durham_lad

Thanks for the update.

Steerpike

Ditto - thanks. So you were out of pocket a total of about $20k, right?

FYI - I was listening to a baseball game in the Bay Area on AM radio - generally the home of tedious, cheesy ads for auto-repair stores, paycheck cash advances, and the like, when I heard a commercial for a tax firm, and they specifically addressed the complex requirements for foreign accounts. It went something like " ... do you have a foreign bank account, or signature authority over any financial vehicle overseas? If so, you may be considered a criminal by the IRS ... don't trust your returns to the wrong accountant, as doing so could leave you facing massive fines and possible jail time ... we have extensive experience with the complex requirements ... ". Thought of you ...

Asg123

Update and info appreciated.

To anyone who's had foreign transactions, even simple ones, and is seeking an accountant: There are accountants who have several stars on reviews, or are recommended by tax lawyers with several stars, who claim to have experience and knowledge regarding taxes on foreign transactions, but actually are surprisingly ignorant, and will give you basically wrong information. It's surprising really, they would need to spend just a little time reading some posts on this site and they would learn enough not to mislead people as they do. So anyone with foreign transactions: be careful not to get misled by ignorant accountants. They should say: "I don't know, I'll find out and let you know", but they don't, they just give you wrong information. (perhaps their thinking is that they won't get the client if they say that they don't know).

Giantaxe

His accounting/tax preparation fees would be tax deductible

Scotsman In Texas

To me the most costly part of this was the amount of time I had to devote to it: the interference in my day job and in my family life (wife and 3 kids under 5). The sheer volume of work, reporting and deciphering unclear tax rules (even to experts) and spotting errors in a 280 page tax return makes me so angry. In the end I realised nobody was going to give me a clear path forward. I had to pick one based on my research and have 'experts' help make it happen.

Ha! My other learning here is that it is simply almost impossible to get things reported just right. After submitting the amended returns and doing my 2015 return STILL things were being discovered that 2 experienced accountants and myself had been looking at for 6 months and had nevertheless overlooked. One thing is reporting income (which is relatively easy to spot), but it's the US's obsession with 'informational reporting' that kills you.

Yup, I have noticed this too, even in really good accountants. There's an element of hubris here as well as the need to give a speedy response without spending the time (and cost) to research the right answer. Again, be the back stop, don't take anything for granted. Ultimately the responsibility lies on your shoulders. It isn't easy.

Cook_County

Only in as far as they relate to tax work. Advice and assistance on FBARs is not deductible under US Treasury regulations.

Simonyg

This is excellent information and really helpful.

I am in a similar position and in the process of deciding between the same two options. I would love to hear more specifics about your case as I am totally undecided.

If there is any way for you to send me a private message with your email address I would really appreciate the opportunity to ask you some questions.

Scotsman In Texas

Hey Simon, I sent you a PM. Happy to share what learnings I have had. Cheers.

TXLonghorn

You'll probably have to file under the streamlined offshore compliance procedures. All I can say is stay away from Greenback. I've had clients come to me after using Greenback and their tax returns are just plain bad (missing forms, missing income, etc). The preparers who work for Greenback are independent contractors and there seems to be little oversight.

Snoozy

Yes, I had come across that link before, thanks, but I think I fall at the first fence because I am over the 183 days in a single year. On the other two conditions I'm okay.

Scotsman In Texas

Another update for anyone interested (or in a similar position). A happy ending.

It took around 6 months but the IRS have now processed my three amended returns filed under the delinquent informational returns procedure without incident - as well as FBAR's. They even sent me refunds for the failure to pay penalties that I sent - charging me only interest on the unpaid taxes.

So zero penalties for the missing forms or taxes unpaid.

The streamline procedures would have cost me over a hundred thousand dollars for the absurd 'misc offshore penalty' - with no recourse to any sort of abatement. I was advised to follow this route by my tax attorney (as well some on this board). It is not 'bad' advice, but another route was better in my case.

So, my learnings have been:
- How much I had to drive the process in the end to get the outcome that I wanted
- That there are most certainly shades of grey here
- You can't avoid wading into the details of tax code and IRS procedures to check and double check all the advice you receive.
- Keep poking around - reading the rules of the delinquent informational filing procedures suggests that it's only if you have no unpaid tax, but there is an attached FAQ that says that having unpaid taxes does not preclude following the procedures. Even my tax attorney missed that.
- Be pragmatic about the cost/benefit of the IRS coming after you. You are probably small fry.
- Don't over-google things. There are so many horror stories about this stuff which is designed to scare you, and will only keep you up at night. Be rational about the risks.

PM me if anyone needs any more detail.

Steve_

This is what I was saying in the other thread about ISAs, reporting them on an 8621 using mark to market is really hard as you've just illustrated.

Honestly you deserve a gold medal for being so honest. It took me 2 years to get answers about how to report ISAs out of them and they're still a little vague on it. It's obvious that they're suffering from a staff shortage.

If this thread doesn't get people to close their ISAs or hold it as cash I don't know what will.

Steve_

And that includes big companies like PWC, E&Y, KPMG, etc. And don't think just because you've got them doing your return they can find out the information either, their offices don't talk to each other internationally.

Which is why I pointed out the mistake on Mitt Romney's return earlier in the thread.

TXLonghorn

If you are able to establish reasonable cause, then the delinquent international filing procedures is a good alternative to SDOP.

I agree on being pragmatic and not over-googling things. People tend to freak themselves out way more than necessary.

Although you and your attorney have made a careful risk analysis, I would caution others that just because a return has been processed and perhaps even a refund issued doesn't mean it's been "accepted as is." I've worked as an auditor at the IRS and all the returns we audited were of course already processed by the service center and refunds were issued. Sometimes a year or even two years later a return would be selected for an audit.

Another mistake is to assume that because the IRS has been lax about certain policies in the past, that it will continue in the future. Every year the IRS prioritizes different compliance issues.

Finally, it's a fallacy to assume that just because someone you know "got away" with something on their tax return that it means you'll be fine if you do the same thing. It's comparable to speeding 100 mph down the highway. Just because you did not get a ticket doesn't mean you should recommend that others do the same.

Each case requires its own risk assessment. If you have reasonable cause then maybe it makes sense to file under the delinquent international information return submission procedures if filing under SDOP would result in a very significant misc offshore penalty for you.

One last note - reasonable cause places the burden of proof on the taxpayer whereas certifying non-willfulness does not. The government will always have the burden of proof to show willfulness. If you are audited, reasonable cause is your burden to prove. Edit: reasonable cause is a very difficult standard to meet (I forgot or didn't know is not reasonable cause).

(My humble opinion. Everyone is entitled to theirs. This is not legal advice, yada yada.)

Asg123

My particular case was actually quite simple- just a property sale abroad. I contacted a tax lawyer and a CPA firm with 5-star reviews, and they both misinformed me that there would be no tax, but I read on BE that there is tax. (One of them later apologized and said she'd got it mixed up with foreign gifts. They'd taken a retainer fee from me but I got them to refund it). I found another CPA and filed and paid my taxes, and I saw from the return that actually filing a return with a sale of foreign property is not very involved and doesn't require a specialist CPA, just one who knows about it, (it's like sale of US property, just have to convert everything to dollars), and one may even be able to file it oneself.