# FBAR - transfer of money between accounts



## venup

Hi, just became a member.

I have been doing a lot of searching and reading the US IRS publications regarding FBAR, and also searching forums like this one for the case wherein one has multiple accounts with transfers from one to the other (e.g. transfer from savings/checking account to open a term deposit account). My original reading of the IRS pub 54 gave me the impression that high balances in each account needed to be added up, and that did not make any sense because you would end up reporting a much inflated income, and so how would it really communicate any meaningful information to the IRS? I noticed advice on this subject on this site and on Txxx tax's site confirming that it was ok to be "double reporting" the same amount.

OK, so what if you were to open a term deposit with a bank, and then during the same year you come across a much better offer of interest from a different bank, you then close the 1st term deposit and open a new one. The amount would then get reported not twice, but 3x times (checking --> 1st deposit --> 2nd deposit) 

Not content, I decided to google FBAR on multiple accounts and came across an "internal" manual (under irs dot gov /irm/part4/irm_04-026-016.html) whose intended audience seem to be the IRS FBAR examiners and the like. The sections in it that talk about Account Valuation (4.26.16.3.2.2) seem to initially give the same impression to me as on these public forums. However, as I read past this on to Section 4.26.16.3.6 (Aggregate Value Over $10,000) I came across what I have pasted below:

*Exception:*
Money moved from one foreign account to another foreign account during the year must only be counted once.​
I don't know if I am trying too hard or something, but to me this seems to state that money amounts "MUST NOT BE" reported twice (or more). Is it me, or am I reading this portion somehow out of context, or missing the big picture?

Could someone please shed some light? Much appreciated.

P.S. I have not pasted the actual link to the IRS manual because I am not allowed to as a member not yet Active. I am not trying to circumvent membership rules here, rather trying to bring to notice a document that needs to be read in fullness to know the context of the above "rule".


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## Bevdeforges

I think you may be confusing two different sets of rules.

The FBAR rules call for requiring all taxpayers who have foreign accounts with an aggregate value over $10,000 to file FBAR statements. The taxpayer has to then report the high balance in each account for the year. It is in the reporting of the separate account balances where the money may be counted twice. The section you quote is clearly from the section on aggregate value.

So, basically, if you have $8,000 and you transfer it from checking to savings to another savings account during the year, you don't have to report anything because you only have $8,000 in total.

But, if you have $20,000 and do the same with it, then you report the high balance of $20,000 in each of the 3 accounts that year. It's not being double (or triple) counted because the FBAR reports don't add up the balances you report at any point. 
Cheers,
Bev


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## venup

Thanks for the response.

However, I still don't get what the IRS reads into this.

As an example, let's say person A had 2 accounts each having 20,000 in them for a total 40,000. And person B had 20,000 in one account that he transferred to a second. Both A's and B's reports will show 2 accounts with 20,000 as high balances. But their realities are very different. So what do their identical reports communicate to the IRS that is meaningful?

I am just trying to make sense of what the IRS wants so I do it right. Thanks.


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## Bevdeforges

That is, I'm afraid, the $64,000 question. Basically, they just want to know what overseas accounts you have. As far as I can tell, the "high balance" requirement is simply to get an idea of the magnitude of the account. And in my own experience, the balance you report really has little or no significance until you start reporting balances in the millions of $. 
Cheers,
Bev


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## cirrus

Bevdeforges said:


> That is, I'm afraid, the $64,000 question. Basically, they just want to know what overseas accounts you have. As far as I can tell, the "high balance" requirement is simply to get an idea of the magnitude of the account. And in my own experience, the balance you report really has little or no significance until you start reporting balances in the millions of $.
> Cheers,
> Bev


 Yes I agree.
I have never made any real sense of having both 8938 and FBAR. I would have thought they could at least combine the two into one form, send one to the IRS and a copy to Fincen.
I made 3 amendments for one FBAR, which is easy if you make a PDF copy before signing unlike the 8938.
My 8938 currently runs into 17 pages which include 3 accounts of less than $25 which I must keep open. Fincen and the IRS told me these *must* be reported. All accounts are relatively small; unfortunately the cumulative total makes the reporting threshold.
Paperwork Reduction Act Notice?


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## iota2014

cirrus said:


> Yes I agree.
> I have never made any real sense of having both 8938 and FBAR. I would have thought they could at least combine the two into one form, send one to the IRS and a copy to Fincen.


The two forms serve different purposes and have different rules.

