U.S. Citizens - If you have $10K+ in a foreign bank, read this

[rfm010 3,098]

It's not the IRS that requires or enforces the FBAR, it is the treasury department.

 

irs is easier to type multiple times.  point is still the same, if you are complying with the fbar reporting but not signing the bank's paperwork it is the bank that might be a problem.  you will be ok with the u.s. gov.

You can file delinquent FBARs and include an explanation for not filing.

 

i knew that you could give an explanation for not having filed before when you first do an fbar but i hadn't realized you could file deliquent fbars.  good to know, may have to look into that.  when the time comes to blow this place i don't want to be held up by this sort of crap.  but to file 20 years of deliquent fbars? 

1.  The subject at hand is FBAR reporting (not FATCA).  The requirement has nothing to do with where you live - only if you are a US Citizen and have had the equilivent of $10k in accounts outside the US at any point during the year.  Many of us are subject to this requirement some years and it is currently done at on-line web site providing the amount and account/bank information.  Has nothing to do with US Income Tax (although you should make sure you report interest earned).

actually, if you are a us "person" which would include permanent residents and, if i read the paperwork correctly yesterday, a foreigner with a "substantial presence" in the us during the year.  substantial presence was defined as less than 330 days outside the us.  so if you are a foreigner taking a 5 week one day vacation in the us you fall under these rules.  i thought when i read it that that was going a bit overboard and maybe i read something wrong.  sorry, was in a bit of a rush at the time.

 

 

2.  If Philippine banks use the same criteria as being used here in Thailand new accounts will require filling out a W-9 form with your SSN or ITIN to allow banks to report.  People with accounts have not been asked for such yet.

this is what i did at pnb yesterday.  interesting that the only reason they had me do it is because i was shifting some money in our dollar account so they figured "while we have you here please fill out these forms".   don't know what they would have done if i hadn't shown up yesterday.  as i mentioned earlier they seem a bit confused by it all, at least at the branch level.

 

3.  The IRS is a bureau of Treasury Department so at some point expect computer matching will be made for all returns - but with the Government record on computer programs this may not happen for awhile.  

my personal concern here is that while in the rp i've never filed us taxes because i've never had enough income to meet the filing requirements.   which is why i had never seen the fbar requirements before last year.  now that i am suddenly appearing in the system my case may raise a few eyebrows.  haven't done anything wrong but i'm not interested in the hassle that may be required in order to prove that.  

 

4.  For most of us adding our small interest returns will not make much difference in total tax bit.  For myself, on a decent retirement, total tax bite last year was 5.3%

 

here's an interesting article that may help feed some paranoia:

http://www.natlawreview.com/article/what-are-risks-associated-quiet-disclosures-fbar-report-foreign-bank-and-financial-a

 

posted on: Tuesday, February 24, 2015

The IRS estimates that there are millions of U.S. taxpayers with unreported offshore accounts. Americans with accounts in Switzerland. Dual nationals with accounts in their home country. American expats living and banking in Israel. Green card holders with accounts in India. Although every situation is different there is a common thread – millions of taxpayers have yet to report their foreign bank accounts.

Although American taxpayers have been required to report foreign accounts for decades, compliance has been spotty at best. The Bank Secrecy Act, passed by Congress in 1970, requires anyone with an aggregate of $10,000 or more in foreign financial assets to report those assets annually to the IRS. Reporting is done on an FBAR form, short for Report of Foreign Bank and Financial Accounts.

Beginning in 2008, the IRS began a high profile campaign of pursuing taxpayers with unreported offshore accounts and the banks and bankers that helped them hide their assets. UBS was the first major prosecution of a bank culminating in a record $780 million fine and a deferred prosecution agreement. 

In the wake of UBS, the IRS has begun criminally charging individual taxpayers with having unreported accounts. Inevitably, when someone gets indicted and arrested, a big media pitch follows. The IRS is better at managing the media than any other government agency. People are afraid of the IRS. 

When an indictment for an unreported offshore account is announced, our telephone rings constantly. Recently an Indian - American physician in Milwaukee was indicted for an unreported Swiss account. In the weeks following the indictment we heard from healthcare professionals throughout the Midwest, all wondering what their obligations were and how best to comply.

Just as every taxpayer that walks in our door is unique, there is no one size fits all solution for unreported accounts. The IRS would have everyone utilize their amnesty program (Offshore Voluntary Disclosure Program) although that solution is often not the best.

One of the most common ways of coming into compliance is what the IRS calls a “quiet disclosure.” For many folks, however, that is an invitation to disaster. To understand why quiet disclosures may not be the best fit, some explanations are necessary.

The IRS wants everyone to come into compliance through its Offshore Voluntary Disclosure Program. If you have possible criminal exposure or have significant unreported offshore income, the OVDP program may best for you.

