# Delinquent FBAR/8938/5471 questions



## pattiwhaley

Hi all 

I've resolved to catch up on FBARs and FATCA and have read stuff until I am nearly blind, but still cannot figure out the answers to several questions. Does anyone else have more certain knowledge on these? 

FBAR: bank accounts, fine, including various charity accounts where I am voluntary treasurer, fine. BUT: 
- should a UK SIPP (self-invested pension plan) be reported here? I have taken one tax-free withdrawal but otherwise I have no current income from this account. It is just a cash account with a small amount of (UK tax exempt) interest, no mutual funds. 
- if I have US investments, via a US broker, in US stocks, all in dollars, I think I do not report these, even though I deal with someone in a UK office. When I get my annual 1099 the FATCA box is not ticked which I think means it does not need to be reported as a non-US account. 
- other UK defined-contribution plans are not reported here, but are reported on the 8938 

SO on the 8938, I would need to report the SIPP and the UK pension funds, but still there is no reportable income here because the US recognizes valid UK pension funds. Correct? i.e., these are not "foreign trusts" or "PFIC" assets, AFAIK. 

Then my partner has a sole-proprietor business and gave me 20% of the company a few years ago. I have faithfully reported the dividends from this company on both my UK and US tax returns. Should I also have filed a 5471? 

AFAIK, I have reported all my income in both countries on both my UK and US tax returns, so I am only short on reporting requirements and do not owe any actual tax. Should I make a formal "streamlined procedure" filing, and do I need legal advice to do that properly? 

hoping for enlightenment and reassurance before I go any further...
Patti


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## JustLurking

pattiwhaley said:


> - should a UK SIPP (self-invested pension plan) be reported here? I have taken one tax-free withdrawal but otherwise I have no current income from this account. It is just a cash account with a small amount of (UK tax exempt) interest, no mutual funds.


You do need to report that, both on the FBAR and FATCA forms (the IRS's motto here is apparently: why do a thing once when twice will suffice?). It is just the balance that goes down. Whether you have taken any income from it over the year is immaterial.

You should be able to find the balance pretty easily, but if not just put in your best estimate. There's no tax calculation here, just an -- arguably pointless, not to mention duplicative -- balance reporting requirement. The IRS publishes a comparison of the two forms here. It is apparently beyond their competence to combine them into one.



pattiwhaley said:


> - if I have US investments, via a US broker, in US stocks, all in dollars, I think I do not report these, even though I deal with someone in a UK office. When I get my annual 1099 the FATCA box is not ticked which I think means it does not need to be reported as a non-US account.


Right. This account is not 'foreign'. (Well, it is to you but not the IRS. They will have received copies of the 1099s also, so they don't have to bother you for details in the same way as for your non-US based investments and pensions.)



pattiwhaley said:


> - other UK defined-contribution plans are not reported here, but are reported on the 8938


Such as an employer group personal pension? That would be the same as a SIPP. Put the balance on both the FBAR and the FATCA forms.



pattiwhaley said:


> SO on the 8938, I would need to report the SIPP and the UK pension funds, but still there is no reportable income here because the US recognizes valid UK pension funds. Correct?


Mostly correct. You have to put them all on the FBAR as well, I'm afraid. But yes, provided you have not taken any withdrawals then under the US/UK tax treaty there is no reportable income.



pattiwhaley said:


> i.e., these are not "foreign trusts" or "PFIC" assets, AFAIK.


Correct. The execrable PFIC rules don't apply inside of pensions. It actually took the IRS a long time to confirm this, but they eventually did five or six years ago or so.

You'll want to watch out for non-pension things, though. An ISA with PFICs would be a really easy trap to fall into. A non-wrapped trading account perhaps slightly less easy, but still a major tax landmine to avoid.



pattiwhaley said:


> Then my partner has a sole-proprietor business and gave me 20% of the company a few years ago. I have faithfully reported the dividends from this company on both my UK and US tax returns. Should I also have filed a 5471?


