# FACAT lead to know failed to file tax and FBAR



## civicsir

Hi, All:
I am new to here and had been reading many posts and getting understand a little bit more about tax, FBAR, FACAT for U.S. citizens who work overseas for years without notice that have the responsibility to file tax and FBAR or others tax related forms to the IRS.

Here is my story:
I immigrated to the U.S. in 1993 with green card status and study there until I graduated with my master degree in June, 2004. During the years in the U.S., if I worked as a part time job for that year, I had filed the tax for that particular year.

Then I became citizen in August, 2004 (no dual citizenship) and as soon as I got my U.S. passport, I left U.S. and found a job in China and work since then and never return to the U.S. for the past 10 years. I had filed my tax with China IRS yearly since I thought I only to file the money I earned here then I will be fine. And like thousands of U.S. citizens that never realized that have to file tax, FBAR or others tax related forms to the IRS until the banks informed me that I have to sign W9 form (FACAT issue) and I had signed it because two of my accounts exceed $50,000 limits. In the beginning, I refused to sign and provide my information to them, but they told me that if I did not do so then they will give out my account as not cooperate account to the U.S. government.

Since then I read many article about FACAT and it is target the people who never file tax or FBAR to the IRS and unfortunately I am one of the victims that IRS is targeting for. And from the first day it worried me until now how to resolve my situation and I really really couldn't sleep well since then and trying to talk to many experienced CPAs on my situation but don't know who should I listen to.

For the past 10 years working overseas, my annual income range from $30000-$50000, not exceed the overseas exemption $87500-$97500 (2004-2013). But my account did exceed $10000 from 2005 to today which violate the FBAR issue. After reading many posts here, I think I am qualify with Streamlined Foreign Offshore Procedures (SFOP) to compliant tax issue.

The first CPA I asked, base on my situation, he told me that I am qualified with SFOP and he will charge me $15000 USD for it.

The second CPA told me that I can just start to file my 2014 tax and FBAR beginning this March and forget about the past tax and FBAR that I did not file then I shall be fine. I had question him about I already signed the W9 form (FACAT), wouldn't that be conflict with the tax and FBAR, but he still told me that just start filing my 2014 tax and FBAR then I will be fine. If anything goes wrong, IRS will inform me with the letter. So this CPA suggestion kinda worries me, but he only charges $200/year to file tax for me.

The third CPA suggest me either to start to file my 2014 tax and FBAR beginning this March or OVPD (this might cause me 40%-60% overseas account money as penality) or SFOP if I am qualified to file (this might cause me 0% penality if I file correctly). The charge is not known, it might depends which option I choose.

This is my situation I faced now and like others that really worries me that I couldn't sleep well in the night and panic about this situation. And I don't know which CPA that I shall listen to. That is why I come here to seek advise and help about this. Is there any has experience how to file SFOP will be appreciated. If anything not being clear illustrated here, we can discuss more. Thanks^^


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## BBCWatcher

Yes, you can participate in the IRS's Streamlined Program. That's a very good option.

Another option -- really a variation on the same option -- is to file the past 6 (or more) years of FBARs (2013 and prior) plus your 2014 FBAR before it's due, i.e. take the first important step in the Streamlined Program. Then consider whether you want to complete the rest of the program. If you genuinely owe zero U.S. tax -- and from your description that seems very likely -- there is zero penalty for non-filing or late filing tax returns. The U.S. Treasury is currently not assessing any penalties for late filing truthful FBARs (FinCEN Form 114) as long as you provide a reasonable, truthful excuse ("I didn't know" is popular). It's really easy to file that report, it won't take long, and you can do it yourself without hiring an expert tax preparer.

So, to net it out, I'd get the FBARs filed and done, then decide how you want to proceed from there. That'll protect you from FATCA data sharing-triggered risks that'll be very real very soon. You may already be well protected against tax non-filing risks.


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## DavidMcKeegan

I agree that you should get the FBAR's taken care of as soon as possible so as to reduce the chances of anything negative coming your way. 

I would also suggest getting caught up under the Streamlined program. From the sounds of your situation you will definitely qualify, and you can likely come forward without worrying about any interest or penalties. It seems as if you will not owe the US anything, and if you do not owe anything, you do not need to worry about any fines for coming forward.

For the Streamlined program they want three years of late returns and six years of FBAR. As such I would recommend filing the 2011-2013 Federal returns and the 2008-2013 FBAR's. After that you would file the current 2014 year as normal.

Also, please continue shopping around for a CPA. 15K to get someone in a situation such as yours caught up is outrageous!


