# SPoke with An attorney on FBAR



## FilingLate

So i finally spoke with an attorney finally someone who knew about this issue

He said i have 4 option
1) back file tax and FBars (since i am in living in the US this option will not work and most definately IRS will hit back and say pay 10,000$ per Fbar violation

2) Do nothing and see what happens (not an option)

3) OVDP which they will come and take 27.5% of the Highest account

4) Opt Out ( tell them you made a mistake and let them take a look into your mistakes and see what they have to say but i will be on their mercy they can put the amount as high as 55%

I think i am about to choose the Opt out way.

Please note the amended tax return will work if your residence is not US if its US they are fining everyone.
This is total injustice in my opinion this was money for my daughter that i had saved . I worked hard and pinched every penny and now i might loose 30-60k

Unfortunately i am not the kind of person who can just sit and say screw everyone i'd rather pay and take this off my chest.

I am just so heart broken all because i had no idea about this requirement at all.


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## Nononymous

Doesn't sound like you're psychologically comfortable with hiding this or trying to sneak it past quietly, so I guess you have to take your chances going in through the front door. Let us know if it costs you anything. Common sense tells me it shouldn't be much if it's an honest mistake over a few hundred dollars in interest, but what do I know. Good luck.

FATCA doesn't go into effect until 1 July, which means banks aren't requiring citizenship or residency information with new accounts. You could try opening a couple of different accounts with Canadian addresses (using ING or similar) and dividing the money up to stay under reporting thresholds to keep it invisible. Beats writing the US government a cheque.


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## FilingLate

Nonomous just spoke with another law firm. I should have just listened to this forum and no one else but my OCD kicks in and i search on other forums who scare the hell out of me

The new lawyer told me not to do OVDI just QD and he'll take care of it.
He said that you do not qualify for OVDI he said the only way you qualify is if you were hiding big time money but for a few hundred dollar you do no do OVDI its a sure way to loose your money

I promise i will keep this attorney and go with him instead of anyone else and will not even log in to the other boards.
Thanks


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## KeithCAN1

Yeah the general consensus if you don't owe anything or owe much is to file your past returns and pay whatever taxes (+ interest) you may owe. The feeling (I hope!) is that they are looking for serious tax evaders who have money in countries known to be tax havens.


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## BBCWatcher

I really don't think you have anything to worry about. This happens all the time, that you miss an account which happens to pay a bit of interest. There's a normal process for that: an amended return, and back filing of disclosure forms. Yes, the IRS and Treasury are within their rights to assess penalties, but for this sort of scenario (voluntary, unprompted disclosure) you'll almost certainly pay the tax owed with interest, possibly with the penalty, and nothing for the late FBARs.


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## Nononymous

Lawyers are compelled to give you worst-case scenarios.

If you are concerned about great big fines, another option is to close your accounts before 1 July, when FATCA comes into effect. Park the cash in a safe deposit box with a Canadian bank, and if you don't want it being eroded by inflation, move it down in legal chunks (below $10k I think - but check!) and invest it in the US.


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## Nononymous

Then again, if you're this nervous about the tax situation, I wouldn't recommend trying to clear customs with ten grand stuffed into your underwear.


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## FilingLate

Ok finally spoke with Centa the guy their seems like a pro this is David Ingram's company if anyone knows ingram one of the best attorney's (May he rest in peace)

He told me that he will file my return when i told him that i was being told by other attorney's to file OVDI he said that's not true and that you shouldn't, and based on what he sees it seem to be a few bucks in penalty.
I am not going to worry about it anymore i just realize my wife is being worried as well and she's 8 months Pregnant.

I have to say one thing thank you to all i will post once i have filed but you guys are the BEST

Thanks i will keep you posted. Nonomous I think you are guy but if you are a girl let me know your name and i will suggest it to my wife for my baby girl. You guys have listened to me and that's more then filing taxes sometimes


Thanks


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## Nononymous

I'm male, and honestly I don't think the advice given was good enough to warrant naming a daughter after, but if you're stuck for ideas you can always start another thread. (I'd tell you my daughter's name except that might count as identifying information!)


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## FilingLate

KeithCAN1 said:


> Yeah the general consensus if you don't owe anything or owe much is to file your past returns and pay whatever taxes (+ interest) you may owe. The feeling (I hope!) is that they are looking for serious tax evaders who have money in countries known to be tax havens.



I will be doing a QD like yourself. I doubt its more then 3200$ for 6 years i will be very surprised its its more then 3200$. On the flip side i had a trading account net loss of around 20k so i am hoping they might look at as well.

Thanks


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## FilingLate

To file Fbar is it the highest and lowest Balance per year? 
It is the highest and lowest Balance per month?
Is it the highest and lowest balance per individual account (for example checking, saving, rsp etc)
Or is the highest and lowest balance per Bank account?

