nikknakk

Hello all,

A little background, I've been a permanent resident for 3 years and received my green card last year.
I've been submitting my taxes in both US & UK, I've never really taken much notice until recently when I read about foreign accounts and having more than $10k you need to declare etc.I have over $10k in my UK accounts.
So for this year I want to do the do the right thing and whats the most beneficial thing for me, ie. not get into any trouble and not be fined.

I spoke to two US tax accountants that have conflicting advice.

Firstly, I'm advised to to fill out the FBAR foreign account paperwork and submit before June. Leave it at that and my chances for the IRS to fine me are low.

The second accountant suggested not to do this as I may lose over 50% of my UK monies via the IRS and I should bring all my UK money into the USA (bank to bank wire), knowing that US bank have to report over $10k but he feels it less risky for me and NOT fill out the foreign FBAR paperwork.

I'm not sure what to do ?

ian-mstm

Correct.


Only if you try to make amends by reporting that you didn't file in prior years. Then you magically come to the IRS' attention, and they'll come after you with fines for not reporting sooner!

That said, if you can access the money in the accounts, then I agree you should move it to the US (if this is where you plan to stay). Be sure to do it in amounts under $10K and you fall under the Treasury Department's rader. The $10k amount refers to a single transaction, not to multiple smaller transactions!

Ian

Giantaxe

Trying to evade detection by breaking a large transfer into a set of transfers under $10k is illegal. There was a case last year where someone was trying to transfer a large amount from a Swiss bank account by doing this. He got caught.

ian-mstm

Illegal you say? Hmm... that'll be news to the many who do it without incident each day.


I'm willing to bet that his accounts had already been targetted.

Ian

nikknakk

My UK monies are approx $100k so would take over 10 transfers which may look suspicious.

It's basically the risk of IRS being notified by the US bank of the transfer or filling out this years FBAR hoping IRS dont look at previous. Worth noting that any interest I've earned in the UK has always gone thru the UK Inland revenue.

Giantaxe

yes, illegal.

http://genevalunch.com/blog/2010/02/...ax-fraud-case/

Michael

Even with transfer of $10,000 or more, the IRS gets ten of thousands of those reported daily and the IRS computer looks for suspicious transfers and red flags those for further investigating for money laundering. Usually nothing unusual is detected.

However Elliot Spitzer (ex-GOV NY) was paying for hookers with his credit card so his monthly the credit card bill indicated well in excess of $10,000 being transferred from his account to credit card company and those transfers were red flagged by the IRS. The IRS subpoenaed the credit card account and as they were checking the bills, they noticed that most of the major charges were made payable to one company. It was finally determined that he spent a lot of money on hookers and that information got leaked to the press.

Because of the scandal, he resigned as governor of New York.

So nothing is risk free but the IRS would likely not spend the resources needed investigating anything but large repetitive transfers.

nikknakk

Good to know, thanks.
So if I transfer all my UK bank monies to a balance under $10k I will not need to submit a FBAR ? Or will they want to know about last year ?

theOAP

Stay away from this person. I can't believe a professional would give this advice.........Well, unfortunately, I actually can believe it.

The money was in the UK. That requires an FBAR. If the money is transferred out of the UK, an FBAR is still required for the year(s) (or part year(s)) it was there. If all the money is transferred out in 2012, then the first year you don't need an FBAR is US tax year 2013. Past FBAR obligations will not go away just because the money is no longer there.

Added: File the FBARs, acknowledge that you were unaware of the requirement, promise that you will never, ever, never do it again, and you're so, so sorry, honest, and cross your heart.

If it's discovered that you were aware of the requirement, and it's detected that you attempted to move the money to the US in a subversive manner in order to hide the fact that the money was abroad, and you'll open yourself up to willful tax evasion. That has really massive penalties.

nikknakk

Thanks 'theOAP'

I'm going to file the FBAR , you say 'acknowledge that you were unaware of the requirement', are you suggesting I file for previous years or just explain if they contact me ?
thanks

celticgrid

Note that the FBAR form goes to the Treasury, not the IRS. There may, or may not, be automatic transparency to the IRS of the information on the form.

The new FATCA 8938 form goes to the IRS - and if your "approx $100k" crosses that line (depending on how approximate it is and the threshold that applies to you on whether you file jointly or not) you will also need to fill out that paperwork.

I presume that income from this money was declared on your US tax returns. If not, you are in a whole different ballpark.

theOAP

Everything hinges on whether or not you declared any interest, gains, or such from the money in the UK on any past US 1040 return. If there was some, and you didn't declare it, then I would suggest that your first step would be to contact a reliable, competent tax advisor for advice. They may suggest opting into an available programme. If so, you would have penalties to pay.

If you did report all on 1040s, then you have more options.

Regardless, a letter should be attached to any past due report, explaining why the report was not filed in a timely manner (the book down the back of the trousers approach). If you go this route, it may be best to have that pro advisor vet the letter.

Some have done the filings on their own, including the letter, but they had already declared all interest, gains, etc. on a yearly basis on past 1040 returns. Whilst publicity tends to the big catches, it's assumed that many may have had a succesful result from doing it 'on their own'.

No one on this forum can give you the 'best' advice. It is a very personal decision as to how you proceed from here.

nikknakk

appreciate all the advice and helps me make the best informed decision.

It's going to be tricky for me as I have wrongly not declared previous UK interest earnings to the IRS, I have nothing to hide I just didn't realize and wrongly assumed it would be OK as this was going thru the UK tax return.

I'll fill out the FBAR and the FATCA 8938 for this year and fingers crossed !

Bob

They still report frequent transfers of $10K.

Chances of getting caught might be slim, but it is also still illegal.

MsElui

we are being told that the reporting regs have been widened this year to include "ANY FINANCIAL INSTRUMENT" - so we are being required by the accountants to declare any UK based pension funds that are circa $100k too. There were other types of things to include but we didnt have any of those so i pushed them out of my head.