# FBAR, interests from foreign accounts & streamlined domestic offshore procedure



## CaroUS

Hello everyone,
I was wondering if anyone here had experience with the Streamlined domestic offshore procedure to fix his/her FBAR situation.

A little background :
I never filed any FBAR (didn't know the existence until recently). I have accounts in France but never reported the interests (I didn't know I had to - I know this is not an excuse, but I'm just explaining I got into that situation). The accounts I'm earning interests on are "Livret A" & "PEL" (about $500 interest per year).

I would like to fix the situation now that I know about FBAR and that I have to report my interets. I went to seek advice from different CPAs and an attorney.
Most of the CPAs are just advising to amend my last tax returns and file the missing FBARs ("quiet disclosure").
The attorney is scaring my with the penalty I face and tells me I have to go through the streamline domestic offshore procedure, which will basically cost me 5% of my savings in France in penalties. I don't think it really matters, but the money on those accounts is not even coming from the US, it is mostly money that I already had before moving to the US and then my family sometimes transfers a little money as gifts.

Does anyone here have experience with either the quiet disclosure or the streamline procedure ?

I really feel bad since I discovered that and what it will cost me. I'd like to fix the situation as soon as possible !


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## Bevdeforges

Basically, if it makes you feel better, just go the Streamlined procedure to amend your prior returns and file the back FBARS. (Three years for the tax returns, six for the FBARs.)

However, from what you say you omitted to report, you could just file the FBARs going forward and take the quiet disclosure route with little or no problem. If you read the Inter-government agreement on this FATCA stuff, the French banks are specifically exempted from having to report Livret A, PEL and a few other of the "tax free" or "tax preferred" types of bank accounts here.

The attorney is, in a word, just "scaring" you to avail yourself of his services. Personally, I would consider just filing the FBARs going forward (like, starting for 2014) and just be sure to add in the interest on your 2014 return and going forward. You're a teeny, tiny fish as far as the IRS or Treasury Dept. is concerned. A "small" mistake or omission like this simply isn't worth their time to pursue.
Cheers,
Bev


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## CaroUS

If I only start to file FBAR from 2014, wouldn't that be a red flag to the IRS because I never filed them before ?

My husband is in a kind of similar situation, but with higher amounts, so he is also entitled to 8936 (and never did it).
This is our first year filing together and we want to make it right. If we report 8936 correctly, we are basically telling the IRS that we have several accounts that were already opened (and there never was any FBAR filled for those accounts) :/


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## CaroUS

I'm discussing the issue with a friend and we are looking at the French/US agreement to implement FACTA.

So we see that, for example "Livret A" is considered as "account excluded from financial accounts" does have any impact on what we have to report on our 1040 ?

And as for PEA, do we have to report something on 1040 ?


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## BBCWatcher

Keep separate issues separate. FinCEN Form 114 ("FBAR") is an _entirely separate_ filing from your tax return, and vice versa.

OK, while Bev is _probably_ correct, there is _potential_ or actual benefit in the Streamlined Compliance Program and absolutely no harm that I can see. I always recommend taking a good deal when it's offered, and it's a great deal.

Yes, you are correct that whether or not you violate FinCEN Form 114 reporting regulations you have to follow tax filing requirements, and vice versa. They are separate requirements. It's possible to violate one, the other, both, or neither. (I vote for violating neither.)

In your tax filings, interest income is ordinarily reported on IRS Form 1040 Schedule B (at least there). You'd then look at the U.S.-France tax treaty to see if that offers any guidance on how to treat that income, and you'd also potentially have a Foreign Tax Credit to reflect French income taxes (if any) paid on that interest income.


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## CaroUS

Thank you for the clarifications 

We'll probably go with the streamlined procedure - the amount of the penalty is harsh (in my opinion), but if it is what it takes to sleep at night, well...

I'll have a look at the US-France tax treaty.


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## Bevdeforges

Just a "trick" - the treaty itself is close to unreadable (whether in French or English). There are documents called the Technical Explanation that actually do a decent job of "translating" the treaty provisions into something comprehensible to the layman. France - Tax Treaty Documents

As far as deciding whether or not to back file on the FBARs, consider that everyone "crossed the line" at some point - one year they had no overseas accounts, or what they had in overseas accounts was less than $10,000. The next year, when the balances exceeded $10,000 for the first time, or when they first opened overseas accounts, then yes, they do have to file. 

Unless you have exceeded the balance by quite a bit, I wouldn't worry too much about the back years. If there was something "funny" on your tax filings in prior years, then maybe I'd be a bit more careful about things. But they're looking for money laundering and tax fraud here. If you had $500 in interest income you didn't report, it isn't going to affect your tax returns by that much, anyhow and the failure to report a Livret A (which is limited as far as how much you can have in it anyhow) just isn't going to be a big concern for the IRS. 

As always, you do what you have to so you can sleep at night. 
Cheers,
Bev


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## Abello

Hi CaroUS,

I was wondering if you had any update on the streamlined procedure? THX


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