IRS Voluntary Disclosures for 2025: Managing Offshore Account-Related Risk

As 2025 draws to a close, it’s time for U.S. taxpayers to start thinking about their annual returns. While Tax Day may not be until April 15, taxpayers need to prepare in advance to ensure that they will be able to file their returns accurately and on time. This is especially important for taxpayers who have offshore accounts. Learn more from Boston offshore tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group:

Federal Offshore Account Disclosure Requirements for 2025

Along with reporting their annual earnings, U.S. taxpayers who own offshore accounts must also report these accounts to the federal government on an annual basis. While filing thresholds apply, most taxpayers who own offshore accounts need to file. For taxpayers living in Massachusetts and other states, the basic filing requirements are as follows:

• IRS Form 8938 – Taxpayers living in the U.S. must use IRS Form 8938 to report their foreign financial assets (including offshore accounts) when they file their annual returns.
• Report of Bank and Financial Accounts (FBAR) – Taxpayers living in the U.S. must file an FBAR with the Financial Crimes Enforcement Network (FinCEN) by April 15.

While taxpayers receive an automatic six-month extension to file FBARs, there is no automatic extension for IRS Form 8938. As a result, to avoid unnecessary liability, taxpayers who own qualifying offshore accounts should ensure that they are prepared to file IRS Form 8938 by no later than April 15, 2026, and that they are prepared to file an FBAR by no later than October 15, 2026.

What If You Didn’t Report Your Offshore Accounts in 2025?

This raises an important question: What if you didn’t report your offshore accounts to the IRS and FinCEN by the applicable due dates in 2025?

At this point in the year, the automatic extension for filing an FBAR has expired, and IRS Form 8938 was due in April. Thus, taxpayers who haven’t filed these forms (if they were required to do so) are now in non-compliance.

In this scenario, coming into compliance typically involves making a voluntary disclosure to the IRS. For offshore account disclosure violations, the IRS offers two primary means of voluntary disclosure: (i) the IRS' streamlined filing compliance procedures; and (ii) IRS Criminal Investigation’s (IRS CI) Voluntary Disclosure Practice.

Each of these is an option under different circumstances, and taxpayers must choose wisely in order to make a qualifying voluntary disclosure and effectively mitigate their risk of facing IRS scrutiny. While taxpayers must file their FBARs with FinCEN, the IRS enforces FBAR compliance; and, in addition to imposing civil penalties, the IRS also works with the Justice Department to pursue criminal charges when warranted.

Request a Call with Boston Offshore Tax Lawyer Kevin E. Thorn

If you need more information about your offshore account disclosure obligations or the options for voluntarily disclosing offshore account disclosure violations, we encourage you to contact us promptly. To request a call with Boston offshore tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 617-692-2989 or contact us confidentially online today.