to Examination with new information, there must be at least 210 days remaining on the statute of limitations at the time Examination receives the case. Refer to IRM 8.6.1.7.7 , Jurisdiction Released.

For post-assessed FBAR cases, Appeals will not accept an assessed FBAR case if more than 180 days have elapsed since the date of assessment, except in certain circumstances approved by Appeals management. Filers may be provided post-assessment appeal rights only when they have not already been provided a pre-assessment appeal. Generally, jurisdiction will not be released back to the originating function when new information is received for a post-assessed FBAR case.

The administrative file will contain the following documents:

The assessment statute expiration date (ASED) and civil action statute expiration date (CASED) for FBAR civil penalties are found in 31 USC 5321(b)(1) and 5321(b)(2), respectively.

Appeals controls the statute of limitations in pre-assessment cases with the ASED and in post-assessment cases with the applicable CASED.

The statute of limitations must be determined for each individual under examination.

For APS procedures regarding establishing FBAR cases on ACDS, refer to IRM 8.20.5.27, Foreign Bank Account Report (FBAR) Penalty Case Carding.

Administrative files may be forwarded to the Appeals Account and Processing Support (APS) Carding Team by either the frontline Exam Group, Exam Technical Services, or in some circumstances, the FBAR Penalty Coordinator at CTR/BSA.

All FBAR penalty cases are controlled on ACDS. FBAR information is not maintained in IDRS.

Initial review of the case file is required within 45 days from the date of receipt on ACDS.

Upon review of the case, the ATE will verify the CSC information and make or request changes as required.

Verify the filer information:

Prepare and forward a referral through the ATM to Specialized Examination Program and Referrals (SEPR) on ACDS using Form 13381, Appeals Technical Guidance / International Referral, when the case is received by the ATE.

All post-assessment FBAR penalty cases are priority cases and must be worked expeditiously with the objective of closing within 120 days of receipt. Refer to IRM 8.11.6.9.3 for additional guidance.

Prepare the Letter 5157, Non-docketed Acknowledgement and Conference, and issue a copy to the filer with Publication 4227, Overview of the Appeals Process Brochure, explaining the Appeals process and filer's rights.

All FBAR penalty cases are Appeals Coordinated Issues, and some cases will require review and concurrence. The ATE will submit a referral using Form 13381 during the preliminary review of the case. Review and concurrence should be received from the assigned Appeals FBAR Coordinator for the proposed settlement determination prior to making the offer to the filer or representative.

ATE will mail Letter 5834, Foreign Bank and Financial Accounts Report (FBAR) Agreement Form Transmittal, with Form 13449, for the filer to sign and return.

ATE will submit a request to have their Appeals Team Manager (ATM) execute the Form 13449 prior to assessment at CTR/BSA.

Encourage FBAR filers to mail payments after receiving correspondence from CTR/BSA, e.g., in response to Letter 3708/3708-A. Those letters include payment instructions. For any FBAR payment-related questions, contact the assigned Appeals FBAR Coordinator.

See IRM 4.26.17.4.4, Closing the FBAR Case - Payment and Collection.

If FBAR payments have been misposted, such as to a Title 26 module, follow the instructions for misposted FBAR payments found in IRM 4.26.17.4.4.1, Instructions for Misposted FBAR Payments.

If an ATE discovers a misposted FBAR payment, they must discuss the payment issue with the assigned FBAR Coordinator to ensure a payment posting correction is done correctly, as well as informing their ATM of the situation. The ATE is responsible for ensuring the payment is correctly posted and also that the filer receives credit for the payment in the FBAR Database.

Refer to IRM 8.20.7.36, Foreign Bank and Financial Account (FBAR) Penalty Case Closing Procedure, for APS procedures for closing all types of FBAR cases.

There are three types of closings for an FBAR penalty case. Determine the type of case and follow the instructions outlined in the following sections:

Determine the valid ACDS closing code:

Case Activity Record and Automatic Timekeeping System (CARATS) - typical codes:

All Appeals employees must adhere to the procedures for shipping Personally Identifiable Information (PII). Refer to IRM 8.20.7.9, Procedures for Shipping Personally Identifiable Information (PII).

The following documents should be included in the administrative file and uploaded to ACDS by the ATE/ATM:

Appeals may not compromise a post-assessed FBAR penalty in excess of $100,000 without DOJ approval. See 31 USC 3711(a)(2) and 31 CFR 902.1 (a) and (b). Once assessed, the penalty becomes a claim of the U.S. government.

Post-assessed FBAR penalty cases are cases received by Appeals where the FBAR penalties have already been assessed by CTR/BSA. These are priority cases and should be worked with the objective of closing within 120 days of receipt.

CTR/BSA will notify the filer of the assessment with Letter 3708, Notice and Demand for Payment of FBAR Penalty. A case can be protested to Appeals before or after receipt of this letter.

The U.S. government must file a collection suit within a 2-year period beginning on the later of the date the penalty was assessed or the date any judgement becomes final in a criminal action under 31 USC 5332 in connection with the same transaction with respect to which the penalty was assessed. (31 U.S.C. 5321(b)(2)).

Appeals will not accept assessed FBAR cases more than 180 days after the date of assessment.

On post-assessed Appeals FBAR penalty cases over $100,000, Appeals will, through Litigation and Advisory Division Counsel Headquarters, provide a settlement proposal to DOJ. This request must be submitted no later than nine months prior to the CASED. Appeals will send the case to Litigation and Advisory Division Counsel Headquarters for referral to DOJ. The AO will work with the FBAR Coordinator to facilitate this process.

If there is less than nine months remaining to file a civil collection suit, no settlement proposal shall be sent to DOJ for consideration. Rather, the case will be closed and Appeals will send the case file to CTR/BSA to refer to DOJ.