• Eric Majchrzak

    Good overview…The IRS latest rhetoric is that they know there is a significant amount of non-compliance in the FBAR area. As you discussed above, the potential penalties can be devastating and the recently announced Voluntary Disclosure initiative could greatly reduce the penalties compared to what may result if taxpayers don’t come forward and are identified by the IRS.

  • I always think these regulations are so unfair. I understand that they are geared toward those who would export funds continuously into an offshore account, but what about those who legitimately have bank accounts abroad in which there is inheritance or other moeny earned abroad in the first place?

  • This is interesting. But how do they know if someone has a band account somewhere else, and does not report? I mean, would it not require a lot of time and resources – not to mention ESP – to track that stuff down?

  • GVAmytaxfiler

    US Tax admnistration has its tentacles widespread, the treaties that the US Government signs with other nations gives them right to share and use data for such compliance. Needless to say, IRS and US Treasury can get whatever they want, a testimony to this is recent lawsuit on UBS.  Also, its not important how administration takes place or how the IRS gets to know of defaults, the goal of any taxpayer must be to be in compliance with the nation’s tax laws.

  • GVAmytaxfiler

    Form TD 90221 is just a disclosure form, of all accounts with financial institutions above a threshold. It is no way levying any additional taxes, provided the taxpayer is legit. So, i guess, legit cases don’t have to worry about filing a 2 page form and comply with the disclosure norms.

  • Kevin Burke

    I cannot believe you actually said that “legit cases don’t have to worry about filing a 2 page form and comply with the disclosure norms.” I am a US citizen living in the UK and have no assets or income in the US. Like those in the US, I report my income to the US and follow the tax rules (as well as those of the UK). What is grossly unfair though with the FBAR requirement is that its supposed to be as I understand it to prevent rich Americans living in America from hiding investment and high interest accounts abroad. However those americans who actually live and work abroad have to put together every bank’s account statement and submit these as well as file my returns. I’m just a working stiff and don’t own investments or stock or even a house. This FBAR is not simply a two page form. It’s threats and penalty warnings relating effectively to bank accounts meant for peoples’ monthly salaries and the bank accounts they should have closed as they are in overdraft or have £50 in them if even that much. I don’t think it is fair or proper that this should be applied to working Americans of modest means legitimately living abroad. Clearly these people, me included, have to use foreign bank accounts as their salary is not paid in dollars. Plus, more importantly, don’t forget that the IRS insist on those with signature authority reporting the amounts in theri employers’ accounts — notwithstanding that the employers are not American or ever deal with America. After asking my employers what was in the accounts, they refused to tell me – and of course, this year I no longer had authority to sign checks at work. What would American companies do, for example, if Japanese working in the USA were required to disclose the amounts held in their American employers accounts. I’ll tell you what, they simply wouldn’t hire any Japaness employees in positions in American companies where they would ever have any authority to issue or sign checks. That’s the end of upward mobility for those employees, and do you really blame the employers? Why should UK or other foreign employers want to have information concerning their bank balances released to the US’ IRS just becuse they had the misfortune to have employed an American and had not known about the FBAR rules.

  • GVAmytaxfiler

    Hey, I completely understand your frustrations with this part of law. Now, regarding the previous comment “legit cases don’t have to worry about filing a 2 page form and comply with the disclosure norms”, what i meant was from the tax paying perspective. There is no payment of taxes that needs to be made if the disclosed income already has suffered taxes.. So, pls read the line as “legit cases don’t have to worry about payment of taxes by filing a 2 page form”. Signature authority on a corporate bank account of a widely held corporation does not come within the ambit of the fbar norms.

  • Thanks for posting some valuable info that people might not know about without actively seeking it out. And as you say, the consequences are expensive.