Greenback Expat Tax News: Short video explains how US expats can benefit from the Offshore Voluntary Disclosure Program….
— Greenback Expat Tax (@GreenbackTax) April 25, 2012
I request that you watch the video described in the above tweet from Greenback Expat Tax Services. Makes me wonder if U.S. citizens abroad have more reason to fear the “cross border professionals” than the IRS. Would be very interested in your comments.
They have posted the same video on YouTube:
If you agree with me, the next question is:
Is there anything the Isaac Brock Society can and should be doing to protect people from this kind of stuff? This video appears to suggest that jail time is likely for people who do NOT file past FBARs and and are caught by the IRS. If I am wrong, I stand corrected and apologize. It is suggested that the penalty outside of OVDI is the willfulness penalty and the jail time is a realistic possibility (for past failures to file FBARs). Furthermore, as usual they are suggesting that the only way to solve these problems is through OVDI.
If I am right in this interpretation, this is an outrage!
HOW WE GOT STARTED:
Greenback Expat Tax Services was founded by two London-based American MBAs who spent years being frustrated by how hard it was to get our US expat taxes done right. Our experience was that finding a CPA with good expat experience and good customer references was impossible. Our previous US CPA didn’t see enough expat returns to be fully up to speed with the rules as they applied to Americans living abroad. Our friends either had horror stories about expat accountants who quoted one fee upfront and then tacked on huge charges at the end of the process or avoided filing altogether because it was too complicated. And all the tax software simply didn’t have the muscle to handle even a simple expat return. So, we decided to do something about it!
We pride ourselves on having recruited the best expat accountants to our team: people who know all the ins and outs of expat rules and taxes, who are easy to work with and approachable, and who can translate the complicated tax code into something that makes sense to non-accountants. We bring that together with best-in-class systems that ensure all sensitive tax information is fully secure. Finally, we make our forms and paperwork as simple as they can be (beware: there is always some work involved!) which keeps the process as easy as possible for our customers. And we offer transparent pricing — one flat, fair fee for all federal returns, no surprises — guaranteed.
There is no mention of a connection with any lawyers.
Finally, if I am wrong in my interpretation, please explain why and this post should be removed.
@just me. I would be surprised too because everything I’ve been told or read, except by TAS, has been to the contrary.
@renounceuscitizenship
“…Not sure why it would matter in the case of simply filing an FBAR.”
You’re probably right – I’m just thinking of what might raise their eyebrows. They might be far more interested in an audit and imposing penalties if they believe you have $600k as opposed to $200k. I guess it’s all speculation and paranoia. The situation makes you 2nd-guess everything: when to send your paperwork, all together or separately, on a full moon….? I guess there is no magic formula, and we’re all playing Russian roulette.
@Petros
After reading your “aggregate” post, I’m thinking that it might indeed be wise to mention in my reasonable cause letter how the accounts show duplicate sums. Maybe it would nip their questions in the bud. I can’t see it making things any worse….
As I filed six years of delinquent FBARS with the shortened version of the form due to having over 25 accounts, I wouldn’t be surprised if they at least enquire about my accounts. Many held duplicate amounts, so I could appear to be very rich indeed….would have been an utter nightmare in OVDI. I made my QD late last June and so far, no questions….but I still have another five years of statutes of limitations.
I’d imagine though that they’ll be able to find out what they’d need to know from my 2011 8938, where all the accounts and assets are explicitly declared separately.
@Steven Mopsick/ 30 yr. IRS vet;
If you’re available, could you address the nagging question of the ways in which these inflated ‘values’ created by the aggregate method for reporting on FBARs are viewed by the IRS? Because really, (as has been noted repeatedly) anytime we move money (including debt) – say, borrowed in everyday life (from line of credit, or mortgage, or car, or student loan, etc.) or by cashing in savings bonds, or rolling over/converting term deposits, etc. it inflates our aggregate balances in such an egregious way, that I can’t see how it really illustrates anything meaningful.
Any insight at all would be useful.