Before moving on, a brief explanation of the IRS criminal enforcement efforts is necessary. Despite the IRS’ very effective publicity machine, less than 200 people have been indicted for unfiled FBAR forms and many of those folks are bankers, lawyers and accountants who helped taxpayers hide their money. 

In other words, the risk of criminal prosecution is low. A good tax lawyer can help you determine if you are at high risk for criminal prosecution. (The willful failure to file an FBAR is a felony punishable by 5 years in prison.) Some of the most compelling reasons to come into compliance are the huge civil penalties for an unreported offshore account.

If you are considered a “low risk” individual by the IRS, the agency’s Streamlined Filing Compliance Procedures. May be a better fit. The penalties are much lower, however there is no guaranteed “get-out-of-jail-free” card and once you enter the Streamlined program there is no going back to traditional amnesty if things don’t work out.

Another method is to work with a lawyer, enrolled agent or accountant and “opt out” of amnesty. By opting out, there are no guarantees although it is possible to receive no penalties.  Opt out candidates must demonstrate why the traditional penalties should be abated. 

Although all these options may be better choices for many taxpayers, the two most common choices are doing nothing and making a quiet disclosure. With the IRS’s FATCA law (Foreign Account Tax Compliance Act) now in full effect, the chances of getting caught are huge as are the corresponding civil penalties. Doing nothing remains the worst possible option.

That leaves us with “quiet disclosures” or simply mailing in missing FBAR forms to an IRS service center and amending old returns. Tens of thousands of taxpayers do this each year and most without any legal or accounting help. They hope that by simply sending in the missing returns they won’t get caught or penalized.

Prior to October 2014, the IRS strongly discouraged these so called quiet disclosures. Now they are authorized if taxpayer doesn’t need to use the OVDP or Streamlined programs. Although an offshore tax professional can best advise you, common examples could include an offshore account owned by parents but which list the children as signatories. The kids could qualify for a quiet disclosure if they do not receive income from the account and also have no ownership interest in it.

Another possible example is a taxpayer who properly reported and paid all taxes on the income from his or her offshore account but failed to file an FBAR.To avoid future problems and audits, the IRS says that a letter of explanation should accompany the missing FBAR forms.

So what are the risks of making a quiet disclosure? The risks are few if you truly have no interest in the account or have paid all taxes on income from the account. Unfortunately, most people who decide to go the quiet disclosure route don’t consult with a tax professional and many aren’t eligible for the no penalty treatment. For those folks that don’t qualify, the risks are plenty.

The biggest risks are the onerous FBAR penalties. Congress has said that the willful failure to file an FBAR carries a civil penalty up to the greater of $100,000 or 50% of the historical high balance of the account. Penalties can be imposed for multiple years. Although these are the maximum penalties, the maximum penalties have become the norm.

Of course, there is some risk of criminal prosecution as well. If you have already gone the quiet disclosure route and are targeted for audit (we know folks that have), it is still possible to make an argument for abatement of the harsh penalties but amnesty is off the table.

Our recommendation? Consult with a qualified FBAR lawyer of offshore tax professional before taking action. Understand your risks and obligations first. If a quiet disclosure is best for you, make sure you have a letter of explanation. Whatever choice you make, don’t ignore the problem. The surest way to huge penalties and a prison cell is doing nothing.

[Jawny 4,524]

I am puzzled by the comments that suggest an explanation for delinquent FBAR filings can be provided. The online system does not seem to have a portion for any sort of text or attachments. The process shows a block to be checked when filing late and then a drop down menu for reason is provided. No place to offer explanations that I could see.

[mistaeric 393]

Big Brother is watching even when you think he is not!

Engaging in Currency Transactions

image: http://www.kiplinger.com/slideshow/taxes/T056-S011-irs-audit-red-flags/images/wad_of_cash.jpg

Thinkstock

The IRS gets many reports of cash transactions in excess of $10,000 involving banks, casinos, car dealers and other businesses, plus suspicious-activity reports from banks and disclosures of foreign accounts. So if you make large cash purchases or deposits, be prepared for IRS scrutiny. Also, be aware that banks and other institutions file reports on suspicious activities that appear to avoid the currency transaction rules (such as persons depositing $9,500 in cash one day and an additional $9,500 in cash two days later).

Read more at http://www.kiplinger.com/slideshow/taxes/T056-S011-irs-audit-red-flags/index.html#QMPXYTF8p8GjAXuo.99

[lopburi3 601]

This is not news - 10k has always required reporting - but it does not mean anything for the normal person and is not a tax flag unless the pattern show it to be.  When I lived in Florida 25 years ago any transaction of 3k was subject to this same reporting (due to the drug trade in that state).  But nobody had any issues with it for legal activity.