Please let me know
Thanks


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## Bevdeforges

FilingLate said:


> To file Fbar is it the highest and lowest Balance per year?
> It is the highest and lowest Balance per month?
> Is it the highest and lowest balance per individual account (for example checking, saving, rsp etc)
> Or is the highest and lowest balance per Bank account?
> 
> Please let me know
> Thanks


Only the high balance for the year. Low balance doesn't interest them in the slightest. If you like, you can base it on the highest balance reported to you on your monthly statements (i.e. the highest month end balance). And if you're "nervous" about that for any reason, just add 10 or 15% to whatever you determine the high month-end balance to be. There's no penalty for over-reporting.
Cheers,
Bev


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## FilingLate

Got it high balance for the year not the low balance

My follow up question is if the money was transferred from one account to another should i point it out or should i just take high balance from each and every year and report that.

I had a trading account as well is it the same principle high balance or should i report it as a stock based on buy and sell

Thank You


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## Bevdeforges

Just the high balance for the year. They're well aware that sometimes money makes its way through two or more accounts over the course of a year. 

Think of the FBARs as mostly just a listing of your accounts for the IRS. The "high balance" is for them to get an idea of what range the account is. I'm tempted to say they don't really check the balance you report against anything, but with the new rules coming into play this year, they might start getting pickier about this stuff.
Cheers,
Bev


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## FilingLate

Got it Bev i am in the process to getting the GICs from my bank. ITs a mess
I am getting what i can


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## FilingLate

Bev or anyone else. Do i also have to report my stock trading for the past 5 years to the IRS?
Seems like in 2012 when i closed the account i was charged some amount on a NR4 it seems like they cut the money of the source i am just wondering if i still have to state the past 5 years on IRS form or just skip it?
Thanks


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## BBCWatcher

FilingLate said:


> Do i also have to report my stock trading for the past 5 years to the IRS?


Income associated with that stock trading -- dividends and capital gains -- has to be reported to the IRS (with the possible exception of specific types of U.S. tax-advantaged accounts). Whether those gains are taxable or not depends on a number of factors including any treaty protections that might be available.

Some foreign "stocks" may be subject to PFIC complications. Here in Singapore, for example, it's very common for a purported "stock" listed on the Singapore Stock Exchange to be a financial construction that, in my view anyway, is considered a PFIC according to IRS rules. (Ownership and investment structures can be very complex.) The fact the stock is highly liquid and traded every day on a public exchange doesn't seem to disqualify it from PFIC treatment.

If that's a foreign financial account (a foreign brokerage account presumably) it has to be reported via FBAR and/or FATCA per normal.

I'm not sure from where you're getting the "5 years" part of your question.


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## FilingLate

5 year is from tax year 2007-2012 when the account was closed. I never filed anything.
The good part or sad part is that i had a lot of losses on the Stock account.
I got a really good CPA out of Vancouver and i feel good now. He's kind of a straight shooter.

Thank You guys i will let you know how it goes.
Thanks
Mo


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## BBCWatcher

Tax years 2007 through 2012 inclusive is actually 6 tax years.

Losses are not good of course -- nobody likes losing money -- but once they occur there can be some tax benefits. In general you're allowed to apply up to $3,000 per year in net capital losses on your tax return, and that tends to reduce your taxable income. If the net loss exceeded that amount in a particular tax year, you're generally allowed to carry that additional loss forward and apply it to one or more future tax years. These tax benefits tend to be somewhat attenuated for many nonresident filers since many tend to have less income that's actually taxed, but it might still be helpful.


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## FilingLate

BBCWatcher said:


> Tax years 2007 through 2012 inclusive is actually 6 tax years.
> 
> Losses are not good of course -- nobody likes losing money -- but once they occur there can be some tax benefits. In general you're allowed to apply up to $3,000 per year in net capital losses on your tax return, and that tends to reduce your taxable income. If the net loss exceeded that amount in a particular tax year, you're generally allowed to carry that additional loss forward and apply it to one or more future tax years. These tax benefits tend to be somewhat attenuated for many nonresident filers since many tend to have less income that's actually taxed, but it might still be helpful.



Thanks BBC i just calculated my T5s for 6 years all together are 3251$ like i expected however for 2008 they are 1750$. I have emailed my accountant i initially told him 150-650$
lets see what happens crossing my finger that this won't ruin my chances of QD.
Either way i will file i am tired now 
Thanks for all your help


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## BBCWatcher

I'd not fond of this term "Quiet Disclosure," for what it's worth. It's just disclosure, much like any other. It happens to be late, but the IRS doesn't expect perfection because humans aren't perfect. Honest mistakes happen fairly frequently, and that's why there are amended returns, interest, and (potentially) penalties when you missed reporting some income that you simply, inadvertently overlooked and then must report it and pay taxes on it.

