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US expat tax and FBAR: Discussion thread (Ask your questions) Part Two

Please ask your questions here about US Expat tax and FBAR.

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NB: This discussion is a continuation of an older discussion that became to large for our software to handle well.  See US expat tax and FBAR: Discussion thread (Ask your questions) Part One.

3,618 thoughts on “US expat tax and FBAR: Discussion thread (Ask your questions) Part Two”

  1. @Just Me, if you have to file your FBAR’s electronically now does that mean a tax service/CPA can’t do it for you?

    Filinng the FBAR’s are pretty easy unless you have lots of accounts. It was doing the Streamlined Questionnaire that I wanted a tax expert’s help with. If I could have just filed the FBAR’s and nothing else I could have done it myself.

  2. @Just Me

    It’s a real game changer when a simple failure to file FBARs forces the taxpayer to enter OVDP:

    “Probably the worst option if confronted by your bank is simply to amend your old returns and file the back FBARs. The IRS calls this a “quiet disclosure” and says it will pursue penalties. By filing old FBARs, you have given the IRS a roadmap to your assets making the penalty calculation easy.”

  3. @MedeaFleecestealer

    Don’t know. I just posted this comment which is in moderation.

    Brian…

    With FBAR filings now being electronic starting in 2014, would a Tax Service really be able to do this for you? I don’t know, as I haven’t done one yet, but understand you have to get a “authorization’ or ID for electronic signing and of course, be sure you are working the the “right version” of Adobe Reader XI.

    Anyone doing the electronic FBAR for this year, should probably start early. I understand there are glitches as it is only doable in Internet Explorer.

    Finally, the FBAR is probably the easiest (but most penalty draconian) part of foreign bank reporting and IRS tax prep for Americans living abroad. I can’t imagine that Tax Service would be necessary for this. In fact, the International CPA I once had wouldn’t touch them.

    Now, filing out IRS forms 8938, 1116, or 2555, or 3520(A), …. that is a different story! A novice might need expensive help 🙂 Tax preparation fees, just another tax by a different name.

  6. How about filling out a paper FBAR, attaching it to the 1040 with a note saying: Sorry could not file electronically. Dog ate computer.

    Forced electronic filing is another frustration heaped upon all the other frustrations the IRS inflicts on its victims.

    We don’t have Internet Exploder, as my husband calls it — more back doors than a 1920’s speakeasy. We will not install IE AND we do not have any tax preparers in town who are expert in US taxes. Even if we did, there’s no way we would share sensitive bank account information with them. Is the IRS trying to force an annual tax journey to far away tax centres for everyone who cannot comply with their e-filing dictats? I think so.

  7. @Em, then your FBAR filing will not be accepted according to this:

    “The Financial Crimes Enforcement Network (FinCEN), the bureau of the U.S. Department of Treasury responsible for enforcing the FBAR filing requirement, adopted a rule that mandates electronic submission of any FBAR filed on or after July 1, 2013, including delinquent FBARs filed for prior years. Any paper FBAR filed on or after July 1, 2013, will not be accepted; the U.S. Department of Treasury will return the paper FBAR to the filer and not consider the FBAR as filed until it is electronically submitted. A filer who is unable to submit an FBAR electronically may contact the FinCEN Regulatory Helpline at 800-949-2732 to request an exemption from e-filing.”

    http://www.lexology.com/library/detail.aspx?g=60e74b5c-a52b-4eac-aa32-beb8afe9f2ff

    Only if you can get an exemption would it be possible. There’s also the possibility of a $500 fine for paper filing.

  8. Em @ Medea
    And if we all keep going along to get along with the IRS, it will simply think up even more frustrations for us, won’t it.

  9. Useful discussions about the IRS ignoring timely filed and automatic extensions of time to file from those residing outside the US. One entry was resolved only with the involvement of the Taxpayer Advocate and their SAMS:
    http://www.taxabletalk.com/2013/12/14/its-nice-to-know-im-right-but/
    http://www.taxabletalk.com/2013/08/22/the-law-and-regulations-vs-irs-publications/
    http://www.taxabletalk.com/2013/08/22/probable-irs-systemic-issue-with-individuals-taking-the-automatic-two-month-extension/

  10. Good discussion of unpaid tax liability, detainment at the border, and passport issuance….

    http://bit.ly/18uwwBG

    In summary…

    Don’t Be Complacent! IRS and State Department Are Linked and Proposals Have Been Made to Deny Issuance or Revoke US Passport for Tax Debts

  11. @Just Me, thanks for that link http://blogs.angloinfo.com/us-tax/2013/12/16/learn-the-real-facts-unresolved-us-tax-liabilities-re-entry-to-usa-renewal-or-revocation-of-your-us-passport/ .
    The author concludes by saying; …”…It is clear that the tax compliance burden for overseas Americans (and those State-side who travel extensively) will not be easing up in the near future….” (Virginia La Torre Jeker)

    The author also notes that: “Currently, the citizenship functions of the US Department of State are separate and very distinct from the revenue functions of the US Department of the Treasury and the IRS. We are seeing a continuous erosion of this separation of functions, however. “

  13. Not a recommendation, just an FYI. Contains some interesting points. May not open in Firefox, try Safari instead in order to get the fulltext download.

