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Discussion Starter · #1 ·
Good day all,

I started filing my tax report last year and I discovered recently that I must file the FBAR for 2011 and I should have done it last year as well.

Is there any real risk of penalty if I file lately for 2010 or should I not take the risk to report it ?

What are the chances that the IRS will know about it ? Has anyone ever been contacted by them ? Do they really control and apply penalties or is it just a threat ?

For how many years in the past would the IRS control an individual reporting ?

Many thanks in advance for your replies.
 

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It kind of depends on how far over that $10,000 filing threshold you are - and whether or not the accounts you're declaring make it look like you have neglected to declare income from the accounts in prior years.

I have yet to hear of anyone getting hit with penalties for not filing back FBARs, but the law on these declarations has changed (and gotten stricter) recently, and what they've done in the past may or may not be a reasonable guide for how they'll do things from here on out.
Cheers,
Bev
 

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Technically, there is penalty for not filing the form. I haven't typically seen it enforced, but the IRS is getting much stricter on this in the past few years.

My advice is to file it and just say it was an oversight to avoid compounding the problem.

**********
 

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Fbar 1st timer

I am in a similar situation , i did not file Fbar last year (as i didn't know about it ) this year i will be filing it , but not sure if i should declare for last year as well , or just file for this year . Also what all should i declare i have a couple of life insurance policies which i bought years back worth about $4000 , and a savings and demat account which i did not operate for the last two years but have a total deposit of over $ 10,000
 

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This is obviously not an official position on the matter, but as long as you declare all your foreign holdings on the current year FBAR (the one you file separately), I'd concentrate on that, and then see what the IRS does about questioning you about back filings.

There is a part of the FBAR/FATCA legislation that deals with getting foreign banks and financial institutions to open up their records to the IRS for review and audit - and it remains to be seen how successful they are going to be in that endeavor. The key thing is to establish your willingness to disclose fully (with the current year filing) and then see what happens. (IMO - if you've got zillions invested in offshore accounts designed to hide money from the IRS, you need to consider your situation carefully, cause those are the accounts they are looking to go after...)
Cheers,
Bev
 

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Discussion Starter · #6 ·
In my case I honestly don't quite see the interest of filing my late FBAR since I would declare the exact same accounts than this year.
I got far away from the $10,000 threshold because I did a transfer from my checking account to my saving account. Consequence: the aggregation exceeds $10,000 whereas it is the exact same money but on two different bank accounts...
I am really afraid that there might be penalties just because I did not file my FBAR in 2010.
What is your opinion about this ?
Thanks and cheers
 

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If you have $5000 in a checking account then move the $5000 to a savings account, the aggregate value of your accounts is still $5000.
 

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The aggregate value is only used to determine whether or not you have to report.

Once you determine that you have to report then you have to report the highest value of each account during the year. If you have moved money between accounts then you will be reporting a higher amount than you actually have.
 

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Question then is, for meeting the 8938 FATCA thesrhold. If I had 10000 which I transferred through 21 accounts, does this put ome over the 200000 threshold?
 

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Discussion Starter · #11 ·
The aggregate value is only used to determine whether or not you have to report.

Once you determine that you have to report then you have to report the highest value of each account during the year. If you have moved money between accounts then you will be reporting a higher amount than you actually have.
I think I misunderstood the meaning of "aggregate".

I thougth that in FBAR instructions "aggregate" meant "add" the maximum value that each bank account (checking and savings among others) you owe reached during the fiscal year.

Here I quote the instructions from form TD F 90-22.1 :

"Item 15. Determining Maximum Account Value.
Step 1. Determine the maximum value of each account (in the currency
of that account) during the calendar year being reported. The maximum
value of an account is a reasonable approximation of the greatest value
of currency or nonmonetary assets in the account during the calendar
year. Periodic account statements may be relied on to determine the
maximum value of the account, provided that the statements fairly
reflect the maximum account value during the calendar year. For Item
15, if the filer had a financial interest in more than one account, each
account must be valued separately.
Step 2. In the case of non-United States currency, convert the
maximum account value for each account into United States dollars.
Convert foreign currency by using the Treasury's Financial Management
Service rate from the last
day of the calendar year. If no Treasury Financial Management Service
rate is available, use another verifiable exchange rate and provide the
source of that rate. In valuing currency of a country that uses multiple
exchange rates, use the rate that would apply if the currency in the
account were converted into United States dollars on the last day of the
calendar year.
If the aggregate of the maximum account values exceeds $10,000, an
FBAR must be filed
. An FBAR is not required to be filed if the person did
not have $10,000 of aggregate value in foreign financial accounts at any
time during the calendar year."