The OVDP and the streamlined program are both optional, may-be-withdrawn-at-any-time IRS partial "amnesty" offers that are potentially better deals than the ordinary process of amended returns (or late filings), tax payments, interest, and penalties. The streamlined program, for example, waives penalties if you qualify. (It seems very weird to me that you wouldn't try to take that better offer if you qualify. If you're going to file, why not volunteer to accept the IRS's best offer? The worst that can happen is you fall back to the normal processes with some more money to send to the IRS.)

I think most people here have this totally backwards. The normal process is filing -- ordinary disclosure. There's nothing any more or less quiet about it than normal tax filing. Maybe you're late, and then maybe you owe interest and penalties, but that's all normal process stuff. Then there are a couple exceptional IRS offers that are potentially better, and you can participate if you qualify. But it's all disclosure, and it's all just as "loud."

The big difference comes when you're just a dirty, rotten scoundrel (pretty much), and the IRS is breathing down your neck and might swoop in at any time. And you knew what you were doing -- you just decided you were going to cheat on your U.S. taxes, intentionally and with forethought. That scenario is also potentially covered by the OVDP, in particular. Or you decide to finally come clean and follow the normal processes, albeit late. Then, relatively speaking, the normal processes are "quiet." But that's not most people, and evidently it's not you. You just missed a bit of reportable and potentially taxable income, you made an honest mistake of omission, you now realized your mistake, and you're following the normal processes to get that mistake corrected expeditiously once you became aware of it. That doesn't seem "quiet" to me, and bravo.


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## FilingLate

sometimes words can be quiet comforting i will go with the QD process.
Thanks for your help


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## Nononymous

Streamlined program is for non-residents only, correct? So for a US resident, little choice but to file quietly (and risk it).


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## BBCWatcher

What's "quiet" about normal filing? It's late, that's all. With interest and penalties assessed if the IRS wishes.

It the adjective "quiet" that doesn't make sense to me. It's misleading. It's just LD (late disclosure). Because if you call it QD you're missing the key point about the streamlined program, in particular. Yes, that's an optional program available to some (not all) late filers. The key point is that it could be better than LD but (as far as I can tell) never worse. (How could it be worse?) Streamlined lets you safely skip the oldest filings (if you're really late) and waives penalties if the IRS agrees, and in the streamlined program that's what you're asking for. LD does neither. The IRS just sends you a bill.

There's also a general hardship program available if you qualify. That involves the IRS making an exception for cause, partially or fully waiving penalties and interest, and putting you on a payment plan.


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## FilingLate

BBC personally when you can make money you can change laws.
If someone can explain me this.

OVDP was made for Tax Cheatears , not for someone who missed 500-700$ the value of the money is not important whats important is that many didnt know about this law

Now we are told in order for you to file tax you will be lumped into a program made for cheaters ODP if you didnt join this program then we will punish you even more...

I just don't get this at all.


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## Nononymous

What is so confusing? It's a very simple choice for you. You have two options:

Option one, you enter an "amnesty" program with the possibility of large automatic fines (OVDI). This was designed for naughty people, and is not unlike a plea bargain: you pay a reduced fine in exchange for confessing.

Option two, you simply file amended returns to include the Canadian interest income, for which you presumably pay only the taxes owed plus interest. Then you also file your late FBARs. Here you have the theoretical risk of substantial fines for the FBARs, but there is very little evidence of "normal" taxpayers being punished (it's an honest mistake on a relatively obscure law, not hiding huge amounts of money, and so on). 

The streamlined program is an attempt to offer non-residents a better deal than OVDI, to encourage compliance and discourage quiet (or late, if one wishes to engage in semantic hair-splitting) disclosure, which the IRS claims not to like when it's used by expats who've not been filing their taxes for many years. The streamlined program is not possible for you, as a US resident.

Again, what is so confusing? You have two options. They are quite clearly different. You must choose one. Neither is particularly appealing, but since you screwed up, basically, it's not like there's a good outcome either way. Pick the less bad option - option two according to your most recent legal counsel.

From previous posts it sounds like you also have potential gains and losses from stock trading. That may complicate matters a little. If you were actively trading on a Canadian account while living in the US and filing US taxes, that may be harder to defend than simply claiming to have forgotten about a foreign bank account making a few hundred in interest every year. But you'll cross that bridge when you come to it. (A net loss is likely less of a problem than a net gain.)


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## BBCWatcher

Agreed. You have standard late/amended filing, and you've got one or a couple optional "plea bargain" programs which may reduce or eliminate interest and penalties. Standard late filing isn't generally _too_ expensive for typical taxpayers, but if you've got big problems then the OVDP could be a great offer.

By the way, the U.S. Treasury still has a late FBAR penalty waiver in force (at this writing) as long as your disclosure is voluntary, unprompted (the government didn't catch you first), and explained. I'm paraphrasing, but that seems to be the gist. The explanation doesn't necessarily have to be very good -- "I didn't know" is popular -- but it must be truthful, just like the rest of the report.


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## freedom1

Hi FilingLate

I am a similar position as you but not entirely. I have hired a very expensive accountant who is completely against any PLR or OVDP.

