# Stressed related to FBAR filing



## Mickey1970

Hi. I desperately need some good advice related to delay in filing FBAR. I had goggle this query and also spoke to some lawyers. I got so many different answer to the same question that i got more confused. So a bit background ..

We moved to USA on 23 Sept 2012. Tax Returns were filed under Dual Residency Status ( for 99 days in 2012). 

For 2013 normal tax returns filed for full year.

Did not declare foreign income or file FBAR in 2012 and 2013 ( as was not aware of US tax requirements)

My current CPA filed my amended tax returns for 2012 and 2013 and filed FBAR for 2012 and 2013. ( 2 week back - 10 Oct 2014)

His logic was that the additional foreign income for 2012 (period of stay in USA ) is additional $600 and tax due on that is $98. (low amount)

For 2013 additional foreign income is $7000 and additional tax is $2010. We have paid all the these taxes.

But after reading articles on various web sites, I realized that what the CPA has done is made a "Silent Disclosure" in my case. And not recommended by tax lawyers on the goggle site. 

We had couple of foreign accounts in India and total highest value of the accounts was around 145k each year. - 2012 and 2013 (aggregate for each year) 

We had never moved any money from USA to these accounts or vice versa. Tax returns were filed in home country but the income was less than taxable limits, so there was no tax liability

My Question is - 

Did my CPA took the correct step in doing - "Silent Disclosure "
What will be the repercussion of Silent Disclose in my case.
Is there a better option now to resolve this.
What can be done now.

Would appreciate any advice on the above ! 

Thanks


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## Bevdeforges

I don't believe there is any real problem with how your CPA handled your case. The fact that you only started falling under US tax law in 2012 as a dual-status alien means that you're not, technically speaking, in a situation that would call for any of the "amnesty" programs.

The other thing to realize is that, in the US, people file amended returns all the time. In many cases, if the "mistake" being corrected was not deliberate and the forms were originally filed in "good faith" with the amendments filed to correct a simple error, the IRS will waive any and all penalties.

The FBAR requirement has been around for a long time now, but the recent hoopla over it is quite recent and "enforcement" of the reporting is just starting to be put into place. The amounts you mention ($145K) are peanuts in the IRS view of things, so the fact that you've filed those reports without being asked to means you've simply corrected a mistake and you're free to go forward from here.
Cheers,
Bev


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## Mickey1970

Thanks. Hope everything will work fine and will keep all posted..


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## StewartPatton

You most likely will be totally fine.

You situation is difficult because you are sort of straddling between two amnesty programs. When you do not have any unreported income, the IRS will waive the $10,000 per year FBAR penalty just for filing the back FBARs. But when you DO have unreported income, the only way to get explicit penalty protection is to use the Streamlined Filing Compliance Procedures. For those living in the U.S., the streamlined program requires payment of a penalty equal to 5% of the highest balance of your unreported offshore assets.

For my clients in your situation, I explain both options and let them decide. That seems to be what happened here. You've made your decision, it's loo late now to do anything differently, so go carve a pumpkin and do some Christmas shopping--you are probably #100,000,001 on the IRS's list of people to go after.


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## Mickey1970

Hi

Thanks for your revert . It do make me feel better. However I do have a couple of pointer for Streamline and OVPD

I look up both the OVPD and Streamline Filing Compliances Program. The OVPD is straight forward but with heavy penalty and not worth for me.

The Streamline Process has 2 parts - Domestic and Foreign. Now the interesting part is that for Domestic program you have the 5% penalty you are talking about above. 

But if you look at the Streamline FOREIGN Compliance Process the penalty is 0 %. Yes 0%.

All you need to file the amended tax returns to add the undisclosed foreign income and pay the tax. File delinquent FBAR , follow the process and you are done.

However you need to look at eligibility of this program. This is available to US citizen you are posted out of USA AND Non Resident for any one year from the latest 3 years the tax returns were due + Fail to meet the substantial test presence in any one year of that 3 year program. ( Bit confusing. But read 2/3 times on net will clear all your doubt).

I am not a lawyer and cannot frame the correct legal language. But if you search you will find the provision. Try searching - " Streamline Domestic and Foreign Compliance Process and eligibility for the same".

The catch is - You need to find a smart lawyer who understand the process clearly and give you best guide. I found lot of lawyers just trying to rip you by pushing the OVPD or Domestic Streamline Process. ( 27% or 5% penalty). Even when I qualify for Foreign Streamline Process and 0% penalty !!! They did not care ! HA


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## StewartPatton

Ah. I misunderstand your facts then, I thought you did not qualify for the Streamlined Foreign Offshore Program.

So, let me change my answer: Your CPA screwed up. There's no reason to do a quiet disclosure and forgo the opportunity to participate in the Streamlined Foreign Offshore Program. 

You will still most likely be absolutely fine.


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