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## Bevdeforges

I agree. Go with the Streamlined Procedure, if it will help you sleep at night. And unless you have complex investments, you may very well be able to do the tax filings yourself. (The FBAR filings are actually quite easy to do yourself online.) If you need help, there are free versions available of popular tax preparation software for the current year. And prior year software available for only about $15 a year. If your salary is your main source of income, the forms are actually pretty easy to do yourself.
Cheers,
Bev


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## civicsir

Hi, All:
Thank you being so helpful in giving me the tips to resolve the situation I encountered now and really appreciated it a lot from the bottom of my heart.

I never file FBAR before and do not know which software (TaxAct? TurboTax?) that I can purchase to back file my FBAR for the past 6 years? Also what kind of explanation that I can use to excuse me from not aware or notice I have to file FBAR on the accounts exceed $10000? Just simply put I did not know? Or do you have a sample that I can reference on on this will be helpful as well. Is explanation need to put on the FBAR for each of the year I report on?

From the suggestions you gave me, it seems that to report FBAR as soon as possible due to that I am running time with the FACAT that overseas banks will handover the lists to the U.S. government. Does anyone know when this FACAT lists will start to track down on the overseas bank account? Since I need some time to request my bank statement for the paste 6 years with the highest amount for that particular year. Hopefully I can catch up soon or later. 

Regarding the filing tax, my situation is pretty straight forward just the bank income or the bank interests (not over $100 yearly). And not much stock trading here, If I lose money, can a get deduction for that if I report it in the oversea?

Right now I think I can see a little better and more confident to face this streamlined procedure. I will also seek more advise on the CPAs and make the finally decision that will not trouble me with the IRS. Thanks!


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## ForeignBody

civicsir said:


> Hi, All:
> Thank you being so helpful in giving me the tips to resolve the situation I encountered now and really appreciated it a lot from the bottom of my heart.
> 
> I never file FBAR before and do not know which software (TaxAct? TurboTax?) that I can purchase to back file my FBAR for the past 6 years? Also what kind of explanation that I can use to excuse me from not aware or notice I have to file FBAR on the accounts exceed $10000? Just simply put I did not know? Or do you have a sample that I can reference on on this will be helpful as well. Is explanation need to put on the FBAR for each of the year I report on?
> 
> From the suggestions you gave me, it seems that to report FBAR as soon as possible due to that I am running time with the FACAT that overseas banks will handover the lists to the U.S. government. Does anyone know when this FACAT lists will start to track down on the overseas bank account? Since I need some time to request my bank statement for the paste 6 years with the highest amount for that particular year. Hopefully I can catch up soon or later.
> 
> Regarding the filing tax, my situation is pretty straight forward just the bank income or the bank interests (not over $100 yearly). And not much stock trading here, If I lose money, can a get deduction for that if I report it in the oversea?
> 
> Right now I think I can see a little better and more confident to face this streamlined procedure. I will also seek more advise on the CPAs and make the finally decision that will not trouble me with the IRS. Thanks!


You do not need any special program to file FBARs. You do it here:

BSA E-Filing System - No Registration Filing FBAR


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## Bevdeforges

And on the FBAR forms, there is a drop down menu for the space where they ask why you're filing "late." Just pick the closest option for your situation (most likely "I didn't know I had to file").
Cheers,
Bev


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## civicsir

Hi, All:
Thanks for the helpful links for me to understanding how to file FBAR. I am just wondering if this e-filing system can file 6 years or so back on FBAR? 

From you personal experience, are there any issue that occurs after back filing FBAR? I mean any contact from Department of Treasury? Or just as it is, no question asked from it?

Sore that I do not have a computer with me, I only can reply and visit the site with my smartphone. Thanks again


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## Bevdeforges

There is no problem back filing 6 years on the FBAR site. You have to fill in the year you're filing on the form as it is, so you just download one form and re-use it to generate the multiple years. 

As far as contact from Treasury is concerned, no news is good news. I've had them come back to ask specific information (like if you didn't fill in a line - though that was back in the days of the paper forms). Even then, you send in the information they asked for and that's it. No further contact.

As far as not having a computer, you're kind of up ye olde creek. It is possible to request "special permission" to file on paper. I assume there are instructions about where to send the request somewhere on the site. But you need to get the permission first - before filing.
Cheers,
Bev


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## BBCWatcher

To be specific, to file FinCEN Form 114 you'll need access to a computer running Adobe Acrobat Reader X (Version 10) or higher, preferably the latest version. (I haven't been able to get the form to work this year with the older Acrobat Reader 9.x that's the latest version available for Linux.) So that means a computer running either Microsoft Windows or Apple Mac OS X that can run Version 10 or higher of Adobe Acrobat Reader.