-I moved to the US after living in Canada all my life in 2012. 
-I paid taxes on all my US income in the US but filed joint
-I paid taxes on all my Canadian income with canadian laws in the Canada
-I then went back to Canada and filed at a higher rate of tax, paid $7000 on my worldwide income over and above what I gave the IRS.

But 
-my wife had 900$ in canadian income reported to CRA, 0 tax.
-I had 430$ in TFSA gain which weren't taxed anywhere - they can't, in canada.
-I had 9000$ extra reported to CRA and paid taxes on it. 

I *just* filed a late FBAR for 2012. Even if I show the extra $1330 in income, I also missed 8891, 3520 and 8938. I am quite positive that I can claim foreign tax credits for missed income. I am doing an amended 1040X and ready to move out of the US. I am disgusted by the air of the country.

Anyone here been 'examined' for late FBAR and quiet disclosure?


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## FilingLate

Freedom i am in somewhat of a different situation.
I have been living in the US for 6 years and have been accumulating T5s for the past 6 years.

I just found out about Fbar and that i had to pay taxes on those few hundred dollars in T5 that i accumulated.


I think no one minds paying the taxes its somewhat the penalty that bothers me.

Anyways to make it short i also got a CPA who advised me to stay away from PLR and OVDI and to file under OVDI is to admit criminal responsibility.

I guess once i am done i will just transfer all money here in the US and close my Canadian accounts


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## freedom1

FilingLate said:


> Freedom i am in somewhat of a different situation.
> I have been living in the US for 6 years and have been accumulating T5s for the past 6 years.
> 
> I just found out about Fbar and that i had to pay taxes on those few hundred dollars in T5 that i accumulated.


I know that your situation is different and obviously reading all the material on the internet, it's quite scary.

I still think that you should prepare a letter of reasonable cause and just file a QD. Doing OVDP and then opting out given the length of the process will cause you sleepless nights and a loss of appetite. a 1040X is processed in 8-12 weeks according to the IRS website.

File your 1040X and then call them about your personal file(s) in 3-6 months provided they don't write to you saying 'all clear' or 'trouble'. 
From the bigtime accountant I saw, he said that he does this all the time. They don't usually pursue you like this but going OVDP means you want pain.
At least you have some small income from T5s. I have missed elections for RRSPs and 8938 + 3520.


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## FilingLate

Freedom i have just come to a conclusion that money comes and goes. It pisses you off to pay an accountant or fine when you didnt had a clue about it but their is nothing much both of us can do about it.
We can pay our fair share and then its a waiting game.
Do you have an cpa or a lawyer?


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## freedom1

Hi FilingLate

I agree that's life but it's criminal government tyranny man! Are we all serfs now? Should we have public lynchings and castrations for (get this) not filling out forms? Make everyone a criminal for existing.

Bunch of crap. I want peace of mind. I've decided that my job in the US is not that important. 

I am going to do the 1040X and be done with it. I didn't do anything wrong. I even remitted taxes to Canada when I was a total non-resident here to the tune of 7000$ in extra money.


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## FilingLate

freedom1 said:


> Hi FilingLate
> 
> I agree that's life but it's criminal government tyranny man! Are we all serfs now? Should we have public lynchings and castrations for (get this) not filling out forms? Make everyone a criminal for existing.
> 
> Bunch of crap. I want peace of mind. I've decided that my job in the US is not that important.
> 
> I am going to do the 1040X and be done with it. I didn't do anything wrong. I even remitted taxes to Canada when I was a total non-resident here to the tune of 7000$ in extra money.



I agree but their are plenty like us i am thinking its the right time to file after July 1 their will be a lot more people who will know about this law.
I have some friends who i contacted are in the same situation and thought i was kidding when i told them what needs to be done.
We are all in somewhat of a similar situation. Hopefully i will get done by the end of April and move on with my life.


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## Nononymous

freedom1 said:


> I even remitted taxes to Canada when I was a total non-resident here to the tune of 7000$ in extra money.


Could you not claim non-resident status in Canada, if you are living and working in the US? Do that and you're not even required to file returns. You can still keep your existing Canadian savings and investments, though you are of course required to declare these to US (both income tax and FBAR).


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## Nononymous

I'm on record as being a fan of willful, considered non-compliance for dual US-Canadian citizens living in Canada with no US assets. All sorts of good moral rationalizations for why you should ignore extraterritorial laws from a country you don't intend to live in that you are "accidentally" a citizen of, yada yada yada. Some practical arguments in your favour too: for now, at any rate, the US cannot collect penalties in Canada; once you make yourself known to the IRS, you're on the hook for future filings; FATCA actually looks fairly toothless for non-millionaires and who knows what will happen, between the budget legislation and impending court challenges.

