FBAR delinquency and VDP
Feb 28th 2011, 2:10 pm
#46
Just Joined
Joined: Feb 2011
Posts: 6
Re: FBAR delinquency and VDP
There must have been literally thousands of American citizens/PRs who have "come in from the cold" in this respect and this is the first I have heard of anyone having a problem (in a situation where tax wasn't due).
http://www.irs.gov/irm/
http://www.irs.gov/irm/
I'm reading these forums and hearing about people saying don't disclose just file amended returns with IRS if you filed and don't owe - just forgot to do the fbar.
Feb 28th 2011, 5:59 pm
#47
Rootbeeraholic
Thread Starter
Joined: Aug 2009
Location: Houston, Tx
Posts: 2,280
Re: FBAR delinquency and VDP
The issue is the FBAR, not the tax returns.
Mar 1st 2011, 12:28 am
#48
Retired
Joined: Apr 2004
Posts: 34,649
Re: FBAR delinquency and VDP
http://www.irs.gov/businesses/intern...html?portlet=7
Question 17.
Aug 31st 2011, 3:45 am
#49
Just Joined
Joined: Aug 2011
Posts: 7
Re: FBAR delinquency and VDP
I'm a dual UK/US citizen. Born in US to British Parents and lived my whole life bar the first 9 months or so in the UK until January 2010.
Got a US PP for the first time late last year and was told that as a US citizen since birth I should have been filing US tax returns and FBARs.
Entered Voluntary Disclosure Programme (VDP) in good faith and sent in all my account information. As expected, my tax returns showed I don't owe any US tax for any period.
HOWEVER, I am now being fined 20% of my highest bank balance on my 'foriegn' bank accounts (UK accounts) for failing to tell the good old IRS that I had money in a different country. I am only being punished for failure to file FBARs, I would not have owed them any money if I had known to file.
Has anyone on here been in a similar situation and fought it? It seems absolutely ludicrous that the US can expect people that have never lived or worked in the USA to know that they have filing requirements and then fine them, despite the fact that if they did file them at the time, they would not have owed ANY money.
My faith in American justice has just taken a massive blow.
Got a US PP for the first time late last year and was told that as a US citizen since birth I should have been filing US tax returns and FBARs.
Entered Voluntary Disclosure Programme (VDP) in good faith and sent in all my account information. As expected, my tax returns showed I don't owe any US tax for any period.
HOWEVER, I am now being fined 20% of my highest bank balance on my 'foriegn' bank accounts (UK accounts) for failing to tell the good old IRS that I had money in a different country. I am only being punished for failure to file FBARs, I would not have owed them any money if I had known to file.
Has anyone on here been in a similar situation and fought it? It seems absolutely ludicrous that the US can expect people that have never lived or worked in the USA to know that they have filing requirements and then fine them, despite the fact that if they did file them at the time, they would not have owed ANY money.
My faith in American justice has just taken a massive blow.
American justice has take a massive blow, especially a country that was founded on no taxation without representation. There is no way an individual will be allowed to appeal on the basis that it is impossible to a overly complex tax scheme. The big companies on the other hand are allowed to keep their earning overseas and not pay tax on them.
Aug 31st 2011, 3:02 pm
#50
Account Closed
Joined: Feb 2004
Posts: 928
Re: FBAR delinquency and VDP
DH has not filed since living in the UK, but they'd have trouble getting 20% of his savings. 20% of nothing is nothing 
Dec 12th 2011, 4:02 pm
#51
BE Co-Founder
Joined: Feb 2000
Location: Florida
Posts: 25,928
Re: FBAR delinquency and VDP
Seems like a lot of people are getting stung by the penalty. I just came across an article about it:
Taxpayers with overseas accounts seethe at big penalties due
Just thought I would post it here in case anyone was interested in reading it as I remembered this thread on the topic.
Taxpayers with overseas accounts seethe at big penalties due
Just thought I would post it here in case anyone was interested in reading it as I remembered this thread on the topic.
Dec 12th 2011, 5:32 pm
#52
Joined: Apr 2005
Location: Milwaukie, Oregon
Posts: 9,966
Re: FBAR delinquency and VDP
Reading that one thing struck me. Why if you were born in Canada and lived and worked there, only recently discovering you had US citizenship, would you even consider filing under the amenity program let alone file at all.