    Probably could go in one of the OVD related threads at IBS too.

    http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2365986

    ‘Is the OVDP a Good Deal? Assessing the OVDP in Terms of FBAR Willfulness’
    Eliezer Mishory
    George Washington University – Law School
    November 26, 2013
    Abstract:
    This Note argues that the OVDP’s value depends on the taxpayer’s exposure to willful FBAR penalties. This Note also provides a guide to willfulness in FBAR violations. The OVDP is a program that the IRS adopted as part of its recent crackdown on taxpayers with undisclosed offshore bank accounts. The OVDP provides taxpayers with amnesty from willful FBAR penalties. On the other hand, entering the OVDP can be an expensive and protracted ordeal. For taxpayers with a high risk of facing willful FBAR violations, the OVDP is a good deal. For other taxpayers, the OVDP is an unnecessary ride. Deciding whether or not to enter the program is difficult because there is a dearth of guidance regarding what makes an FBAR violation willful. There are very few criminal FBAR cases and there are only two civil FBAR cases. This Note examines judicial guidance on willfulness in other contexts and extrapolates principles of willfulness that apply to FBAR violations. Using these principles, this Note examines the FBAR cases to identify current judicial thinking on FBAR willfulness. This exercise indicates that there is currently a strong inclination to find that FBAR violations are willful. This makes entering the OVDP more compelling and a better deal for taxpayers than it may seem.

    Number of Pages in PDF File: 65

    Keywords: OVDP, Offshore, BSA, FBAR, Willful, Cheek, Ratzlaf, Williams, Mcbride, Bank Secrecy, IRS, Tax, IRC, IRM

  15. Expect IRS ‘service’ to get even worse:
    http://www.gao.gov/products/GAO-14-133
    ‘IRS Needs to Do More to Address the Growing Imbalance between the Demand for Services and Resources’
    GAO-14-133, Dec 18, 2013
    …”In the face of similar trends, last year GAO reported that a dramatic revision in IRS’s taxpayer service strategy was needed and recommended IRS take steps to better balance demand for services with available resources. GAO acknowledged this may require IRS to consider difficult tradeoffs, such as limiting some services. In response, IRS has proposed eliminating or reducing some services for 2014 such as answering basic tax law questions only during the filing season. …”…

    And our ‘services’ have already been cut – to zero in Canada in US consulates and embassy
    “Taxpayer Assistance

    The information on this page is intended especially for taxpayers residing in Canada. Note: Owing to budget cutbacks, the Internal Revenue Service will not/not be providing any in-person assistance or tax seminars at the U.S. Embassy and certain of the Consulates General in Canada.”

    ..”IRS Ottawa
    The Internal Revenue Service (IRS) does not maintain an office in Canada.”…
    http://canada.usembassy.gov/service/taxpayer-assistance2.html

    Note, still no tollfree number listed for ‘US taxable persons’ in Canada – the country with > 1 million US citizen/duals – the most outside of the US, excepting Mexico.

  16. @Badger

    This is how bean counters deal with the problem of the “Imbalance between the Demand for Services and Resources” – but cutting services, which will in turn increases demand because of the fewer services!

  17. @bubblebustin, re; “cutting services, which will in turn increases demand because of the fewer services!..”..

    And as we know, since the IRS benefits the most from confiscatory extraterritorial reporting and filing penalties imposed on our non-US wages and savings, (even in the instances when no US tax is owed) the less information and less service they provide, the more people fall into the myriad of compliance pitfalls or are consumed by the IRS FBAR and FATCA Minotaur in the compliance labyrinth. The Taxpayer Advocate has already flagged that issue repeatedly – to no real avail.

  18. I don’t know much about this, so cannot usefully comment, but am posting this http://www.keeblerandassociates.com/files/Understanding-the-Health-Care-Surtax.pdf here for others to explore who have more insight into it. This might help those trying to understand the Obamacare ‘Health Care Surtax’ on investments – a US double tax imposed on those abroad as well, which it appears so far that Canadian citizens and residents claimed by the US as ‘taxable persons’ are NOT protected from under the terms of the existing US-Canada Tax Treaty.

  20. The ignorance in the US (and elsewhere) regarding the existence of FBARs and FATCA and CBT (vs. RBT) continues, as one expat attests;

    “……..This past fall I had to get my banking reorganized and in dealing with two banks neither one of the agents we dealt with had heard of all this or FATCA. when you tell them that all US citizens have to fikle returns with no US income they think you’re from another planet. Even the agent at the social security office when I went to apply for the SSN was bewildered which did not make me feel good. I questioned whether I was doing the right thing as it felt like I was the only person in the world gullible enough to become compliant. The US border agent also asked me if I had US income. When I said no then she asked then why do you have to file? As for the banks here , unless it is pushed back further they will be giving their staff a quick education on FATCA!….” http://www.expatforum.com/expats/expat-tax/300361-future-considerations-now-i-am-compliant.html

  22. @badger (and all)

    I’ve now had the experience probably many here are familiar with – tried to explain FATCA and FBAR and their implications to a few American citizens here (who have never filed taxes since leaving the US) and was told to my face that I’m a conspiracy theorist. They laughed at me and flat out refused to believe that the American government is that crazy. 🙁

  23. I’m sorry, shunrata, that you have experienced that. Many (all?) of us have at some level. To be laughed at certainly makes us more cautious and could shut us up if we in turn listen to them and question what we know to be. That phenomenon is meant to put us in our place and is the face of others’ fear we might be right. We may have placed some doubt in others’ minds and they will start to pay better attention (at least that’s the way I see it). Yes, I have many times asked myself if I am imagining all this; if I am over-reacting to it all. How would we handle all this on our own, without support of others in the fore-front of this. Stay strong!

  24. @calgary

    Thanks for the good words. Such a reaction is unpleasant even if not surprising…

    I asked one of them, “what would change your mind?”

    Her answer : “If someone I know would be affected.”

    At that point I imagine it would be rather late in the game.

  25. @shunrata

    “If someone I know would be affected.” Classic bubble dweller mentality.
    At some point in my explanation I usually say “look, I can’t make this stuff up”, which indicates to them that even you find it unbelievable.

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