However, if you are a Canadian who moves to the US for work, it is your responsibility to figure out how your foreign (i.e. Canadian) income and assets are treated by the US tax system. Probably something you should do immediately upon arrival. You have entered another country and have accepted that you will operate under its laws. You can consciously choose to ignore these rules, of course, but then you take risks in so doing. You really have no cause to whine about it. You moved there; if you don't like it, vote with your feet - leave.


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## freedom1

@nononymous

Look there is no doubt that one should learn and follow the laws of a country they're moving to or reside in. But just because someone writes it down doesn't make it a law that someone shouldn't complain or 'whine' about as you say.

That's why we have licensure - so the practice (medicine, law, trades) more or less yields consistent results. My accountant didn't ask me - do you have any other foreign income or accounts. 2012 was my first year in the US. Is immigration not a reality of our lives?

The idea that one should forfeit hundreds of thousands of dollars to some 'penalty' structure because they live in the US and can't easily or often receive mail regarding their minute 'offshore' income is draconian and medieval. How about we start roadside executions for people caught speeding? it's the law! 
Yes one should absolutely try to learn and obey the laws where they are going. So I hire an accountant, pay all my taxes. Return to Canada, file my taxes again. Make a huge payment.

Should I lose my life's savings for it? Why not gouge my eyes out? Yes! as you said vote with your feet - talking to my boss about canceling my H-1B.


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## Nononymous

To date there is little or no evidence of any of these draconian penalties being assessed on "ordinary" taxpayers, so nobody's having their life savings wiped out. 

Look, I'm no fan of the IRS. I think the tax reporting requirements for US citizens abroad are asinine, and I fully support civil disobedience by dual citizens in Canada. But the requirement that US *residents* report worldwide income from all sources is perfectly reasonable and consistent with what most other countries do (including Canada); overseas asset reporting is also relatively common in other countries. Given that there are check boxes for this sort of stuff on the forms, it sounds like you had a lousy accountant if they didn't think to ask when you said you'd come from Canada. 

But yes, by all means, come back to Canada if you don't like the way the US wants you to report your Canadian assets. I'm not sure why you'd make a huge payment after returning, but I'm no expert on this stuff so who knows.


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## Bevdeforges

freedom1 said:


> That's why we have licensure - so the practice (medicine, law, trades) more or less yields consistent results. My accountant didn't ask me - do you have any other foreign income or accounts. 2012 was my first year in the US. Is immigration not a reality of our lives?


Unfortunately, the licensure of the legal and accountancy trades most definitely does not result in "consistent results." In the matter of US taxes, many of the laws are (deliberately?) vague and it is possible (and very common) for there to be as many interpretations of the law as there are practitioners. 

Like both you and Nononymous, I'm irate over the stupid tax laws in the US, but particularly at the moment, there is little or no chance of them changing any time soon. So, you play the game and you take your chances. I like to have a rationale for any "aggressive tax stance" I take. (Something I learned while working for one of the big public accounting firms many years ago.) But then there is always "selective compliance."
Cheers,
Bev


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## FilingLate

Look Freedom i agree with you unfortunately it is a reality.
I earned all this money killed myself in the process of saving every penny and they pay the lawyer 15k just because of something i didnt know about and that's just his fees.

You are not the only one who will get hit with this penalty. I understand that you are thinking about resigning i would not take extreme measures in other word if you can get a job immediately in Canada good otherwise don't
if you have RSP you must file form 8891 and i think a PLR letter as well penalty is 10,000 or 5-25% if i am not mistaken.

Most of the people i would say 95% use the streamline process which does not work for us. Quiet disclosure is not possible anymore. I understand a lof of quiet disclosure here unfortunately with 8891 i don't think their is a QD.

My understanding of QD its like playing with fire. You can simply get away with it or if the IRS decides to make a few example and you get in their cross then that's it.
Although i would say 99% plus on this board went with QD

Your situation and mine are pretty much the same we are both Canadian living in US soil

Which accountant did you talk to i spoke with a Canadian base lawyer today he really took his time in explaining everything if you want to i can give you his number.
PM me
Thanks


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## Nononymous

Dude, you're scaring people. The story keeps flip-flopping. Report back with the outcome, don't assume that any Canadian resident in the US getting caught up will immediately be cleaned out of every penny they posses (if they have any left after spending it on lawyers and accountants).


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## FilingLate

Sorry its not my intention to to scare anyone i just read the faq and posted it.
Freedom you will be better off talking to a professional.
Thanks


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## Nononymous

Which FAQ are you talking about?

Look, the consensus round here is that for small corrections and unreported accounts and things like that you can just file amended returns and get caught up on FBARs and the odds of being hit with massive penalties are very, very small. Even for US residents.

I know you've admitted to some OCD issues and all that so it's difficult for you, but ratcheting up the paranoia doesn't help others. Instead, come back in a few months when you've done whatever it is you're going to do (which seems to change based on the last lawyer or accountant you spoke to) and report on the outcome. That would be useful.

