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FBAR help - currently non compliant for previous year

FBAR help - currently non compliant for previous year

Old Sep 16th 2016, 7:27 pm
  #16  
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Default Re: FBAR help - currently non compliant for previous year

I get that I'm likely under the radar, as neither bank in the UK has any reason to tie me to the US, and that its typically accounts over 50k that are reported, so I'm pretty sure I'm not likely to be reported via FATCA. However, prior to FATCA the was a time where people would have said their accounts won't be reported either. Whats to say they can't expand that reporting in future or lower the $50k figure? Regardless, yes i probably don't currently have US indicia at the moment, but doesnt submitting my FBAR basically do the reporting of my account for them? Once they know i have it then it doesn't matter whether I'm reported via FATCA surely?

Again i evidently don't know enough about it, so i could be wrong, I'm just speculating.

If I'm going to report one for 2016, and under the logic you're offering here i likely wouldn't get chased over it the amounts we're talking about... would it not be worth filing the previous ones as well? The same point of it being likely they wouldn't pursue it still stands no? And by filing my 2016 FBAR and not the others, doesnt that not make my previous missed years go from a non willful to willful violation?

In terms of the future getting rid of the ISA and keeping my accounts under $10k, would it be wise to make deposits over to say a family member? so that money isn't in my own account and they can 'gift it' to me at a later date. Or is that dodgy in itself?

Can i do the same thing on any future income made into the account? Declare the income on taxes, but deposit it elsewhere and not have to file FBAR?

Last edited by CoachMB; Sep 16th 2016 at 7:37 pm.
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Old Sep 16th 2016, 9:57 pm
  #17  
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Default Re: FBAR help - currently non compliant for previous year

Originally Posted by CoachMB
I get that I'm likely under the radar, as neither bank in the UK has any reason to tie me to the US, and that its typically accounts over 50k that are reported, so I'm pretty sure I'm not likely to be reported via FATCA. However, prior to FATCA the was a time where people would have said their accounts won't be reported either. Whats to say they can't expand that reporting in future or lower the $50k figure? Regardless, yes i probably don't currently have US indicia at the moment, but doesnt submitting my FBAR basically do the reporting of my account for them? Once they know i have it then it doesn't matter whether I'm reported via FATCA surely?

Again i evidently don't know enough about it, so i could be wrong, I'm just speculating.

If I'm going to report one for 2016, and under the logic you're offering here i likely wouldn't get chased over it the amounts we're talking about... would it not be worth filing the previous ones as well? The same point of it being likely they wouldn't pursue it still stands no? And by filing my 2016 FBAR and not the others, doesnt that not make my previous missed years go from a non willful to willful violation?

In terms of the future getting rid of the ISA and keeping my accounts under $10k, would it be wise to make deposits over to say a family member? so that money isn't in my own account and they can 'gift it' to me at a later date. Or is that dodgy in itself?

Can i do the same thing on any future income made into the account? Declare the income on taxes, but deposit it elsewhere and not have to file FBAR?
Have you submitted a tax return before - there is a question about foreign accounts - how have you answered that? This by far is the most important thing.

As celticgrid said FBARs are submitted to the Treasury, it is a reporting mechnanism. FBARs are not about tax. Under-reporting of income/interest is an issue. If you have reported on your Tax return but been delinquent in your FBARs, there is no penalty. FBARs are easy and quick to complete.

Yes of course, FATCA thresholds may change in the future. Some banks are even ignoring them now. The Common Reporting Standard has no threshold. By dumping I meant liquidate the account and move your cash to the US.

Don't over complicate things ie giving money to other people. Only you can decide what to do. I'd refile the most recent tax return and file FBARs going forward.
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Old Sep 16th 2016, 10:18 pm
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Default Re: FBAR help - currently non compliant for previous year

Originally Posted by CoachMB

In terms of the future getting rid of the ISA and keeping my accounts under $10k, would it be wise to make deposits over to say a family member? so that money isn't in my own account and they can 'gift it' to me at a later date. Or is that dodgy in itself?
Totally fine. I've done this with nearly all my liquid money in the UK.
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Old Sep 16th 2016, 11:18 pm
  #19  
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Default Re: FBAR help - currently non compliant for previous year

Originally Posted by Orangepants
Have you submitted a tax return before - there is a question about foreign accounts - how have you answered that? This by far is the most important thing.

