nun

I'd go back to your first US tax accountant and ask what should be done. I'd advise filing amended returns, 1040X. There might not be any US tax due because of tax credits you can take for UK tax paid, but it's important to get this stuff right. Then I'd get your FBARs and FATCA filed. This is the sort of situation where a professional is needed for peace of mind.

nikknakk

Thanks for the info, I didnt know about the 1040X.

nun

+1. If you have $100k in UK accounts I imagine that they are in investments other than a bank saving account. If you did not declare returns from these investments correctly and if they are in things like UK unit trusts or stocks and shares ISAs or pensions the 1040x filing will be very complex and there may well be some nasty penalties. I'd go to a good tax professional and ask for advice. Sometimes you can get direct assistance form forums like this, but in your situation you really need a professional.

nikknakk

the money is in an instant access savings account, not tied up in any shares, bonds etc.
do we need to inform them of pensions now ?

nun

If you have UK pensions the IRS should be informed and a treaty exemption taken to shelter any gains from US taxation.

jbrown

In case it isn't obvious to some people, it's perfectly fine to make legitimate transfers of any amount (and by legitimate, I mean transfers on which the appropriate taxes have been or will be paid). For example, it's fine to transfer a large amount of savings from employment (in any given quantities or frequency) upon which income tax has been paid, together with any tax on the interest at the appropriate time and any other required filings (FACTA and FBAR). This $10k amount gets talked about often, but it really isn't significant for any good reason. The specifics:

http://en.wikipedia.org/wiki/Bank_Secrecy_Act

md95065

The key thing here - and the problem - is that whether or not is illegal depends on the intent - and intent is hard to prove either way.

So, for example, transferring $50,000 as 10 transactions of $5,000 each once a month for ten months should be OK if your intention is to mitigate the risk of fluctuating exchange rates or, indeed, if the money only became available to you on a monthly basis, but doing it to avoid the reporting requirements is illegal.

Bob

No one said it wasn't a problem.

The banks automatically file the transfers, they also do the same for a pattern of amounts just under.

What is illegal is transferring the amounts at under $10K amounts to avoid declaring foreign accounts.

jbrown

I think you may have missed my point. I don't disagree with you. Some of the responses to this thread left me wondering whether people thought that a transfer of $10k+ (or any other amount) was a problem in itself, which is not the case. For anyone that is trying to evade tax, a transfer of any amount is a problem (the $10k is a red herring in this context, as the flags/software are more sophisticated than that).

Bink

Be careful - I got fined for telling the IRS I hadn't filed previously (they put me on the Voluntary disclosure programme at that time which turned out to be a bad thing for me). They had absolutely no time to listen to me tell them that I was completely unaware of the FBAR requirement, nor that if I had filed I wouldn't have owed any tax, I was fined based on the paperwork exercise.

Speak to a professional. In hindsight, I would have filed ammended returns, then filed FBARs. If you owe tax to the IRS for previous years on these investments, that's where there could be difficulties and where the advice of a pro would be needed.

nikknakk

Seems like I have two main options, after speaking to 3 accountants !!
Both with risks.

1. to file this year correctly then hope the IRS doesn't notice the back years, filing the FBars and 8938 for just 2011, a quiet disclosure.
It carries the risk of the IRS seeing the numbers then going back to the prior years and levying penalties. But at the same time could skirt by them.

2. File all the back and present years and ask the IRS to use discretion as I was not intentionally trying to cheat anything and are paying all the back taxes now claiming

ian-mstm

As I understand it, the 8938 is a new requiement this year, so no worries about back years. As for the FBAR, it doesn't go to the IRS... it goes to the Treasury Department. I suggest you don't bring FBAR to the attention of the IRS.

Ian