Talking to professionals isn't always the best course of action. They can be expensive. If they screw up (as presumably happened with the poster Freedom1) then you're still on the hook. And for all kinds of reasons they are inclined or obliged to advise of worst case scenarios and suggest sticking to the letter of the law, when sometimes one would be better served by fudging a little through quiet disclosure or partial compliance.


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## freedom1

@nononymous
@filinglate

I was very depressed and scared for a full 2 weeks. I actually lost weight and had other symptoms because of thinking about this. 

But then I realized something - OVDP FAQ 2. Of course if someone has hidden their assets and evaded taxes on income off those assets with the full intention to do so, disclosing so quietly should be punished especially if it went on for years. That's what the OVDP is for.

But for small time benign actors who either 1. didn't know the rules (immigrants) 2. didn't know they had income 3. forgot to add that income 4. reported the income where it was earned, the objective - faq 2 - does not (really) apply. 

I take solace in that. If QD was the blessed rectifying process, then by principle you'd have to make it available to *everyone*. So there is some discretion. Not all QDs will coming crushing down on you like a ton of bricks in theory.


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## Nononymous

Yes, that's what everyone on this board and elsewhere has been saying, repeatedly, for ages. 

OVDP is a plea bargain for crooks, nothing more. Everyone else can quietly file late or amend and while technically there is the potential for huge penalties, there is also little or no evidence of them being assessed at this time. 

Trusting professionals isn't necessarily the smart way to go either. (Re: an earlier post - $15k in fees for a few hundred in interest?)


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## FilingLate

I am going to do it. I just have to talk to the wife but i will file quietly. I have talked to a few OVDP lawyers but it seems like that's the only thing they do.
My only problem is from what i have heard if they come after you they can make your life miserable so i am a bit tensed.
If they came after me and said why did you open the bank account i don't have a problem i am a Canadian Cit so i opened the account i just don't want them to use petty tactics and that's whats bothering me
Anyone with any advice please let me know
Thanks


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## rrspresp

FilingLate, freedom1,
I'm in a similar situation as you, even worse. We didn't know that we should report RRSP and RESP accounts with US tax return until last week. Need to backfile FBAR, 8891, 3520/a. Called many CPAs and got different answers. We still don't know which CPA we should trust. If you have found some good CPA or tax attorney, could you please share the info with me?


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## FilingLate

RRSPRESP Most of the advice i got from attorney's was to join OVDP then again all of them were OVDP lawyers.

I am thinking about filing quietly (the term) I have an accountant who i will go with he's in Canada and he's amazing he's not one of your DOOM GLOOM person

If they want to audit they can do that and ask me why i opened the Bank account in Canada its my home country and that's why i did.


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## rrspresp

FilingLate said:


> RRSPRESP Most of the advice i got from attorney's was to join OVDP then again all of them were OVDP lawyers.
> 
> I am thinking about filing quietly (the term) I have an accountant who i will go with he's in Canada and he's amazing he's not one of your DOOM GLOOM person
> 
> If they want to audit they can do that and ask me why i opened the Bank account in Canada its my home country and that's why i did.


Thanks. It seems that there is no need to talk with attorney now. After filing quietly, can I hire attorney to negotiate if there is a big penalty?

Could you please share your accountant's info? I'd like to check if he/she has a solution for my case. Late election for RRSP is not allowed. I don't know how to backfile 8891.


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## freedom1

@rrspresp
@filinglate

I've completely stopped worrying. Or, for the most part started to eat and sleep well again.

Look, this is from a reasonable person's position.

If any or most apply to you
-I have the account established when i was in canada.
-I reported my income to canada as per CRA rules
-My T5 did not come
-I didn't know i had a T5 (or such income) as I don't go to canada often
-My account was a TFSA and my local accountant didn't know a thing
-The TFSA never generated a PFIC. I called the institution they didn't know what to do.
-My RRSP / RESP, I thought was tax-treaty protected (RRSPs are)
-I am complying asap
-OVDP FAQ 2 is not my profile. not one bit.

Then you should file an amended return. If you then get prosecuted, ok fine spend 15k on a lawyer. This isn't legal advice but we're not criminals. Hell I even declare food to customs that i already ate.

I don't know if i'll get kicked off this forum for recommending anyone but if you want - I spoke to trowbridge in toronto. The CPA there has initials WB. Tell him you came to know of him from a guy who recently saw him in toronto one thursday but works in new york city and 'Please help'


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## rrspresp

freedom1, Thanks for all the points. We might have made a stupid mistake. I opened one RRSP account after I became US resident. My family was still in Canada that year, so I should file tax return as Canadian resident, too. To deduct the tax, I bought some RRSP with the money saved in CIBC. What bad effect will this lead?