@Badger, It’s why metculous record-keeping is a must, especially for any one facing a long statute of limitations. I am all too aware that both the IRS and Fincen may contact me with various questions over the next several years. I have nothing to hide but am worried because a couple of my share and mutual fund administrators changed hands with records lost along the way.
I don’t think it will be a major problem but if I had joined OVDI, the onus would havd been on me to prove duplication. They could try to thus raise their misc. penalties this way.
thanks @monalisa1776.
@Howard…
If it is any help to you, I did a similar statement when I filed my FBARs back in 2009 and entered the OVDP to point out that how funds would be wrongly double counted in the highest aggregate.
Your question has prompted me to go back and look at the letter I sent with my first FBARs. Gosh was I naive then! I see I even put in recommendations about how do do this stupid OVDP better. Why did I think any clerk would listen or do anything. How silly of me. LOL..
Anyway, I put a statement like this about the highest aggregate with examples. I am sure they have seen many like it…
………………………….
Ii don’t know that you need to be that expansive, and frankly I don’t know that it is necessary. I was entering the OVDP, so was concerned, but you are doing a QD. Maybe it is better not to draw any more attention to yourself.
I vote with your CPA on short and sweet!
As an aside…. Inside the OVDP, they definitely did not double count funds transferred for calculating highest aggregate, and outside the OVDP, I can’t imagine that they would either. Neither could my examiner. There has been no evidence of double counting in Opt Out audits, and in a regular exam, I just can’t believe it would happen. This would result in absurd penalties that the IRM practically screams at the examiner not to do.
So, I wouldn’t worry about it too much. I would, however, go through the exercise to create a flow chart of funds, so you could document and easily show your elimination of double counted funds. That might be good insurance against the day that an examination “might” come as unlikely as it seems. It was the first thing I did when I entered the OVDP, as that was where I was concerned to that I had the most risk. If I double counted, based upon that high number alone, I really looked like a Whale, and I knew I was not. I wanted a clear picture for myself of what my real highest aggregate was.
@justme, we did the same, even had a former IRS agent do the explanation as it pertained to my husbands business.
@justme – thanks very much. Food for thought… I might try for a middle way: mention it but keep the explanation short and sweet. I believe I will need to send 2 reasonable cause letters – one to the IRS and one with the FBARs, so maybe mention it just in the latter.
I guess there’s a fine line between trying nip any unwanted attention in the bud, and attracting unwanted attention!
@…Howard. I would probably only do 1 short letter with your FBARs. You don’t really need one with your 1040X. When you amend your return, there is a section in the 1040X for explanation, and I just put a very short statement, that I had just discovered the requirement to report on my offshore passive earnings, and so was making that correction now. End of story.
@JustMe – I am ending up owing taxes because of US capital gains, combined with the newly reported foreign interest (nightmare!). The Dec Fact Sheet says if you owe taxes you need to show reasonable cause to not be penalized, so that’s why I was planning to send 2 letters.
I’m confused, though – the FS also says the IRS determines “reasonable cause” (i.e. not the Treasury). This makes it seem like the FBAR letter would go to the IRS, not with the FBARs….?
Well, ultimately the IRS is the determiner-in-chief. I assume that FBAR late filings get directed from one treasury office to the other for determination. They are probably just being sloppy in their language, as the FBAR is unique in that it is sent to that Detroit address and not with your returns. The knowledge of the filing probably ends up with the IRS office eventually. Like I said, if you are going this route, instead of compliance going forward, then I would do one letter with my FBARs, and just amend with the 1040X with explanation. But that is just my opinion. In practice, in the past, letters I have sent with my 1040s were just stripped off in the processing and never dealt with. Not sure that the little Admins that do the front in processing, know what to do with them. There probably is not an easy way to input them into the system and keep it with your actual data. Maybe I am wrong, but the 1040X explanation seems enough to me.
BTW, over at the drudgery thread Christophe is choosing another route for compliance going forward. You might want to read more before you finally decide…
http://isaacbrocksociety.com/2012/01/28/the-ovdi-drudgery-for-minnows/