Worst case you can stop by an Internet cafe and fill in the form there. Be sure to print a copy (and save one, too). You _can_ read the filing instructions on your smartphone, tablet, or other Internet-compatible device ahead of time. Filling in the form itself requires a Windows or Mac PC (or Windows tablet).


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## civicsir

Hi, All, 
Thanks again to your great help on this!

Shall I file these back tax and FBAR first before I start filing the 2014 tax and FBAR? Or can do it at the same time to save time. But for filing streamlined foreign procedures seems need more work because I have to provide a document that I work overseas and live outside of U.S. more than 330 days and also each years' first page I have to use red pen to written streamlined procedures on it, so IRS would know that I am filing this streamline procedures. Does anyone have experienced this? Or encountered any problem?

Sorry to confuse you. I do have personal computer with me but currently I am on vacation and did not bring with me and that is why I use smartphone to reply you. Thanks all again!


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## BBCWatcher

The late FBARs are the priority in your case, as mentioned.


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## Bevdeforges

You don't actually need to provide any sort of "proof" that you live outside the US. Nor do you need to provide any "proof" of the earnings you declare from outside the US. Nor for the balances you report on your FBAR filings.

Especially for the FBARs, if you need to you can estimate the high balances for each year (though if you need to estimate, I'd add some to whatever your estimate is - better to estimate high than low). Unless they have reason to look into your tax situation, it's next to impossible that they could really even check the accuracy of the high balance you report. For practicality's sake, your estimate of the high balance had better be higher than the year end balance for the year. However lots of things, including exchange rates, will affect the precise number you report.
Cheers,
Bev


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## jbr439

BBCWatcher said:


> ...
> Worst case you can stop by an Internet cafe and fill in the form there.
> ...


That's the official line as well, more or less. However, entering sensitive financial information on a *public* computer really seems to be just asking for trouble.


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## BBCWatcher

You mean, a subset of the "sensitive" financial information sent in the mail in your bank statements?

What is "sensitive" here?


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## civicsir

Hi, All:
Hi, All:
Hi, All:
Hi, All:
I just contact a new CPA about my situation, she told me that I am not only need to file FinCEN 1114 FBAR and there might be to file 8938 form (for a single person who lives oversea needs to file where account total exceed $200000. I am well below this amount). But I am to file it with 1040, 2555, along with 8938 form in order to prove that I am qualify oversea exemption.

So the the back 3 years of tax, do I also need to include 1040, 2555, 8938 forms all together for Streamlined foreign offshore procedure?

As I know my priority is to file FBAR as priority for now. 

Thanks again!


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## Bevdeforges

Why, exactly, does the new CPA say that you need to file an 8938? If your reportable financial assets total less than the $200,000 threshold, you shouldn't have any need of filing one. 
Cheers,
Bev


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## BBCWatcher

You only need to file IRS Form 8938 if/when you file a tax return (IRS Form 1040), and only if you meet the filing threshold for that particular form.

If you live overseas (outside the U.S.), and if you are filing a separate return (not a joint return with a spouse), then you only file Form 8938 if you have at least $200,000 in total value of your non-U.S. financial accounts at the end of the year (December 31) or at least $300,000 total at any time during the year.

You would certain file IRS Form 1040 -- that's your tax return -- plus applicable attachments. Usually you'd file Schedule B ("Interest and Ordinary Dividends") at least. Form 2555 is quite popular, yes, but it's optional. (You can choose whether or not you want to take the Foreign Earned Income and Foreign Housing Exclusions.) It's not obvious from Taiwan's published income tax rates whether Form 2555 makes sense or not, so you could try the calculation both ways (letting tax preparation software do the work for you). Form 1116 ("Foreign Tax Credit") is also quite popular, with or instead of Form 2555. You'll need to attach Form 8965 starting with tax year 2014. (That's a new form as a consequence of medical insurance improvements in the U.S.)

Tax preparation software -- TaxAct, TaxSlayer, etc. -- figures out which forms you need automatically.


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## jbr439

BBCWatcher said:


> You mean, a subset of the "sensitive" financial information sent in the mail in your bank statements?
> 
> What is "sensitive" here?


Account numbers, high account balances, social security number (!), name, and address collectively make up sensitive information. Would you not call this sensitive?

Bank statements never include social security number (social insurance number). And although I put little faith in the postal system, I trust a potentially compromised internet cafe computer far, far less.