As celticgrid said FBARs are submitted to the Treasury, it is a reporting mechnanism. FBARs are not about tax. Under-reporting of income/interest is an issue. If you have reported on your Tax return but been delinquent in your FBARs, there is no penalty. FBARs are easy and quick to complete.

Yes of course, FATCA thresholds may change in the future. Some banks are even ignoring them now. The Common Reporting Standard has no threshold. By dumping I meant liquidate the account and move your cash to the US.

Don't over complicate things ie giving money to other people. Only you can decide what to do. I'd refile the most recent tax return and file FBARs going forward.
Apologies, I thought I had covered that but perhaps not. FBAR aside I have not reported the foreign income. I have filed taxes but not included the foreign Income. There is interest income and from 2010, 11 and 12 some income from temp jobs on my break from the US each year. One year was a few hundred pounds, another about 3k another about 4K I believe. Since 2013 it has been the interest only amounting to an average of about 250-280 pounds per year, maybe a bit less.

Neither the income or fbars have been reported due to my own negligence and naivity. I originally came to the US as a short term thing and foolishly didn't put much thought into my tax obligations. I didn't know it was all taxable.

So essentially I'm trying to get to the bottom of my best remedy for the whole situation. fbars and unreported income.

Edit I may have misunderstood what you were asking. I haven't scoured through every year yet, but I believe I answered that there is an account, but not over 10k. I honestly never considered the ISA until now.

Last edited by CoachMB; Sep 16th 2016 at 11:28 pm.
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Old Sep 17th 2016, 5:39 am
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Default Re: FBAR help - currently non compliant for previous year

The IRS have a domestic streamlined program that is designed to let you file 3 amended returns, up to 6 delinquent FBARs and pay a modest penalty. The IRS view is that this is designed for exactly this kind of situation.
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Old Sep 17th 2016, 11:52 am
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Default Re: FBAR help - currently non compliant for previous year

Originally Posted by Cook_County
The IRS have a domestic streamlined program that is designed to let you file 3 amended returns, up to 6 delinquent FBARs and pay a modest penalty. The IRS view is that this is designed for exactly this kind of situation.
I read about that, i thinks it's about 5% of the highest balance. Which is probably $1000 or so. Which is a lot of money to me. Just curious to see if there's alternatives. I've seen some people say just file them all now, others say leave it alone and just file next year, others saying take the hit.
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Old Sep 17th 2016, 1:21 pm
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Default Re: FBAR help - currently non compliant for previous year

Can you not transfer the cash either into a US account (not ideal with the current forex rate) or into a family member's account, close the ISA (shite interest rate anyway) and ensure your current account doesn't pay interest. Finally, keep the balance in the current account comfortably under the equivalent of $10k.

What do they do with the information from the FBAR forms anyway?!
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Old Sep 17th 2016, 2:33 pm
  #23  
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Default Re: FBAR help - currently non compliant for previous year

Originally Posted by mgmidget
What do they do with the information from the FBAR forms anyway?!
What did the Stasi do with all the info in all their Manila folders? Mostly nothing, I suppose, but yours might be the one they open up and look at.
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Old Sep 17th 2016, 2:47 pm
  #24  
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Default Re: FBAR help - currently non compliant for previous year

Originally Posted by mgmidget
Can you not transfer the cash either into a US account (not ideal with the current forex rate) or into a family member's account, close the ISA (shite interest rate anyway) and ensure your current account doesn't pay interest. Finally, keep the balance in the current account comfortably under the equivalent of $10k.