Reading this, I understand that if I have $5,000 on my checking account and $0 on my saving account. In december, I transfer the 5,000$ from my checking to my saving account, then the maximum value each account reached in the year is $5,000 each. And as I understood the aggregation would be $10,000 and I msut file the FBAR.

Am I wrong ? If yes, how do I determine whether I must file or not ?

Many thanks and cheers.
 

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You may be right. I just thought it would be strange for Treasury to set a $10,000 threshold and then expect someone with only $5,000 to report it. Perhaps someone else can better answer the question.
 

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Discussion Starter · #13 ·
You may be right. I just thought it would be strange for Treasury to set a $10,000 threshold and then expect someone with only $5,000 to report it. Perhaps someone else can better answer the question.
Thanks graubart.

Does anyone know anything else about this ?

I am still hesitating about filing my late FBAR. Has anyone here already sent one or more late FBARs ? Did you get any penalty ? What happened ? Did you join a note explaining why you had not files (i.e I imagine in most cases, you were basically not aware of it ) ? Were you contacted by the IRS ?

Thanks again for your feedbacks.

Cheers.
 

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FBAR late filing, quiet disclosure

You may want to have a look at this recent article by a specialist, that covers the issue of "quiet disclosure" (in other words, just amending and back-filing your reporting and hoping to pass under the radar, without entering into the OVDP program which now confiscates +-28% (?) of your entire foreign assets including your house, artwork, jewelry, etc... and regardless of taxs and penalties, requires you to pay tens of thousands of dollars in lawyer fees to defend yourself...)

Apparently the IRS want people to come in through the OVDP and are claiming they will subject quiet disclosures to high scrutiny and be intolerant of anyone who tries to file quietly.

This is truly a tragedy for so many people; I don't know what the solution is except perhaps to make sure you have a 2nd nationality and get used to the idea you will never set foot in the US again. At least until some major overhaul of the tax system is done.

How many families, grandparents and grandchildren will be separated and unable to visit each other due to these tyrannical policies.

"In its published Questions and Answers of May 6, 2009, the IRS clearly stated that quiet disclosures do not satisfy the reporting requirements.57 More recently, on June 1, 2011, IRS representatives revealed that the Service is opening examinations against taxpayers who have submitted quiet disclosures. The government has developed a process by which to “filter” these submissions to facilitate proper processing either civilly or criminally.58 The IRS cautioned that civil penalties and/or criminal prosecutions may apply with respect to quiet disclosures. In fact, Q&A 10 of the 2009 disclosure information and Q&A 15 of the 2011 disclosure program both encouraged taxpayers who made quiet disclosures to come forward and take advantage of the penalty framework of the respective programs. "


"he IRS’s announcement of the new indefinite voluntary disclosure program, a move that places continued public pressure on United States citizens with foreign accounts to come into compliance through a specific, clearly marked door. "



FBAR: Handle With Care
 

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Discussion Starter · #15 ·
You may want to have a look at this recent article by a specialist, that covers the issue of "quiet disclosure" (in other words, just amending and back-filing your reporting and hoping to pass under the radar, without entering into the OVDP program which now confiscates +-28% (?) of your entire foreign assets including your house, artwork, jewelry, etc... and regardless of taxs and penalties, requires you to pay tens of thousands of dollars in lawyer fees to defend yourself...)

Apparently the IRS want people to come in through the OVDP and are claiming they will subject quiet disclosures to high scrutiny and be intolerant of anyone who tries to file quietly.

This is truly a tragedy for so many people; I don't know what the solution is except perhaps to make sure you have a 2nd nationality and get used to the idea you will never set foot in the US again. At least until some major overhaul of the tax system is done.

How many families, grandparents and grandchildren will be separated and unable to visit each other due to these tyrannical policies.

"In its published Questions and Answers of May 6, 2009, the IRS clearly stated that quiet disclosures do not satisfy the reporting requirements.57 More recently, on June 1, 2011, IRS representatives revealed that the Service is opening examinations against taxpayers who have submitted quiet disclosures. The government has developed a process by which to “filter” these submissions to facilitate proper processing either civilly or criminally.58 The IRS cautioned that civil penalties and/or criminal prosecutions may apply with respect to quiet disclosures. In fact, Q&A 10 of the 2009 disclosure information and Q&A 15 of the 2011 disclosure program both encouraged taxpayers who made quiet disclosures to come forward and take advantage of the penalty framework of the respective programs. "


"he IRS’s announcement of the new indefinite voluntary disclosure program, a move that places continued public pressure on United States citizens with foreign accounts to come into compliance through a specific, clearly marked door. "



FBAR: Handle With Care

Thanks for this explanation.