The FBAR Fundraiser is a handy income stream, because it not only allows the IRS to sock hefty penalties to non-US-resident USCs for never having heard of it, but also serves to broaden the effective tax base by a) scaring NURUs into compliance and b) steadily increasing the number required to file FBARs by keeping the threshold at $10,000 without regard to inflation. The FBAR's weak spot, though, was the difficulty of enforcement, pre-FATCA.

The 8938, on the other hand, is there to help put the fear of god into both banks and customers, and acquire detailed evidence the IRS can take to court should there be enough money in the accounts to make an attempt at collection cost-effective.

Along the way, FATCA also has the effect of making the FBAR enforceable.

What's not to like? (from their point of view.)



> Paperwork Reduction Act Notice?


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## Bevdeforges

I thought the Paperwork Reduction Act was one of those things that Al Gore championed - and that no one has really paid any attention to it since Gore lost the battle of the "hanging chads." 

But FBAR isn't all that much more enforceable than it ever was. Technically, you are supposed to file an FBAR even if you don't need to file a tax return. OTOH, if you don't need to file a tax return (usually for income under the filing threshold), you don't need to bother with a form 8938. I do the FBAR for a friend of mine who is in precisely that situation. (Because she has no Internet access.)
Cheers,
Bev


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## iota2014

Bevdeforges said:


> But FBAR isn't all that much more enforceable than it ever was. Technically, you are supposed to file an FBAR even if you don't need to file a tax return.


If you have a US birthplace or other indicia, you have to answer your bank's FATCA questions, and if the answer to the Question is yes, your account becomes reportable regardless of whether you're required to file a tax return or an FBAR or form 8938.



> OTOH, if you don't need to file a tax return (usually for income under the filing threshold), you don't need to bother with a form 8938.


Correct. The 8938 does not enforce FBARs, it's the bank's reports that do that.

The banks snitch on the customers by reporting their accounts. The customers snitch on the banks by filing the 8938s. Though low-value customers are not really at much risk of getting caught, the fear of the punitive penalties combined with the awareness of FATCA, provides the stick for enforcement of the FBAR.


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## JustLurking

iota2014 said:


> The two forms serve different purposes and have different rules.


Just to nuance this further...

FinCEN form 114, aka FBAR, falls under Title 31. Although its collection and compliance is managed by the IRS, it is a FinCEN form. And under Title 31, someone (IRS, FinCEN, whoever) would have to take court action to apply penalties for noncompliance.

Obviously that would be costly and inconvenient for the IRS or FinCEN, and the US bureaucracy is only interested in creating inconvenience for its users, so they needed to create a streamlined route to penalties. Their answer was IRS form 8938.

Form 8938 falls under Title 26, so applying penalties for noncompliance becomes trivial. From the IRS perspective, just unilaterally declare noncompliance and then apply sanctions, liens or whatever. Tada! No more need for that pesky Due Process annoyance enshrined in the Fifth and Fourteenth Amendments.

The Taxpayer Advocate Service regularly recommends that the IRS combine these two forms into one. The IRS just as regularly ignores this and most other Taxpayer Advocate Service recommendations. The form duplication itself is annoying, but even more so are the areas where the requirements of these two forms differ, meaning that you can't just copy from one to the other. There is no visible logic to any of it.


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## cirrus

Bevdeforges said:


> I thought the Paperwork Reduction Act was one of those things that Al Gore championed - *and that no one has really paid any attention to it* since Gore lost the battle of the "hanging chads."
> Cheers,
> Bev


That’s for sure. I have recently received my 12th corrected 1095-A with further information in about 15 different languages from O’Care.


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## iota2014

JustLurking said:


> Just to nuance this further...
> 
> FinCEN form 114, aka FBAR, falls under Title 31. Although its collection and compliance is managed by the IRS, it is a FinCEN form. And under Title 31, someone (IRS, FinCEN, whoever) would have to take court action to apply penalties for noncompliance.
> 
> Obviously that would be costly and inconvenient for the IRS or FinCEN, and the US bureaucracy is only interested in creating inconvenience for its users, so they needed to create a streamlined route to penalties. Their answer was IRS form 8938.
> 
> Form 8938 falls under Title 26, so applying penalties for noncompliance becomes trivial. From the IRS perspective, just unilaterally declare noncompliance and then apply sanctions, liens or whatever. Tada! No more need for that pesky Due Process annoyance enshrined in the Fifth and Fourteenth Amendments.


The sad thing is, most countries which claim to respect due process wouldn't even be trying to force people to pay totally life-changing penalties, over something that is actually described by the government as "non-wilful."


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