# Non-US citizen, non-US resident Delinquent FBAR Filing Advice requested



## TommyTurk

Here is the scenario:

Person A:
Citizen of a European country. 
Worked in the USA for 8 years (no Green Card, no US citizenship, just visa).
Purchased a house in the USA & built up some savings.
Filed US taxes each year.
Acknowledged existence of a “foreign” bank account at each filing. Checked box indicating said account held less than $10,000 (person A did not keep tabs on the foreign account).

Person A then sold their house (amount received from this sale was well below Capital Gains Tax reporting requirements) & wire transferred the contents of their US bank account, say over $120,000 to the “foreign” bank account in 2 separate chunks.

Person A then repatriated to their country of citizenship.

Keen to tie-up loose ends & file their final US tax return, with W-2 in hand, Person A discovers for the first time the FBAR requirement. While checking past statements of their “foreign” bank account they discover that the account actually held, say $20,000 to begin with, reducing as time went by to $12,000 (person A made regular automatic payments from this account). The “foreign” bank account payed negligible annual interest, so any interest received per year was a maximum of $50.

Person A is now a little concerned & confused! What to do? 
This person is considering 4 options, but would appreciate suggestions:
1.File taxes as usual & not file a FBAR & FACTA for the “foreign” account that now contains $120,000+?
2.File taxes as usual & file a FBAR / FACTA for the “foreign” account & hope that no further investigation into previous filings is forthcoming.
3.File taxes as usual & file a FBAR / FACTA for the “foreign” account for this tax year & FBAR’s for all previous years & hope that no further investigation into previous filings is forthcoming.
4.Do not file taxes at all as deductibles on earnings have already been payed as per W-2!

As Person A now lives in their country of citizenship, has no ties with & has no need to return to the USA, what would be their best option?

Thanks in advance for your suggestions!


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## TommyTurk

The "European country" mentioned is the UK!


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## BBCWatcher

Before we get too far here, are you filing 1040NRs? What type of visa did you have? I'm trying to determine whether you were even subject to FinCEN Form 114 filing requirements.


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## TommyTurk

Hi BBCWatcher. Thanks for your questions.
My visa was L-1. I filed regular 1040's, not the NR, during my time in the USA, sometimes self filing, sometimes using H&R. 
Regards,
T


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## Bevdeforges

It sounds like you may have had a Green Card. Did you turn in your Green Card when taking leave of the US? That, too, can affect your FBAR filing status.
Cheers,
Bev


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## TommyTurk

No Green Card, just a series of L-1's. The company I worked for did not sponsor GC's

Regards,
T


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## TommyTurk

Just giving this a gentle "bump"! Any useful advice is much appreciated.

Thank you


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## Bevdeforges

Depending on how long ago you left the US, I'd do nothing at all. The FATCA stuff comes into full effect only in 2014 (with the bank reporting and all). Going forward, you have no filing obligation to the US, so no problem there. And with the rush of information for the "kick-off" year, it's very doubtful they are going to delve back into prior years - particularly for someone who is no longer subject to US filing requirements.
Cheers,
Bev


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## TommyTurk

Thanks for the reply, Bev.
I left the USA at the end of June 2014. The money from my house sale was transferred a few weeks earlier than that. I'm guessing that banks notify the IRS or other Federal financial departments when large sums are transferred outside of the USA.


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## BBCWatcher

U.S. banks report large transactions -- and "curious" patterns of smaller transactions -- to the U.S. Treasury Department, yes.


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## Bevdeforges

Actually, both sides (sending bank and receiving bank) normally must report a transfer of funds in excess of $10,000 to their respective governments. It's standard operating practice. 
Cheers,
Bev


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## DavidMcKeegan

I would recommend back filing the FBAR's to report the balances (up to a max of six years). You are not taxed on these amounts, and it is a relatively simple form to complete, so why don't you just do it and save yourself any potential worry for the future... It sounds as if your US filing obligation is over after this year, so why not tie up all loose ends?


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## TommyTurk

Thanks for the suggestion David. Yes, my tax filings will end with the 2014 posting & I do want to tie up the loose ends. 
Just one final questions for you; As my UK bank account held over $100,000 during 2014 am I obliged to file a FATCA also?

Thanks.
Tommy


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## DavidMcKeegan

From the sounds of your situation you were living in the US during a part of 2014? If this is true then I would file the FATCA forms for 2014. If you are living in the US the FATCA threshold drops to around 50K, and as you were above that threshold, it is best to lean on the side of caution and report.

Good luck!


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## TommyTurk

Thanks to everyone who replied with advice. Just 1 further question: I have checked my UK accounts again & they only went over $10,000 threshold for 3 of the last 6 tax years (2009 - 2014). Therefore, would I be correct in assuming that I only need to file FBAR's for those 3 years?

Thanks.
T


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## BBCWatcher

You're looking at the total across all non-U.S. accounts combined (including joint and signature authority accounts), correct?

Yes, correct, if the total never hit $10,000 at any time during a particular year, you didn't have a filing requirement that year.