Don't know, sorry. Completely outside my experience and knowledge. (Hopefully Bev or someone who is still a US citizen can pick up on this point for you.)



pattiwhaley said:


> AFAIK, I have reported all my income in both countries on both my UK and US tax returns, so I am only short on reporting requirements and do not owe any actual tax. Should I make a formal "streamlined procedure" filing, and do I need legal advice to do that properly?


If it were me, I would just back-file the missing FBARs and send in any of the missed FATCA forms under normal amendment procedures, and expect to hear nothing back on the matter.

I suppose you could use 'streamlined' if it makes you feel better, but it seems like huge overkill here if all else is in order and you don't have any actual tax delinquency. If you do go this route you don't particularly need legal help. Plenty of folk have done it by themselves with no comebacks. Just search around the internet for some examples.

It sucks to be an American abroad, though, doesn't it?


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## celticweb

pattiwhaley said:


> Hi all
> 
> 
> 
> Then my partner has a sole-proprietor business and gave me 20% of the company a few years ago. I have faithfully reported the dividends from this company on both my UK and US tax returns. Should I also have filed a 5471?


I had a situation last year with the formation of a partnership with non US shareholders and a directorship and I renounced US citizenship. The other shareholders (non US Citizens) were adamant that they did not want a US citizen on board due to possible complicated filings and Fatca. That was the straw that broke the camel's back for me and when I had to say enough was enough and renounced. 

You might just want to read up on what the IRS says on who has to file
https://www.irs.gov/individuals/int...d-to-foreign-corporations-must-file-form-5471


regarding pensions, I agree with Justlurking. I did a streamlined filing before renouncing and all my pensions were reported on fbars. and on the tax return i took a treaty position on form 8833 402 (b) article 18 for the work pension. i missed having to file the other fatca form by a a hair's breadth. I was getting very close to the threshold but not quite there and of course now it's a non issue.


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## celticweb

also I did a streamlined filing because I had never filed anything. i was an accidental American, born to foreign parents abroad, left at a young age.
streamlined was the way the preferred way that the compliance industry were processing us into the system
not saying you should do streamlined and i also think amended returns might work depending on what you have to file.


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## Bevdeforges

I basically agree with what you've been told so far. Just to add that, for practical purposes, any account where you receive a 1099 can usually be assumed to be non-reportable for FBAR (and probably also for FATCA) purposes. The idea is supposed to be to get a report about those accounts the IRS would otherwise have no inkling about.

On the 20% interest in your partner's business, it's one of those areas where you have to stake out a "position" based on how you read the instructions. The "touchy" bits are the fact that they only require filing for "certain foreign corporations" and then there is the notion of just what business forms are considered "a corporation" and what are simply registered "self-employment." Plus, somewhere in there there are a few sentences that some would interpret as exempting businesses in which you are an employee, or where your interest really isn't about "investment" and is more about putting bread on the table.

If it's really a small personal business, I'd look long and hard for some sort of exclusion or exemption from having to file the whole raft of papers - including full financial statements in both local currency and US $$ - and all that goes with that. Of course, if you go to a tax adviser, they are going to say that you "must" file everything - especially because the official estimate of the time to complete the paperwork is something like 80 hours, and how can someone pass on all that billable time? If your 20% amounts to no more than $10K or $20K, it will probably never become an issue. If the business becomes the next Apple or IBM or if your 20% is worth $100,000 or more, there is much more likelihood that someone may get interested, especially if anything on your tax returns is less than squeaky clean. I wish I could be more specific than that - but it's one of those things you have to decide for yourself, in light of your level of risk.
Cheers,
Bev


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## pattiwhaley

Thanks, you folks are incredibly helpful. I agree, being an american abroad has its downsides...I feel very confident I have reported all my income so it seems daft to be potentially subject to huge penalties for not filing forms. 

I think my only remaining worry is the 5471. It would be great not to have to file those forms but most of my income from the company has been treated as qualifying dividends, which might weigh on the side of treating it as a proper corporation. 

I have an estimate from a very reasonable-sounding guy to sort the whole lot out for £5k, and for that price it is actually quite tempting. I'll think about it....

Thanks again to all of you for your replies.


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