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## FilingLate

@Freedom and @RRSPRESP

I just spoke with an OVDP lawyer for an hour or so nice person i was really surprised the only only person who said to not to join OVDP program. She basically said that as long as you are not hiding money from the IRS by hiding she meant not transferring money from one account to another i should be ok

I think we should be ok like Freedom said if they did come we can fight then.
Thanks


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## FilingLate

@RRSP if you can find about backfiling 8891 and or filing late election to defer please let me know as well.
Thanksiu


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## rrspresp

I opened one RRSP account after I became US resident. Does that mean I transferred money from one account to another to hide money?


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## FilingLate

rrspresp said:


> I opened one RRSP account after I became US resident. Does that mean I transferred money from one account to another to hide money?


@RRSPRESP
No what i meant from hiding money was an example Ex a US Citizen who had millions in one account so he transferred money from one account to another and finally got caught.
Usually people who hide money don't put it in RRSP or Resp
Thanks


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## Bevdeforges

To ease your minds a bit - the IRS is not pouring through tax filings, looking for petty technical violations to audit. They are looking for returns where it is evident that "something is wrong" or that appear to indicate that the taxpayer is hiding something.

File what you have, in good faith - and if you're worried about something, better to "over disclose" than to leave it off. The first contact (if there is any) will be to ask questions. When you file away your copy of whatever you decide to file, make sure to have your notes as to how and why you filed what you did. That way, if a question arises, you have access to your thought process and can explain without appearing to be making something up on the spot.
Cheers,
Bev


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## FilingLate

Bev i would like to thank you and everyone. I am just a anxious person and this situation is so stupid. How the hell would a common person know about all these taxation laws. I still cannot wrap my head around as to why i should tell another country about my Retirement fund it just doesn't make any sense to me however i will comply because its the law.

Actually i spoke with a wonderful lawyer yesterday one of only who was very open and carefully explained me everything. In fact when i said i want to hire you she told me that she is very expensive and that i should contact a cpa and file amended taxes. she infact said just file going forward and said if and if the IRS checks your return the first thing they are looking for is if money was transferred from bank to bank to bank in order to hide money, this is not the case with me i am ok they can check all infact if they want to i can sit and tell them about each and every transaction


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## freedom1

@filinglate

Why would transferring any money from bank to bank to bank be a felony if someone has to pay bills? And, what if the money was salary with tax withdrawn at source?

I had a US denominated credit card from canada in 2012. I couldn't get a credit card in the US so i needed it to avoid fees. I had to wire 2-3k every few months to pay it off in canada. 

I even wired money from my US bank account to my canadian bank account to put it in an investment account in 2013. Any interest I earned and any dividends or capital gains I made, I declared as income (to the IRS and paid tax on it) in 2014. 

I was reading an IRS summons on a criminal case to a man who created accounts and became a consultant. Then he arrange payments shuffled in ways such that he could avoid taxes on it. His account was in Bermuda with HSBC. It was low 6 figures but he evaded 40k in tax. I/You/others here have done nothing of the sort. I am a normal guy with a job, not a high priced consultant. 

I appreciate Bev's words. I just (over)paid my 2013 tax online and will file an accurate return. I first did 4868 to get an extension so I could clean up my 2012 mess with a 1040x.


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## FilingLate

@Freedom

This was not for you. If you have 10 or 50 account you can transfer money into your account. The lawyer that i spoke was giving me an example where she said

Some people in order to avoid paying taxes would create several account some fictitious where they would shuffle money from one account to another.

Obviously this does not apply to us.
Yes i have filed the 4868 as well. You only go back one year i have to go back 6


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## someNri

FilingLate said:


> ...
> 
> The new lawyer told me not to do OVDI just QD and he'll take care of it.
> He said that you do not qualify for OVDI he said the only way you qualify is if you were hiding big time money but for a few hundred dollar you do no do OVDI its a sure way to loose your money
> 
> I promise i will keep this attorney and go with him instead of anyone else and will not even log in to the other boards.
> Thanks


FilingLate, Could you pl pass me the contact of this attorney?

I am in a similar fix. Under $4K in unreported total interest income over last 3 years (2010, 11, 12) from my India bank (joint with parents). India banks don't send 1099's etc and I had no clue. Money (total ~$60K) I had sent piece meal was for different need but never got used. Parents converted it CDs that earns higher interest. 

Never heard about fbar till earlier this yr. For 2013, I reported my foreign interest in my return and planning to file fbar for 2014. But scared as hell if First Time fbar filing will raise flags. But I don't want to miss file yet again!
Read about OVDI experiences of some folks, it's a nightmare for benign folks. 

Thx


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## Bevdeforges

I really wouldn't bother messing with an attorney for small potatoes like you're talking about. File the FBAR for 2013 (deadline is the end of June - so hurry up) and file going forward. The chances of your ever hearing from the Treasury Dept about the previous years is somewhere between slim and none.
Cheers,
Bev


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## someNri

someNri said:


> FilingLate, Could you pl pass me the contact of this attorney?
> 
> Thx


Can you provide the contact of your attorney?