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## TommyTurk

Yes, all bank accounts combined 

Thanks.
T


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## TommyTurk

Sorry to resurrect this old topic, but I need a little bit more advice. As I have been preparing to file my taxes I checked the FATCA agreement between the USA & UK.
All of my UK accounts are with a Building Society & I noticed that Building Societies are listed under Appendix 2:
*NON-REPORTING UK FINANCIAL INSTITUTIONS AND PRODUCTS*

II. Deemed-Compliant Financial Institutions. The following categories of institutions are
Non-Reporting United Kingdom Financial Institutions that are treated as deemed-compliant
FFIs for purposes of section 1471 of the U.S. Internal Revenue Code:

Financial Institutions with a Local Client Base
1. Any Financial Institution, including any of the entities listed in this
subparagraph 1, that meets the requirements of subparagraph 2, below:

Friendly Societies - a friendly society within the meaning of the Friendly
Societies Act 1992 (c. 40)
Building Societies - a building society incorporated or deemed to be
incorporated under the Building Societies Act 1986 (c. 53)
Mutual Societies - as defined in the Building Societies (Funding) and
Mutual Societies (Transfers) Act 2007

What does this mean for me?
Does this mean that I do not have to complete the FATCA / IRS Form 8938 as my assets are held by a Building Society? 

I'm assuming that FATCA reporting is done via IRS Form 8938, please correct me if I'm wrong.

Thanks in advance for any advice forthcoming.

Regards,
T


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## BBCWatcher

TommyTurk said:


> What does this mean for me?


Absolutely nothing. You are not a party to that agreement.



> I'm assuming that FATCA reporting is done via IRS Form 8938, please correct me if I'm wrong.


Correct. If you meet the filing threshold (inclusive of your building society accounts -- they are foreign accounts) then you must file.


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## maz57

TommyTurk said:


> What does this mean for me?
> Does this mean that I do not have to complete the FATCA / IRS Form 8938 as my assets are held by a Building Society?


As BBC said, it means nothing to you. It means the institution will not "FATCA" you, i.e. it won't send your account information off to the IRS. However, that fact doesn't relieve you of any US filing or reporting obligation that you may have for that account.

This seems to be a common misconception regarding FATCA. Just because a certain account is exempt from FATCA reporting for the institution doesn't mean it isn't US reportable or taxable for the individual.


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## BBCWatcher

maz57 said:


> It means the institution will not "FATCA" you, i.e. it won't send your account information off to the IRS.


Not quite, and forgive me for repeating this point, but it's an important one. The agreement means the particular institution is not _required_ to report such account information, either directly to U.S. authorities or via its comparable domestic authorities. There is nothing in the agreement (or, generally, in domestic legislation) that _prohibits_ the institution from supplying _more information than required_.

Indeed, there seems to be evidence that most financial institutions exceed their baseline governmental reporting obligations because they'd rather not have the liability, implicit or explicit, political or not, in doing business with "interesting" clients. Most governments have a broad "keep on the lookout for 'suspicious' behavior" requirement -- a manifestation of "Know Your Customer" practices. What's "suspicious" depends on the financial institution and its evolving practices. Financial institutions also have their own internal risk preferences that steer them to collecting more data than required for regulatory reasons, so that they can make independent business decisions about which clients they solicit and retain.

Anyway, none of that background matters for purposes of _your_ U.S. FATCA and FBAR (FinCEN Form 114) reporting obligations if you have them.


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## Bevdeforges

Net-net, what it means is that the IRS may not get a nice, neat report of your account, tied to your US social security number with which to check your tax and FBAR filings. Practically speaking, as maz57 says, you still have the obligation to file the information. But how and if the IRS would find out should you fail to meet your obligation is open to speculation.
Cheers,
Bev


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## maz57

BBCWatcher said:


> Not quite, and forgive me for repeating this point, but it's an important one. The agreement means the particular institution is not _required_ to report such account information, either directly to U.S. authorities or via its comparable domestic authorities. There is nothing in the agreement (or, generally, in domestic legislation) that _prohibits_ the institution from supplying _more information than required_.
> 
> Indeed, there seems to be evidence that most financial institutions exceed their baseline governmental reporting obligations because they'd rather not have the liability, implicit or explicit, political or not, in doing business with "interesting" clients. Most governments have a broad "keep on the lookout for 'suspicious' behavior" requirement -- a manifestation of "Know Your Customer" practices. What's "suspicious" depends on the financial institution and its evolving practices. Financial institutions also have their own internal risk preferences that steer them to collecting more data than required for regulatory reasons, so that they can make independent business decisions about which clients they solicit and retain.
> 
> Anyway, none of that background matters for purposes of _your_ U.S. FATCA and FBAR (FinCEN Form 114) reporting obligations if you have them.


In most of the IGAs the foreign financial institutions report info to the foreign country tax agency and that foreign agency, in turn, reports info to the IRS. Even if a bank gets overzealous by reporting exempt accounts to that foreign agency, it is likely the foreign agency will delete that extra, FATCA exempt, part of the info before they pass it on to the IRS. Foreign country tax-advantaged accounts are by definition already known to the foreign agency anyway. So while the banks may be confused by the rules, the tax agencies certainly understand them.

So yes, foreign institutions may over report (there is evidence of this already happening here in Canada), but that doesn't mean that info will be passed to the IRS.

I think the institutions that are really paranoid about their US citizen customers will simply get rid of them by closing the accounts. US citizen customers are becoming increasingly bad for business; the liability attached to a handful of customers is not worth the risk. This is an unintended consequence Congress never thought of.

Of course, according to Robert Stack, this is all a myth.


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