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## BBCWatcher

jbr439 said:


> And although I put little faith in the postal system, I trust a potentially compromised internet cafe computer far, far less.


OK, then don't use a computer at an Internet cafe. Ever.


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## jbr439

BBCWatcher said:


> OK, then don't use a computer at an Internet cafe. Ever.


Well, googling the weather or movie showtimes doesn't require personal information, so activities of those sorts would be appropriate. However, for anything that involves the transmission of personal information, I certainly would not use any public computer.


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## BBCWatcher

You're assuming a private individual knows at least as much as an Internet cafe owner about how to secure personal computers properly.

After watching a particular family member in action, I certainly wouldn't assume that.


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## Bevdeforges

Still, jbr has a very valid point. It seems a rather poor idea to suggest using an Internet café or other public computer to report something like the FBARs. I had thought that maybe you could use a public computer as long as you're careful to download the pdf file directly to a USB key, prepare and store the document on that and then transmit the finished document from there. However, there is still the risk of divulging your private information via keystroke recorders or other fairly simple techniques.

Frankly, I think the only practical option for someone without a computer (or computer access) is to find a friend with a computer who can do the filing for you. (And obviously, someone you trust with this sort of information.)

Going to mandatory online filing was NOT a brilliant idea on the part of the government. There are simply lots of folks who don't have computer access. And in our area - where I do the filing for an elderly friend of mine - I know of no "Internet café" anywhere in the area (not that she would have the foggiest idea how to use one). 
Cheers,
Bev


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## BBCWatcher

Public library?

I am deeply skeptical of the argument that Internet filing is less secure, on balance, than postal filing was, especially when dealing with international postal systems. Internet filing secures the communication path, and at least with Internet filing you have the _opportunity_ to secure your side of the channel (or choose who you trust to do that). Postal filing offered none of those protections.

That said, I would certainly prefer that the Treasury Department shift as quickly as possible from proprietary Adobe Acrobat to standard Web browser-based technologies that also extend to smartphones and tablets. Until they do that, in my view they should allow paper filing.


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## Bevdeforges

BBCWatcher said:


> Public library?


Not in France.

Actually, the security issue is probably worse for individuals filing the FBAR because you must download the form, save it, fill it out, save the filled out version and then upload the pdf form to the FinCEN. Every place you have to save an image is a potential problem.

And then there's the thing about needing to have a Windows (or possibly Mac) machine.

No, the mandatory electronic filing is a big gaffe on their part. But I think it demonstrates the audience they're actually after.
Cheers,
Bev


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## BBCWatcher

No, you don't actually have to do it that way. You can do everything inside the browser, albeit with the Acrobat Reader plug-in.


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## civicsir

Hi, All,
Thanks for the helpful discussion. Really appreciated it a lot.

If back 6 years of FBAR filed over the internet, what did you do next? Since to fullfill the streamlined foreign offshore procedures as below:
U.S. Taxpayers Residing Outside the United States

Specific Instructions for the Streamlined Foreign Offshore Procedures
Failure to follow these instructions or to submit the items described below will result in returns being processed in the normal course without the benefit of the favorable terms of these procedures.

For each of the most recent 3 years for which the U.S. tax return due date (or properly applied for extended due date) has passed:

if a U.S. tax return has not been filed previously, submit a complete and accurate delinquent tax return using Form 1040, U.S. Individual Income Tax Return, together with the required information returns (e.g., Forms 3520, 5471, and 8938) even if these information returns would normally be filed separately from the Form 1040 had the taxpayer filed on time, or 
if a U.S. tax return has been filed previously, submit a complete and accurate amended tax return using Form 1040X, Amended U.S. Individual Income Tax Return, together with the required information returns (e.g., Forms 3520, 5471, and 8938) even if these information returns would normally be filed separately from the Form 1040 had the taxpayer filed a complete and accurate original return. 
Include at the top of the first page of each delinquent or amended tax return and at the top of each information return "Streamlined Foreign Offshore" written in red to indicate that the returns are being submitted under these procedures. This is critical to ensure that your returns are processed through these special procedures. 
Complete and sign a statement on the Certification by U.S. Person Residing Outside of the U.S. certifying (1) that you are eligible for the Streamlined Foreign Offshore Procedures; (2) that all required FBARs have now been filed (see instruction 8 below); and (3) that the failure to file tax returns, report all income, pay all tax, and submit all required information returns, including FBARs, resulted from non-willful conduct. You must submit the original signed statement and you must attach copies of the statement to each tax return and information return being submitted through these procedures. You should not attach copies of the statement to FBARs. Failure to submit this statement, or submission of an incomplete or otherwise deficient statement, will result in returns being processed in the normal course without the benefit of the favorable terms of these procedures. 
Submit payment of all tax due as reflected on the tax returns and all applicable statutory interest with respect to each of the late payment amounts. Your taxpayer identification number must be included on your check. You may receive a balance due notice or a refund if the tax or interest is not calculated correctly. 
If you are not eligible to have a Social Security Number and do not already have an ITIN, submit an application for an ITIN along with the required tax returns, information returns, and other documents filed under these streamlined procedures. See the ITIN page on Internal Revenue Service for more information. 
If you seek relief for failure to timely elect deferral of income from certain retirement or savings plans where deferral is permitted by an applicable treaty, submit:

a statement requesting an extension of time to make an election to defer income tax and identifying the applicable treaty provision; 
a dated statement signed by you under penalties of perjury describing:

the events that led to the failure to make the election, 
the events that led to the discovery of the failure, and 
if you relied on a professional advisor, the nature of the advisor’s engagement and responsibilities; and 
for relevant Canadian plans, a Form 8891 for each tax year and each plan and a description of the type of plan covered by the submission. 
The documents listed above, together with the payments described above, must be sent in paper form (electronic submissions will not be accepted) to:

Internal Revenue Service
3651 South I-H 35
Stop 6063 AUSC
Attn: Streamlined Foreign Offshore
Austin, TX 78741

This address may only be used for returns filed under these procedures. For all future filings, you must file according to regular filing procedures. 

For each of the most recent 6 years for which the FBAR due date has passed, file delinquent FBARs according to the FBAR instructions and include a statement explaining that the FBARs are being filed as part of the Streamlined Filing Compliance Procedures. You are required to file these delinquent FBARs electronically at FinCen. On the cover page of the electronic form, select “Other” as the reason for filing late. An explanation box will appear. In the explanation box, enter “Streamlined Filing Compliance Procedures.” If you are unable to file electronically, you may contact FinCEN's Regulatory Helpline at 1-800-949-2732 or 1-703-905-3975 (if calling from outside the United States) to determine possible alternatives to electronic filing. 

you also need to back file 3 years of tax, is that correct? This way will clean up your un-filed tax records without penalities if I read it correctly? 

I have confirmed with the new CPA, she told me that I don't need to file 8938 forms since my account total value is not over $200000 as my status as single. It seems the streamlined procedures described really easy, not as complicated as it seems, but is there any hidden dangers or misleading to have people like me to come forward and got penalities. Maybe that is why one of CPA suggested me to forget the previous tax and start from this year. Or maybe I just think too much!!! Anyway, thanks again


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## Bevdeforges

BBCWatcher said:


> No, you don't actually have to do it that way. You can do everything inside the browser, albeit with the Acrobat Reader plug-in.


Difficult to explain to someone who is using a public computer because she has never used a computer before in her life.

I still believe there should be an option to file on paper for those without computer access. But it does make a handy excuse to just not bother filing.
Cheers,
Bev


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## Bevdeforges

civicsir said:


> . It seems the streamlined procedures described really easy, not as complicated as it seems, but is there any hidden dangers or misleading to have people like me to come forward and got penalities. Maybe that is why one of CPA suggested me to forget the previous tax and start from this year. Or maybe I just think too much!!! Anyway, thanks again


So far, there seem to be no "horror stories" of folks using the Streamlined procedure and then getting "nailed" for something. But in all honesty, other than marking the returns up as being for the program and submitting them together with copies of the FBARs, this is pretty much the same procedure they've advised for the last couple of decades when folks find out they should have been filing.

Chances are, unless you have some huge and complicated investments or have been avoiding lots of taxes over the years, you could just as well start filing in the current year and nothing would ever be said about it. Comes under the heading of "they have bigger fish to fry."
Cheers,
Bev


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## jbr439

BBCWatcher said:


> You're assuming a private individual knows at least as much as an Internet cafe owner about how to secure personal computers properly.
> 
> After watching a particular family member in action, I certainly wouldn't assume that.


The Internet cafe (or public library) computer is also subject to malicious tampering by people (e.g. employees, other users) who have physical access to the machine. This introduces even more potential for the computer to be compromised.


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## civicsir

Hi, All: 
Thanks for all the advise, and after discuss with the new CPA, they will charge for 3300 for my case which a whole lot cheaper than 15000 previously ask. I guess I will start from here and see how it goes. Finger crossed!


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