I swore a mighty oath on a skyscraper of Bibles to never write about RRSPs again, so pretend that this is a post about FBARs and not RRSPs at all. That is actually semi-accurate because the logic applied here need not only apply to RRSPs.
So what is the semi-nearly-somewhat nearly way to fix it I have not filed FinCen Form 114 for the past 5 years? I have been in US since 2000 and have been filing 8891 every year since 2004… and didn’t realize I need to include RRSP in FinCen until I found out that 8891 become obsolete :(. Is the fix able way is file prior year from (5 years) and pray that IRS wont come after me? Thanks very helpful website.
In his case, there is a system in place for specifically solving his problem (no FBARs because why spend your entire life trying to figure out WTF the entirety of Title 26 and Title 31 of the United States Code mean to the life of an ordinary human?).
The system is called the Delinquent FBAR Submission Procedure.
You qualify for this procedure if:
Two of those three things will be known to you. The middle one — are you under examination? — will not necessarily be known to you. I have had OVDP submissions blown out of the water because the IRS secretly had started an unrelated audit that you knew nothing about because they had just opened a file on you.
And look at the first point. The message of that first point, of course, is that if you want leniency from the IRS you should never file anything. Because if you try and fail, you will be treated worse than someone who never tried. (NOTE! THIS IS SARCASM! THIS IS NOT ACTUAL LEGAL ADVICE!)
The semi-promise of the procedure is waiver of penalties:
The IRS 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.
I suspect in the vast majority of situations that penalties will not be imposed. I suspect that at the day-to-day operational level of the Internal Revenue Service, the humans tasked with the job have no particular appetite to take the whip to random ordinary souls that look a lot like their next-door neighbors.
For a more scholarly look at this problem, look at Ham Sandwich Nation: Due Process When Everything Is a Crime in the Columbia Law Review. The title to this article comes from the prosecutor’s brag that he could “indict a ham sandwich”.
But I digress.
For most of you — and especially in benign situations like the one described by the commenter, the IRS procedure will probably work well.