[mistaeric 393]

This is not news - 10k has always required reporting - but it does not mean anything for the normal person and is not a tax flag unless the pattern show it to be.  When I lived in Florida 25 years ago any transaction of 3k was subject to this same reporting (due to the drug trade in that state).  But nobody had any issues with it for legal activity.

Im talking the part where a person deposit only $9500 one day,,,then wait to deposit another $9500 so on and so forth,the IRS is notified. My post was for the UNinformed members here. You obviously know all the rules.

[RogerDat 3,475]

Greetings! If you have $10000.00 in total in a ( unlimited number) of financhal institution, or haver control over the funds, at any time during the year, you must report.

If next year you no longer have that much, you do not.

[Phillovescebu 153]

FATCA only matters when your deposit exceeds $50,000. The government is afraid of people who hide their money offshore. I have "overstated" my account balance for the past 4 years and never heard anything from them!

 

It's typical big government trying to control the masses but not knowing how to effectively do it once they have the information.

[rfm010 3,098]

FATCA only matters when your deposit exceeds $50,000.

 

 

depends on where you live, married or not, required to file a tax return or not.

 

a summary of fatca and fbar, with link at end:

 

FBAR (Foreign Bank Account Report) and FATCA (Foreign Account Tax Compliance Act) are part of the recent US crackdown on tax evaders hiding assets in overseas accounts. In the past 5 years, the IRS has collected billions of dollars in unpaid taxes as a result of their efforts and there is no end in sight to their crusade. FATCA has garnered worldwide infamy (and uproar), as foreign financial institutions are being forced to report on the accounts of their American clients as a system of ‘checks and balances’. There have been widespread reports of Americans being turned down for bank accounts or having their accounts closed simply because the banks don’t want the hassle of the additional reporting requirements.

 

 

FBAR

 

FBAR is a report of foreign bank accounts and its sole purpose is to collect data on the balances of foreign bank accounts. If you have had $10,000 or more in a foreign bank account at any point during the year (even one day) you must file FBAR. This is a cumulative balance—meaning, if you had a total of $10,000 or more in several bank accounts, you must file. Also, if you have signing authority over such an account, FBAR must be filed.  While this affects the majority of expats because they live overseas, US residents are also required to file if they hold qualifying offshore accounts.

 

The FBAR is sent electronically to the US Treasury Department via FinCEN Form 114—it is separate from your US Federal Tax Return. The filing deadline is June 30^th and unlike your US tax return, you cannot file for an extension. Penalties for failure to file can be steep so it is important to meet that deadline if you are required to file.

 

 

FATCA

 

FATCA filing requirements are a bit more confusing than FBAR filing requirements. While FBAR looks for bank account information alone, under FATCA you must report specified foreign assets (which include bank accounts) if the value exceeds the filing threshold. Specified foreign financial assets include things such as:

 

• Foreign pensions
• Foreign stockholdings
• Foreign partnership interests
• Foreign financial accounts

 

The reporting thresholds are different for taxpayers residing in the US than they are for those living abroad.Thresholds for those residing in US:

 

• Single filer: Total value of assets was $50,000 or more at the end of the tax year, or $75,000 at any point during the year
• Married filer: Total value of assets was $100,000 or more at the end of the tax year, or $150,000 at any point during the year

 

Thresholds for those residing outside the US:

 

• Single filer: Total value of assets was $200,000 or more at the end of the tax year, or $300,000 at any point during the year
• Married filer: Total value of assets was $400,000 or more at the end of the tax year, or $600,000 at any point during the year

 

FATCA Form 8938 is filed along with your US tax return to the IRS, so if you request an extension til October 15^th on your tax return, this applies to Form 8938 as well.

 

One note: if you aren’t required to file a tax return in any given year (i.e. you didn’t meet the filing threshold), you are not required to file Form 8938, regardless of the value of your specified foreign assets.

 

 

Filing Clarification

 

FBAR and FATCA may be similar in design and purpose, but you very well may be required to file one or the other—or both. Or neither! Simply because you do not need to file Form 8938, does not necessarily mean that you don’t need to file FBAR (and vice versa). You must look at the requirements of both initiatives and determine how, or if, you have a filing obligation.

To help make FBAR and FATCA clearer, Greenback has created this detailed chart with a side-by-side comparison to help you distinguish the differences between FBAR and Form 8938 filing requirements.

 

 

http://www.acareturnpreparerdirectory.com/article/fbar-vs-fatca-a-comparison-of-filing-requirements.html

[throttleplate 1,885]

i filled out the FACTA form 10 months ago and then just 30 days ago they BDO contacted me and i had to come in and sign another page which was the W-8BEN. They told me if not signed within so many days bdo will close my account, also said a year ago the paperwork will sit in my file because i dont have $50000.00 in the account but BDO needed the info in case it exceeds the threshhold. Now that i signed the other page 30 days ago is BDO releasing the info to the usa govt? I didnt even ask as i am just playing their game both usa and ph.its their ball and their field.