Dec 13th 2011, 3:06 am
#53
BE Forum Addict
Joined: Aug 2004
Posts: 4,754
Re: FBAR delinquency and VDP
DH should file and get into compliance asap. Wages can be garnished and what will he do when he returns to the US. It might not seem like an issue right now, but it will cause trouble in the future.
Dec 13th 2011, 3:37 am
#54
Joined: Apr 2005
Location: Milwaukie, Oregon
Posts: 9,966
Re: FBAR delinquency and VDP
Two questions come to mind. How are they going to garnish his wages in the UK, and how are they going to know about any bank account etc which should be reported on?
Dec 13th 2011, 4:44 am
#55
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Re: FBAR delinquency and VDP
FATCA will require UK banks to report their US clients' accounts to the IRS.
Dec 13th 2011, 5:42 am
#56
Joined: Apr 2005
Location: Milwaukie, Oregon
Posts: 9,966
Re: FBAR delinquency and VDP
Not sure what the IRS would do to get the money, but would you want to have IRS fines compounding year after year? I suppose any US assets could be taken and what happens if the US citizen ever wants to come home. It's not hard to do US taxes for most people and many don't even have to file FBAR as they don't have foreign accounts over $10k, so why not just do it and avoid trouble.
FATCA will require UK banks to report their US clients' accounts to the IRS.
FATCA will require UK banks to report their US clients' accounts to the IRS.
Likewise what if the UK bank has a UK address for you, doesn't know you are even a US citizen. Seems the only people with real problems are those living in the US, even then if you didn't do a FBAR for some previous years and don't confess, how will they ever know. I comment as someone who fortunately is in compliance.
Dec 13th 2011, 8:47 am
#57
Account Closed
Joined: Feb 2004
Posts: 928
Re: FBAR delinquency and VDP
DH is not due to pay any US taxes. He only earns £17.5K per year, way below the threshold to pay any US tax. He does not have any savings. He does not have any US assets.
It is very common for US/UK couples who've been living in the UK to be alllowed to back file the last 3 years taxes when they apply for a visa for their UK spouse. They do not impose a penalty for not doing so before. Why would DH be any different?
It is very common for US/UK couples who've been living in the UK to be alllowed to back file the last 3 years taxes when they apply for a visa for their UK spouse. They do not impose a penalty for not doing so before. Why would DH be any different?
Dec 13th 2011, 9:26 am
#58
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Location: The Shire
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Re: FBAR delinquency and VDP
DH may not owe any US tax, thanks to FEIE, but if DH is a USC, he is still required by the tax code to file a US tax return (proving he doesn't owe tax) since the amount is larger than the filing threshold (even married filing jointly).
Dec 13th 2011, 9:49 am
#59
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Re: FBAR delinquency and VDP
Likewise what if the UK bank has a UK address for you, doesn't know you are even a US citizen. Seems the only people with real problems are those living in the US, even then if you didn't do a FBAR for some previous years and don't confess, how will they ever know. I comment as someone who fortunately is in compliance.
I've been changing UK accounts around in the last month, closing several and opening a new one. The form required for the new account had a number of questions. You were required to declare ALL your citizenships, and you were also required to state your country of residence. Yes, you could 'fib' on the form, but if you claim UK residence HMRC will be expecting a statement on the tax liability of UK interest for a UK resident.
I always state I'm a USC on any account. When the lady was processing the opening, a screen came up saying 'WARNING - FOREIGNER' (well, maybe not that bad), and she was required to enter information regarding my visa status. I smiled and said of course I would have to know the exact dates of interest payments for my US tax obligation. She laughed (I know her quite well since I've dealt with her before), and said that another US Person was in earlier, in a panic, trying to clarify all their accounts for 2011 for their US tax return.
It's nice to know that the US has a made US Persons abroad a joke in other countries.
Dec 13th 2011, 11:30 am
#60
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Joined: Aug 2004
Posts: 4,754
Re: FBAR delinquency and VDP
DH is not due to pay any US taxes. He only earns £17.5K per year, way below the threshold to pay any US tax. He does not have any savings. He does not have any US assets.
It is very common for US/UK couples who've been living in the UK to be alllowed to back file the last 3 years taxes when they apply for a visa for their UK spouse. They do not impose a penalty for not doing so before. Why would DH be any different?
It is very common for US/UK couples who've been living in the UK to be alllowed to back file the last 3 years taxes when they apply for a visa for their UK spouse. They do not impose a penalty for not doing so before. Why would DH be any different?