Quiet disclosure of FBAR
Apr 8th 2011, 8:53 pm
#121
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Joined: Apr 2011
Posts: 13
Re: Quiet disclosure of FBAR
I know how you feel!
So by not going into the voluntary disclosure, does that mean all you have to do is write a letter explaining why you didn't send fBAR form and just send it in? I think that's what I am going to do.
So by not going into the voluntary disclosure, does that mean all you have to do is write a letter explaining why you didn't send fBAR form and just send it in? I think that's what I am going to do.
Apr 8th 2011, 9:28 pm
#122
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Thread Starter
Joined: Mar 2009
Location: Florida
Posts: 78
Re: Quiet disclosure of FBAR
I quickly re-read your posts. If, like me you are also guilty of not accurately reporting everything on your 1040, then please get some good advice first. I say that because its on a case by case basis and technically you dont qualify for the "send in the FBAR form with a note" route. All the Tax attorneys I have spoken to think I have a good case for leniency (no willfull intent, no criminal intent, just a freshly minted LPR who employed professional advice that failed him).
Ask yourself what reason can you give for not filing your 1040 correctly and not knowing about FBAR? If you have to struggle to convince yourself, that will tell you something.
Its all so draconian. There should be more than a "one size fits all" system of penalties. I'm no Al Capone but after this I sure feel like I am! That is ridiculous.
Apr 8th 2011, 11:51 pm
#123
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Joined: Apr 2011
Posts: 13
Re: Quiet disclosure of FBAR
Sometimes less info is better but it's hard to tell. Sorry what is LPr?
For me I had no idea I had to disclose foreign income. My CPA also didn't tell me.
Hopefully no penalties!
For me I had no idea I had to disclose foreign income. My CPA also didn't tell me.
Hopefully no penalties!
Apr 8th 2011, 11:59 pm
#124
Retired
Joined: Apr 2004
Posts: 34,649
Re: Quiet disclosure of FBAR
Gosh its been 2 months since I posted this thread. I can't even bear to think about the countless hours I have spent worrying about this.
My situation in the end boils down to not reporting on my 1040 less than $200of interest earned from a UK savings account. Luckily this is not an ISA so I paid tax on it at source. My foreign tax credits for 2009 should cover any US tax.
Thankfully, becasue I became LPR half-way through 2009, refiling as dual-status will exclude most other interest recieved because it was recieved in the first half of the year.
I have been advised NOT to go into the voluntary disclosure program. That is designed for people hiding US sourced money to avoid paying tax. On my part there is no criminal intent, no US sourced income, no tax due, was not advised properly by CPA, just did not know about FBAR, I'm clearly taking steps to correct the filing error, looking at the numbers I'm just a blimp on the radar.
Still, it could turn out to be one of those horror stories where it was better to not be honest. I still have to report all my UK financial assets on FBAR. Becasue of that $200 i could in theory face a horrific draconian penalty.
I'll take some comfort that a few other people have realized they need to take action because of reading this. And I have been told that its my CPA that will be getting thrown under the bus. Error and Ommissions liability exists for things such as this.
My situation in the end boils down to not reporting on my 1040 less than $200of interest earned from a UK savings account. Luckily this is not an ISA so I paid tax on it at source. My foreign tax credits for 2009 should cover any US tax.
Thankfully, becasue I became LPR half-way through 2009, refiling as dual-status will exclude most other interest recieved because it was recieved in the first half of the year.
I have been advised NOT to go into the voluntary disclosure program. That is designed for people hiding US sourced money to avoid paying tax. On my part there is no criminal intent, no US sourced income, no tax due, was not advised properly by CPA, just did not know about FBAR, I'm clearly taking steps to correct the filing error, looking at the numbers I'm just a blimp on the radar.
Still, it could turn out to be one of those horror stories where it was better to not be honest. I still have to report all my UK financial assets on FBAR. Becasue of that $200 i could in theory face a horrific draconian penalty.
I'll take some comfort that a few other people have realized they need to take action because of reading this. And I have been told that its my CPA that will be getting thrown under the bus. Error and Ommissions liability exists for things such as this.
Except for one case where someone was (perhaps incorrectly, in retrospect) advised to go into the voluntary disclosure program I have never heard of a "horrific draconian penalty" for the kind of trivial tax amount that you are talking about. Talk to your CPA, the solution may simply be to file an amended 1040 and pay the (probably small) additional tax and interest they will assess. As for FBAR, just go ahead and file it, but don't make this into a bigger issue than it is.
