FBAR Amnesty Is History & Canadian Citizenship By Descent
Without any notice or official press release, the IRS removed its public webpage for the Delinquent FBAR Submission Procedures (DFSP) on July 1, 2026, ending the administrative path that allowed taxpayers to file late Foreign Bank Account Reports (FBARs) without penalties. While the statutory framework governing FBAR filing obligations and penalties remains unchanged, the removal of this administrative procedure creates uncertainty for taxpayers seeking to correct historical non-compliance, which is often unintentional.
For more information on FBARs and who is required to file, see our article: Unlike How It Sounds – The FBAR Is Not Made Of Chocolate.
Prior to July 1, 2026, the procedure to catch up on missed FBAR filings provided amnesty from penalties provided that all related foreign income was previously reported and associated taxes were paid, and assuming you had not previously been contacted by the IRS regarding any delinquent FBAR filings. The procedure acknowledged that the tax filer did not intend to refrain from paying taxes on income generated in FBAR-related accounts and instead missed satisfying the more procedural process of foreign account reporting.
From July 1, 2026 onward, there is no longer guaranteed relief from penalties for late FBAR-only submissions to the IRS. Instead, the lack of this procedure means that the Treasury Secretary has the authority to impose penalties for FBAR reporting violations and the determination will be made on a case-by-case basis based on the circumstances including if there is reasonable cause to believe failure to file FBAR reporting was willful. We have yet to see many cases be tried, and the hope is that discretion will ere on the side of caution in terms of applying penalties to harmlessly negligent tax filers, but the introduction of discretion on behalf of the Treasury Secretary is never a fun thumb to find yourself under. The change in policy may be to more closely scrutinize those taxpayers and bad actors who willingly avoided filing, those who have additional US tax filings that were missed, and/or those who have little cause to have missed filing the FBARs. All that said, the official guidance is for those who are delinquent in their filings to file the necessary FBAR filing as soon as possible, which in our opinion, may help the Treasury Secretary ere more strongly in the tax filer’s favour.
While the amnesty has been removed, the method for catching up on delinquent FBAR filings has not changed. Tax filers can still use the electronic reporting system – FinCEN Form 114 – using reason codes or attached explanations to justify your untimely disclosure, with a renewed importance to establish reasonable cause that the delinquent filing was not willful.
Utilizing a cross-border accountant with experience in filing delinquent FBARs may prove to be valuable to those tax filers who are delinquent and need to catch up on US tax reporting.
Bill C-3 Dramatically Expands Who Can Claim Canadian Citizenship With Proof of Descent
On December 15, 2025, Bill C-3 removed the first-generation limit on citizenship by descent (i.e. parental citizenship requirement) for individuals born outside of Canada before that date.
Any individual born outside Canada who can prove their parent or grandparent, including grandparents many generations back, was a Canadian citizen starting in 1947 or resident prior to 1947 using official sources such as birth, marriage, and death certificates, can apply to attain Canadian citizenship. In other words, if you know your great-great-great-grandfather was a Canadian resident, immigrated from Canada to the US in 1850, and your family has lived in the US since 1850, any and all descendants of that great-grandfather are likely to qualify for Canadian citizenship.
Canada is the first ‘settler nation’ to allow applicants to attain citizenship by descent and is the only nation that allows citizenship by descent without a firm start date or set of circumstances such as belonging to a specific persecuted group. Previously, Italy was the only country that allowed applicants to attain citizenship by descent without any generational limit or specific set of circumstances. After millions of applicants qualified for Italian citizenship since 1998 and with 60 to 80 million people worldwide potentially meeting the criteria for Italian citizenship with no generational limit, Italy recently introduced a two-generation limit to better control citizenship by descent, although this issue is currently being contested in the Italian Supreme Court.
In Canada’s case, perhaps due to the political and social climate south of the border, the number of applications for citizenship by descent has far exceeded federal government expectations of “in the tens of thousands over time”. According to Immigration Refugees and Citizenship Canada (IRCC), in addition to the ~23,000 already newly recognized citizens under the program between December 15, 2025 and May 31, 2026, and likely many thousands more recognized citizens since then, there are ~122,000 applications in the queue as of August 10th, up from ~100,000 one month prior. The approximate wait time for an application to be processed has ballooned to 25 months, up from 10 months at the start of 2026. It should be noted that this is the wait time after the application has been submitted and that applicants need to track down all necessary paperwork to prove their citizenship by descent prior to submitting an application.
At Steele Wealth Management, we have come across a number of individuals who are seeking Canadian permanent residency or citizenship without an easy pathway. Applying for Canadian citizenship by descent may be an effective way to make Canada your home permanently without having to navigate the traditional immigration system and the uncertainty that can bring. Securing Canadian citizenship can help increase your residency options in future even if establishing Canadian residency doesn’t make sense now.
Considering the wait time for application processing has already reached 25 months, those who wish to pursue Canadian citizenship by descent should apply as soon as possible. There is a chance that due to the high demand for citizenship by descent, the Canadian government or potential Canadian court cases could act to restrict citizenship by descent, impose a generational limit, or introduce a start date (such as Canada’s formation in 1867), so there may be limit to how long this citizenship pathway exists. As we saw in the Italy’s case in 2025, the introduction of a two-generation limit invalidated some pending applications and waitlist spots unless they were confirmed by a specific date, so getting the wheels moving as soon as possible could be the difference between attaining citizenship and not. It is important to note that there is the ability to apply for expedited processing if there is a job offer or school placement on the line, a family death or serious illness that requires urgent travel, statelessness, bringing a Canadian minor child to the country, or you are experiencing hardship linked to who you are.
Although we are not immigration lawyers or consultants, to provide the best guidance to our clients, we feel it is important to keep our finger on the pulse of issues that affect and opportunities that arise for cross-border individuals. Attaining Canadian citizenship by descent may be one way for individuals to reduce some of the uncertainty involved in immigrating to Canada and can increase one’s employment options and/or potential retirement destinations.
Contact Us For Help
At Steele Wealth Management, we understand the challenges involved in managing wealth in both countries and our experience with complicated situations provides us with the expertise to help. The requirement to file annual FBAR forms is just another example of the complications that we help our clients address. We offer a consolidated wealth management solution and coordinate entire portfolios of assets to keep our clients compliant with their obligations in both Canada and the U.S. At the same time, we keep our clients on track to achieving their vision and financial goals.