What do they do with the information from the FBAR forms anyway?!
Yes and that's pretty much the plan moving forward. I'll plan on reporting any income and keeping the accounts below 10k, that's the easy part. I'm just trying to remedy the previous years where I didn't do so.
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Old Sep 22nd 2016, 2:02 pm
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Default Re: FBAR help - currently non compliant for previous year

Given that you now know you were non compliant, albeit accidentally, you should refile the past three years tax returns (13, 14, 15) and pay what you owe for those years, and (re)file the last 6 years FBAR (10, 11,12,13,14,15). Its 3 years of past tax returns because of the 3 year statute of limitations (the IRS won't accept returns further back) and 6 years for FBAR because the statute of limitations is 6 years on those. Include a SIMPLE letter of explanation that states that you just became aware of the requirements and want to correct your filings. If you don't and you file only on a forward basis, you have just made a case that you willfully evaded tax since you are now aware of the requirements but chose to ignore them for prior years. Despite the scare mongering out there, the IRS does not want to prosecute or punish the regular Joe's, especially the little ones, who made an honest mistake, but they do want you to make it right, which seems reasonable. If you do this you should be able to go forward with no worries. This is called a Quiet Disclosure vs the official program with penalties that was mentioned above. its not condoned by the IRS but it is the mechanism used by many in your situation. You will need to pay any unpaid tax for 13, 14,15 but no other penalties. You can do this by yourself without incurring professional fees from the many lawyers out there who are trying to scare you to death. Note that I am not a professional offering any advice here, just a regular Joe who totally understand your dilemma.

Dump the ISA, its not worth the hassle. With those you enter ambiguous territory as to whether or not it is a foreign trust and another raft of paperwork. If you have any UK pensions make sure you declare them on the FBAR and the tax form that you need to include with your tax return.

If you ever would want to become a citizen, make it right now, or you will be unable to answer questions on your previous tax obligations.

Last edited by Glasgow Girl; Sep 22nd 2016 at 2:33 pm.
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Old Sep 22nd 2016, 2:27 pm
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Default Re: FBAR help - currently non compliant for previous year

Originally Posted by Garrioch01
Dump the ISA, its not worth the hassle. With those you enter ambiguous territory as to whether or not it is a foreign trust and another raft of paperwork. .
It's a cash ISA so, from the US perspective, is no different to an ordinary savings account.
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Old Sep 22nd 2016, 4:58 pm
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Default Re: FBAR help - currently non compliant for previous year

I think you should read about the doctrine of "wilful blindness" and suspect that once with that knowledge, you will probably go streamlined. You may want to pay for a lawyers advice if you still think you have a reasonable cause argument.
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Old Sep 22nd 2016, 5:36 pm
  #28  
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Default Re: FBAR help - currently non compliant for previous year

Originally Posted by Cook_County
I think you should read about the doctrine of "wilful blindness" and suspect that once with that knowledge, you will probably go streamlined. You may want to pay for a lawyers advice if you still think you have a reasonable cause argument.
Interesting. You think willful blindness applies to not including foreign-source income on the tax return, or to non-filing of FBARs, or both?

Having looked up some of the basics, it looks like he has a reasonable defence against it for both:
- He believed that foreign-source income was not taxed by the US for resident aliens (though I doubt he knew that term)
- He wasn't aware of the FBAR rules until recently, and he thought he was following the reporting rules

Interestingly, one of the links I read suggested that willful blindness can be avoided by a genuine mistaken belief, even if that belief can't be shown to be reasonable.

Providing he can convince the IRS (or a court) that both of those were genuinely held beliefs, it sounds to me like willful blindness would not apply. That said, I agree that I'd still want to consult with a tax lawyer (and not the one who posted the page with the massive error the OP linked earlier).
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Old Sep 22nd 2016, 5:56 pm
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Default Re: FBAR help - currently non compliant for previous year

Do we seriously believe the IRS is going to take an interest in such small amounts? Is the risk so great that he needs a lawyer?

To be 99% safe he should go the streamlined procedure. Many would do quiet filing.
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Old Sep 22nd 2016, 5:59 pm
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Default Re: FBAR help - currently non compliant for previous year

Originally Posted by MidAtlantic
Do we seriously believe the IRS is going to take an interest in such small amounts? Is the risk so great that he needs a lawyer?

To be 99% safe he should go the streamlined procedure. Many would do quiet filing.
Agreed. I think I would contact a lawyer only if the IRS did take an interest.

I would backdate the returns and payments up to the statutes of limitation, though.
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