Apr 9th 2011, 2:34 am
#126
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Joined: Mar 2009
Location: Florida
Posts: 78
Re: Quiet disclosure of FBAR
Except for one case where someone was (perhaps incorrectly, in retrospect) advised to go into the voluntary disclosure program I have never heard of a "horrific draconian penalty" for the kind of trivial tax amount that you are talking about. Talk to your CPA, the solution may simply be to file an amended 1040 and pay the (probably small) additional tax and interest they will assess. As for FBAR, just go ahead and file it, but don't make this into a bigger issue than it is.
Apr 9th 2011, 3:43 am
#127
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Joined: Aug 2004
Posts: 4,754
Re: Quiet disclosure of FBAR
JAJ I know that is the course of action to take now. I guess researching FBAR on the internet is a bit like to diagnosing an ailment using the internet. If you believed everything you read you'd think you had six months to live! If you believed everything you read about FBAR you'd come to believe you were going to be penalized heavily without any mercy by the big bad IRS. Perhaps the IRS is a bit like the Wizard of Oz when it comes to FBAR
Definitely file the FBAR and make sure you include interest, dividends and capital gains from those accounts on your Schedule B and D
Apr 9th 2011, 12:47 pm
#128
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Joined: Jul 2007
Location: North Norfolk and northern New York State
Posts: 14,540
Re: Quiet disclosure of FBAR
Just FYI, FBAR is filed with the Treasury, not IRS. It has none of the privacy protections that you get when you file a tax return with the IRS.
Definitely file the FBAR and make sure you include interest, dividends and capital gains from those accounts on your Schedule B and D
Definitely file the FBAR and make sure you include interest, dividends and capital gains from those accounts on your Schedule B and D
Apr 9th 2011, 3:28 pm
#129
Forum Regular
Joined: Nov 2010
Posts: 50
Re: Quiet disclosure of FBAR
Well, after reading though this thread and some of the links given as well, I'm still not sure what I should do. I'm pretty certain that I definitely need to file an FBAR (or multiple ones for previous years), but I'm still not clear about this.
The first I heard of this form was back in December 2008. At that time, I was an American living in the UK and didn't even know I needed to file a US tax return. My parents had always done it for me before I got married, and their tax guy told them that it wasn't necessary for me to file once I'd moved abroad. Obviously, that was bad advice. As I was in the process of applying for my husband's DCF permanent resident application, I got in touch with a good international tax preparer.
He prepared my 2006, 2007 & 2008 returns for me. At that time, I asked him about FBAR. We had no assets in the UK, no ISAs, no significant savings except for one single deposit in 2008 that did exceed $10,000 due to a bonus I received from work, which was depleted within a month.
My CPA told me that the FBAR wasn't strictly enforced. He said the government was more concerned about people abroad who may be trying to hide large amounts of cash overseas. So, I didn't do it. To date, I have never filed an FBAR.
We do still have a bank account in the UK, but rarely with more than a 100GBP in it. We only use it to pay off credit cards. I've asked my tax guy again this year, but he still doesn't seem concerned. He agreeds that TECHNICALLY I need to file it, but it's not a big deal because we have so little money.
Do I file for all past years that I had a UK bank account going back to 2005? Or only the years that I had $10,000 in the account, even if only for a few weeks? Do I need to file one this year if there's less than $10,000 in our UK account? I'm so confused. I have absolutely NO money to pay extra tax or penalties. In fact, we're counting on getting a refund just to help us get by with bills this year.
I've reading the articles, sought professional advice and I'm still so confused and stressed about this.
The first I heard of this form was back in December 2008. At that time, I was an American living in the UK and didn't even know I needed to file a US tax return. My parents had always done it for me before I got married, and their tax guy told them that it wasn't necessary for me to file once I'd moved abroad. Obviously, that was bad advice. As I was in the process of applying for my husband's DCF permanent resident application, I got in touch with a good international tax preparer.
He prepared my 2006, 2007 & 2008 returns for me. At that time, I asked him about FBAR. We had no assets in the UK, no ISAs, no significant savings except for one single deposit in 2008 that did exceed $10,000 due to a bonus I received from work, which was depleted within a month.
My CPA told me that the FBAR wasn't strictly enforced. He said the government was more concerned about people abroad who may be trying to hide large amounts of cash overseas. So, I didn't do it. To date, I have never filed an FBAR.
We do still have a bank account in the UK, but rarely with more than a 100GBP in it. We only use it to pay off credit cards. I've asked my tax guy again this year, but he still doesn't seem concerned. He agreeds that TECHNICALLY I need to file it, but it's not a big deal because we have so little money.