Or it that against this forum rules to share that?


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## Nononymous

Considering the sort of advice that guy was getting, and the number of different lawyers and accountants he was paying, I'm not sure you want to go there.

If you trust your parents, could you not simply remove your name from the accounts?


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## someNri

Nononymous said:


> Considering the sort of advice that guy was getting, and the number of different lawyers and accountants he was paying, I'm not sure you want to go there.
> 
> If you trust your parents, could you not simply remove your name from the accounts?


You mean move and don't bother filing even 2013 fbar? I am guessing india banks might have already reported the account status starting 2013 (or will report including 2013 accounts including closed accounts).


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## BBCWatcher

I don't think anyone is suggesting you not file the reports you are legally required to file. I presume you live in the U.S. and want to maintain that privilege, so it's particularly important to file.

With respect to your unreported interest income, that's actually even more important to resolve. First, was any Indian tax paid on that interest? If so, you probably would get to take a Foreign Tax Credit to account for the Indian tax paid. If the Indian tax rate is higher than the U.S. rate -- and that's possible -- you might actually be entitled to a U.S. tax refund. (Now that'd be a great, happy reason to get this oversight cleared up, wouldn't it?) Second, is the $4K your pro-rata share, or is the $4K the total for all three account holders (you and your parents)? If the latter, the IRS would generally consider you to have received only $1.33K (one third) of that interest, i.e. your share, though read the instructions carefully.


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## Nononymous

I would look at what is likely to be reported, and when. Then explore whether taking your name off the account makes the problem go away.


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## BBCWatcher

Bad idea, in my view. Reading between the lines, the original poster is living in the U.S. and enjoys that residence as a privilege, not a right. There is absolutely no assurance the account won't be reported, and the stakes are high.

It's just a report, and it's already legally required. I'd file it. You don't skirt the law unless there's a damn good reason, and there simply isn't here.

The tax owed, if any, is likely to be minor. Theoretically at least there might even be a tax refund possible from the IRS.


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## freedom1

In my case, 3 amended tax returns for 2012 - CRA, IRS, and NJ have today been filed.

My case was - I had 2012 income in Canada, and the US. I spent over 330 days in the US and continue to live there. I was taxed on my US income in the US. I added my US income to my Canadian income in Canada and paid taxes on everything to the CRA. I claimed a tax credit to the CRA from my US taxes.

some of my canadian income was wages, other was interest and dividends (those were < $2000). Worried sick, I thought I would have to go the OVDP route. But an accountant prepared massive packages for me and I've mailed them. Now my fingers are crossed. I claimed about $8000 back from canada (as i was not resident) and made cheques to NJ and IRS for a total of $2560 or so. Let's hope the federales don't shake me down.


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## freedom1

Update: My case is detailed above. I simply did an amended return.
Both cheques - one to NJ, one to the IRS have now been cashed. The one to the IRS was botched by my bank giving them an extra $1000. But they've corrected that (allegedly)


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## freedom1

Update: The IRS website shows my application as having been received. Processed: No, Finalized/Completed: No.

It's been exactly 8 weeks as of today. I got an extension for 2013. Crossing my fingers hoping no penalties will be assessed.


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## freedom1

Final update: My amended return has been adjusted!!
It's all over. I had to wait from June of 2014 to February of 2015. But it's over now and I can breathe a sigh of relief.

Next destination: green card  (i hope)


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## nitinkhosla79

what is a big amount (switch between QD vs amnesty programs)?
Is there a magic number?


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## BBCWatcher

Just run a "back of the envelope" calculation. Find out what the back tax owed would be on the previously unreported income plus statutory interest (figure 3% per annum for estimation) plus penalties across all the affected tax years. Assume that the late/corrected FBARs have zero penalty if you're voluntarily coming forward and the Treasury Department hasn't contacted you first about that problem -- a reasonable assumption at least for now, I think. What does that total amount of money look like after you run this estimation? If it's reasonable to you, then just file your 1040Xs and 114s for all affected tax years and pay. If you think you might get a better deal via the Streamlined Program, then choose that option instead.

Don't forget that you are allowed a Foreign Tax Credit (IRS Form 1116) if you paid income tax (or an income-like tax) on that bank interest you didn't report. Doesn't India have a bank interest tax? Yes, even if the tax is withheld before you receive the interest. You'd report the gross (before tax) interest as income and take the FTC to account for the tax withheld.


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## Bevdeforges

nitinkhosla79 said:


> what is a big amount (switch between QD vs amnesty programs)?
> Is there a magic number?


Net net there is no magic number. What counts above all else is the overall situation for your returns - i.e. how much you owe, whether anything else on the returns in question "looks funny", whether you have had tax issues with the IRS in the past, and quite frankly the source of your various income streams. If it "looks like" there is a reasonable chance of recovery (and a significant recovery, not just a couple hundred dollars), then they'll dig deeper.
Cheers,
Bev


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