Edited April 18, 2015 by throttleplate

[Cipro 6,202]

I'm pretty sure that rule doesn't apply to all forms of assets, for instance gold in a safe deposit box is (I believe) exempt.

[Monsoon 28,935]

This comes up on this forum all the time.

 

Basically. If you need to act on it, you probably know and have people to sort it for you- or you have the sense to do it yourself.

 

If you don't know what to do, there's next to zero chance you need to worry about it.

 

Personally I file an FBAR on several accounts, in fact I file on accounts that might not meet the reporting threshold.

 

There are so many chicken little posts about these regs. It has become comical to me to be honest.

 

Guys here who are on disability claiming the sky is falling.

 

Personally I have well above and beyond the reporting threshold balances in multiple accounts and nobody has threatened me with account closure. I bank with all of the banks mentioned in this thread.

 

Maybe they aren't interested in your business anymore.

 

What? Do you think that might be possible? Well I know it is possible because I deal with banks in other countries that make it very clear they aren't interested in small potatoes when it comes to American citizen account holders.

 

I think expat residents need to accept that banks here are definitely not feeling chubbies over a hundred grand USD or a couple million pesos in the bank anymore.

 

They definitely don't give two shits about a twice monthly $2000 deposit. They are just now absorbing all of the reporting requirements that are involved with the U.S. Demands.

 

Get over yourselves.

 

You are lucky they will even entertain your account.

 

Don't believe me? Try to open an account in a neighboring country that used to do it with nothing other than a passport.

[Monsoon 28,935]

 

 

had to come in and sign another page which was the W-8BEN.

 

The W8BEN has nothing to do with an American citizen ownership of an account. It has everything to do with foreign ownership of a US based account. Either your bank manager is a total idiot, or your advisors are or both. 

 

In fact, if you are truly a United States citizen, and you did in fact complete and sign a W8BEN then you did in fact perjure yourself.

 

Did you not read the second line under Part III?

 

FYI, it says, "The person named on line 1 of this form is not a U.S. person"

 

 

Well anyway. You best find yourself someone qualified to give you advice, apparently you have some serious investments here in the Philippines if they are asking you to fill out and return a W8BEN.

[throttleplate 1,885]

The W8BEN has nothing to do with an American citizen ownership of an account. It has everything to do with foreign ownership of a US based account. Either your bank manager is a total idiot, or your advisors are or both. 

 

In fact, if you are truly a United States citizen, and you did in fact complete and sign a W8BEN then you did in fact perjure yourself.

 

Did you not read the second line under Part III?

 

FYI, it says, "The person named on line 1 of this form is not a U.S. person"

 

 

Well anyway. You best find yourself someone qualified to give you advice, apparently you have some serious investments here in the Philippines if they are asking you to fill out and return a W8BEN.

i have zero investments and a few hundred dollars in the bank.I will go to the bank tmrw and take care of this. Thanks for notifying me. Also i didnt complete any of the form other than signing it as i understand it is going into my file and if things change they have the paperwork on hand but i will surely look at my file and get it in my hands and show them that section III 2nd line and then go from there.

Edited April 19, 2015 by throttleplate

[Phillovescebu 153]

This comes up on this forum all the time.

Basically. If you need to act on it, you probably know and have people to sort it for you- or you have the sense to do it yourself.

If you don't know what to do, there's next to zero chance you need to worry about it.

Personally I file an FBAR on several accounts, in fact I file on accounts that might not meet the reporting threshold.

There are so many chicken little posts about these regs. It has become comical to me to be honest.

Guys here who are on disability claiming the sky is falling.

Personally I have well above and beyond the reporting threshold balances in multiple accounts and nobody has threatened me with account closure. I bank with all of the banks mentioned in this thread.

Maybe they aren't interested in your business anymore.

What? Do you think that might be possible? Well I know it is possible because I deal with banks in other countries that make it very clear they aren't interested in small potatoes when it comes to American citizen account holders.

I think expat residents need to accept that banks here are definitely not feeling chubbies over a hundred grand USD or a couple million pesos in the bank anymore.

They definitely don't give two shits about a twice monthly $2000 deposit. They are just now absorbing all of the reporting requirements that are involved with the U.S. Demands.

Get over yourselves.

You are lucky they will even entertain your account.

Don't believe me? Try to open an account in a neighboring country that used to do it with nothing other than a passport.

If you have done nothing wrong, don't worry! I pay all my taxes every year. I am very transparent with Uncle Sam regarding all of my financial transactions. I go to bed every night with no worries!

[Paul 55,107]

Upon my return from the US (March 3rd), I opened a USD Savings Account at Canadia Bank. I had to fill out a W-9 form, prior to opening the account. 

 

That will be the last account I ever open in my name, anywhere.