Do I file for all past years that I had a UK bank account going back to 2005? Or only the years that I had $10,000 in the account, even if only for a few weeks? Do I need to file one this year if there's less than $10,000 in our UK account? I'm so confused. I have absolutely NO money to pay extra tax or penalties. In fact, we're counting on getting a refund just to help us get by with bills this year.
I've reading the articles, sought professional advice and I'm still so confused and stressed about this.
Apr 9th 2011, 4:21 pm
#130
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Joined: Apr 2011
Posts: 13
Re: Quiet disclosure of FBAR
Yes that is correct. For cash ISAs its the interest. For stock/bond ISAs its the income (from the tax (dividend) voucher). For unit trust ISAs its the annual income and short/long term gains of the fund. The point is that none of these fund managers produce this information in the correct format for US tax purposes (why should they). Therefore you need to hold US tax compliant funds which are difficult to find from a UK firm AND the correct reporting format.
Alternatively, as Nun stated, cash out and take the funds to the US but if you US tax resident when you do that you could well be liable, under PFIC rules, to US tax on any income, gains or distributions since inception (even if that was when you were UK resident).
Simple and prudent message to other posters is: pre-immigration/expatriation planning!
Alternatively, as Nun stated, cash out and take the funds to the US but if you US tax resident when you do that you could well be liable, under PFIC rules, to US tax on any income, gains or distributions since inception (even if that was when you were UK resident).
Simple and prudent message to other posters is: pre-immigration/expatriation planning!
I found out about the UK stock and savings ISA account that is invested in
European funds. It buys unit trusts and distributes the dividends in the account
but we haven't cashed anything. I think Nun and im9907620 were saying I DO have
to report this on Both FBAR and 1040. Do you know if i just add up the total distribution and report that for taxes? even if I didnt cash it?
For the FBAR is it the total value of the account or the total dividends bought as well?
Thanks for your help!
Apr 9th 2011, 5:47 pm
#131
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Joined: Aug 2004
Posts: 4,754
Re: Quiet disclosure of FBAR
Thanks for the advice!
I found out about the UK stock and savings ISA account that is invested in
European funds. It buys unit trusts and distributes the dividends in the account
but we haven't cashed anything. I think Nun and im9907620 were saying I DO have
to report this on Both FBAR and 1040. Do you know if i just add up the total distribution and report that for taxes? even if I didnt cash it?
For the FBAR is it the total value of the account or the total dividends bought as well?
Thanks for your help!
I found out about the UK stock and savings ISA account that is invested in
European funds. It buys unit trusts and distributes the dividends in the account
but we haven't cashed anything. I think Nun and im9907620 were saying I DO have
to report this on Both FBAR and 1040. Do you know if i just add up the total distribution and report that for taxes? even if I didnt cash it?
For the FBAR is it the total value of the account or the total dividends bought as well?
Thanks for your help!
Apr 9th 2011, 6:16 pm
#132
Just Joined
Joined: Apr 2011
Posts: 13
Re: Quiet disclosure of FBAR
As you own a foreign pooled investment you will have to fill out the PFIC forms for your tax. Your unit trusts won't send you the IRS required dividend and capital gains distribution 1099s so you can't simply put then on your schedule B and D as you would US mutual funds. At this point I think you should get professional advice to get your situation sorted out. I isn't terribly complicated but PFIC forms are long winded and I think you'll need some help
Thx again I appreciate it.
Apr 9th 2011, 7:31 pm
#133
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Joined: Aug 2004
Posts: 4,754
Re: Quiet disclosure of FBAR
Yes you have to do FBAR and report the gains on your foreign unit trusts using the appropriate PFIC forms. The FBAR will be easy, just account details and max amount I think. I'm not sure about the PFIC forms. They have the reputation of being long and I don't know if this will get the IRS to inquire about previous years.
Apr 9th 2011, 7:46 pm
#134
Just Joined
Joined: Apr 2011
Posts: 13
Re: Quiet disclosure of FBAR
Yes you have to do FBAR and report the gains on your foreign unit trusts using the appropriate PFIC forms. The FBAR will be easy, just account details and max amount I think. I'm not sure about the PFIC forms. They have the reputation of being long and I don't know if this will get the IRS to inquire about previous years.
Thx!
Apr 9th 2011, 10:03 pm
#135
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Joined: Aug 2004
Posts: 4,754
Re: Quiet disclosure of FBAR
Yes, the gains on your unit trusts have to be reported to the IRS so they can be taxed. The FBAR is just to inform the Treasury of your foreign accounts. I've always avoided foreign pooled investments as I don't want the hassle of PFIC filing. I haven't looked at the forms, but I think they are a bit obscure is their rubric, so it might be a bit complicated