Taxpayers who are behind on their federal filing and payment obligations may be eligible for penalty relief from the IRS—including automatic penalty relief in some cases. However, penalty relief does not absolve taxpayers of other payment obligations, and applying for it can be risky in certain scenarios. As a result, taxpayers considering penalty relief should consult an experienced Virginia IRS lawyer before doing so.

If you missed the deadline to file a Report of Foreign Bank and Financial Accounts (FBAR) in 2026, you should promptly assess your options for coming into compliance. Noncompliance can carry civil or criminal penalties, depending on the circumstances. If you are not yet facing an audit or investigation, you may be eligible to come into compliance under the IRS’Streamlined Filing Compliance Procedures or IRS CI’s Voluntary Disclosure Practice.

The DOJ and IRS are actively conducting FBAR investigations in 2026. These investigations pose substantial risks for targeted taxpayers—including fines and federal prison time. For noncompliant taxpayers who are not yet under federal scrutiny, submitting an IRS streamlined disclosure filing or a voluntary disclosure could be critical to avoiding unnecessary consequences.

The IRS is phasing out its First Time Abatement (FTA) program and replacing it with a new Automatic Exemption from Penalty (AEP) program that does not require taxpayers to file for available relief. However, taxpayers who are not eligible for the AEP will still need to take proactive steps to minimize their liability exposure.

While IRS audits are civil in nature, IRS CI investigations are focused on gathering the evidence needed to substantiate criminal charges. With that said, audits can (and do) lead to criminal charges as well. In all cases, taxpayers that are at risk of facing criminal charges must build and execute a comprehensive defense strategy, and this starts with engaging an experienced Virginia criminal tax attorney.