I would like to check one thing. If I send my late FBAR with my current FBAR, would that be "quiet disclosure" ? If not, what would it be ?

Thank you.
 

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Discussion Starter · #16 ·
Thanks for this explanation.

I would like to check one thing. If I send my late FBAR with my current FBAR, would that be "quiet disclosure" ? If not, what would it be ?

Thank you.
I have one more question. When you file the FBAR, do you automatically need to file form 1040 schedule B with your tax return ?

Thanks and cheers.
 

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You may want to have a look at this recent article by a specialist, that covers the issue of "quiet disclosure" (in other words, just amending and back-filing your reporting and hoping to pass under the radar, without entering into the OVDP program which now confiscates +-28% (?) of your entire foreign assets including your house, artwork, jewelry, etc... and regardless of taxs and penalties, requires you to pay tens of thousands of dollars in lawyer fees to defend yourself...)

Apparently the IRS want people to come in through the OVDP and are claiming they will subject quiet disclosures to high scrutiny and be intolerant of anyone who tries to file quietly.

This is truly a tragedy for so many people; I don't know what the solution is except perhaps to make sure you have a 2nd nationality and get used to the idea you will never set foot in the US again. At least until some major overhaul of the tax system is done.

How many families, grandparents and grandchildren will be separated and unable to visit each other due to these tyrannical policies.

"In its published Questions and Answers of May 6, 2009, the IRS clearly stated that quiet disclosures do not satisfy the reporting requirements.57 More recently, on June 1, 2011, IRS representatives revealed that the Service is opening examinations against taxpayers who have submitted quiet disclosures. The government has developed a process by which to “filter” these submissions to facilitate proper processing either civilly or criminally.58 The IRS cautioned that civil penalties and/or criminal prosecutions may apply with respect to quiet disclosures. In fact, Q&A 10 of the 2009 disclosure information and Q&A 15 of the 2011 disclosure program both encouraged taxpayers who made quiet disclosures to come forward and take advantage of the penalty framework of the respective programs. "


"he IRS’s announcement of the new indefinite voluntary disclosure program, a move that places continued public pressure on United States citizens with foreign accounts to come into compliance through a specific, clearly marked door. "



FBAR: Handle With Care
This is what I did last summer. It's been almost a year and so far so good but realise they have another five years to assess penalties...so it's still early days.
 

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Discussion Starter · #18 ·
This is what I did last summer. It's been almost a year and so far so good but realise they have another five years to assess penalties...so it's still early days.
Does this mean you have not back filed and you are waiting for another OVDI to do so ? Or have you willingly back filed ?

Do you know about form 1040 schedule B ?

Thanks and cheers.
 

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I discovered my tax and reporting requirements last fall and back filed six years of tax plus FBAR in December. I did it manually and screwed it up and so filed 6 1040x in March to correct it. I recently received 6 letters from the IRS, one for each year, that said:

"We have reviewed your information and determined no action was necessary on your account."

I included a cover letter with the FBARs with points from this IRS web page that applied to me:

Information for U.S. Citizens or Dual Citizens Residing Outside the U.S.

Lawyers and accountants are not necessary for most people who haven't been hiding anything, just making an honest mistake.
 

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Discussion Starter · #20 ·
I discovered my tax and reporting requirements last fall and back filed six years of tax plus FBAR in December. I did it manually and screwed it up and so filed 6 1040x in March to correct it. I recently received 6 letters from the IRS, one for each year, that said:

"We have reviewed your information and determined no action was necessary on your account."

I included a cover letter with the FBARs with points from this IRS web page that applied to me:

Information for U.S. Citizens or Dual Citizens Residing Outside the U.S.

Lawyers and accountants are not necessary for most people who haven't been hiding anything, just making an honest mistake.
Thank you Graubart. This is comforting to read.

Did you attach form 1040 schedule B with your late tax returns ? I got less than the $1.500 of interests with my saving accounts but I am wondering if the simple fact that I need to file the FBAR makes me have to file form 1040 schedule B.

Thank you.
 
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