# FBar Compliance



## amphitecna

Hello all,

I have been losing sleep over learning about this Fbar thing on 1 October. I have been looking through the forum, and I am still not feeling any better. If my question is already addressed, but I have not seen it, please accept my apologies and send me to the correct thread.

I am married to a non-US citizen, and we left the US in 2009. I have not worked while abroad, and therefore have no income, save my retirement funds in the US. I make WELL under the $3600 threshold for filing, but do so anyway. Basically out of fear. 

The FBAR people told me just to send in the relevant paperwork, along with a letter of explanation for each year as to why I didn't file before. Since my husband lived in the US he has an SSN. All of my accounts are joint with him, but I didn't know that I could just put "NRA Spouse" in the Primary joint owner field as was suggested on another thread, so I gave them all the details they asked for (wish I'd have thought of this forum before...).

We, like most other people reading this it seems, are squarely middle class. All of the accounts are just savings/checking accounts. I just mailed the paperwork on Friday. The woman answering the phone at FBar did tell me (upon questioning) that while she couldn't guarantee anything, it did sound as though I was unlikely to have any repercussions, since I am coming into compliance. I am still in full blown panic mode though. It was so invasive filling out those forms, especially since, due to bank transfers, money is counted twice, or even more.

Since I filed tax forms I don't qualify for any of the amnesty programs, so I don't know if I'm just "coming into compliace" as they want, and the FBar woman is right, or if I'm going to get sent to the whipping house and ultimately bankrupted. 

Does anyone have any experience with this? Does anyone know how long they take to contact you if they're breaking out the whip?

Thanks in Advance


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## Bevdeforges

It is HIGHLY UNLIKELY you'll ever hear anything further on this. The FBAR and FATCA things are there primarily to find US residents stashing ill gotten gains abroad where they think they won't be subject to US taxes. 

Unless you're reporting bank accounts with balances in the millions that reveal potentially unreported income, chances are they are only going to check you off as "compliant" and that will be that. Any time you call the IRS or the Treasury Dept they have to tell you that they "can't guarantee anything" - just in case something really out of whack shows up on your forms or they discover that you really ARE hiding something.

But I've been filing those things for years now and the only come-back I've ever had has been a request for the "Employer ID number" for the company account I have signature authority over. It's not a US company, so it has no US Employer ID number. I sent back a note telling them that and have never heard anything further. 

BTW, it's a good practice on your part to file even though you don't have to. Should you ever want to go back to the US and sponsor your husband for a green card, it will save you the trouble of back filing to "prove" to them that you didn't have to file.

Anyhow, no need to panic. You sound like you're doing just fine.
Cheers,
Bev


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## amphitecna

Thanks Bev,

I was hoping you'd chime in on this. I actually tried to PM you, but I can't find a way to, guess I'm too new a user. Plus I bet you are overwhelmed with people asking you what I am about to. It sounds like, given your background and other posts, you have some really good knowledge. Can you suggest anything, other than the oh-so-clearly written IRS pubs that could help us figure out this expat thing and how to be compliant without getting nailed? 

From everything I've read in my middle of the night insomniac searching on this, it sounds like they feel (as others have suggested) that if you're an expat you're living the high life, and of course hiding gazillions. But it sounds like retirement management, and other common things can be a real headache, and investments aren't worth it. I'd love some guidance....and my husband too. I think we would like to go back to the US at some point, or at least keep that possibility open, but overall he feels that US citizenship is more of a liability than anything else.

If you know of any useful books, web sites, or a good (and reasonably priced) US-Expat tax professional here in France, we'd be interested in that. If you can PM me, that might be more appropriate since I don't know if this forum considers such recommendations to be endorsements, and whether or not that's OK.

Again, thanks!


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## Bevdeforges

You need a few more posts before you can use the PM facility, but just keep posting - you'll get there. 

Actually, I've never found any really good information on the financial side of being a US expat. It so depends on your specific circumstances. If you have lots of money and are living the "high life" they seem to expect of us expats back in the States, I guess you can afford to hire financial counselors - but even they don't seem to know all the angles.

One thing you can do is to consider signing up for something like AARO or the ACA. Lately, they seem to be a bit "fear mongering" themselves, I suppose because lots of their members do seem to be, um, how shall I put this? ... "better off." But they do offer quite a bit of practical information on taxes. ACA is based in Switzerland, the AARO folks have an annual tax seminar where they have information on both the US and French tax systems. 

The other thing is that, when I was in b-school they always told us that you should never make any major decision based solely on the tax consequences. You decide what works best for you and then you deal with the tax side of things. (One possible reason for this is that tax laws can change overnight, especially here in France - or so it seems.) The other factor to consider is that there are certain types of income that are more or less "available" to the IRS - but that also can depend on your individual circumstances.

Stick around until tax time and we'll have some more tips and tricks to post here.
Cheers,
Bev


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## amphitecna

What IS it with the US and fear-mongering?! Especially post 9-11. I feel like if they didn't act as though they thought we were criminals, more people would step forward. I honestly feel like since I did that, I've opened myself up for their whims. 

I'll look into those organizations. It does seem to be overwhelmingly complex. Have you learned what you know then, just by having been through the ropes for a number of years, and dealing with things as they come up, or did you have help at least in the beginning? Or is the language, and perhaps knowledge of resources more accessible to you because of the b-school thing? I will absolutely take your advice, and pass it along, if it's OK, and be particularly alert around tax time. Along those lines, what IS the definition of tax time? I always filed early, = as soon as I received all the forms, so it's on my radar for end Jan/Feb. I suspect most people wait until April though?

And your advice on not making decisions based on taxes is sound- I've heard that before. It's just really scary to be put into a new situation, with unfamiliar rules, and not know what new tax consequences will be, for better or worse. 

Thanks again! You're awesome for being so prompt on the responses, and knowledgable! I see you helping out a lot of people here, too. 

Best,
Susan


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## Bevdeforges

It definitely helps that I have an MBA in accounting and am a CPA back in the US (though I admit I haven't kept up on the continuing education and certification). Always been interested in taxes, in any event.

"Tax time" for US expats starts sometime after January 1st - whenever the forms are finalized. (Recently there have been a couple years where some of the main forms weren't available in final form until February or later.) Expat returns are subject to a 2 month automatic extension - to June 15th - so that's your deadline if you're outside the US as of April 15th. (I like to get my returns over and done with early - and if I'm due to be in the US anytime before June 15th, I tend to take my returns with me and mail them in from the US to take advantage of lower postal rates over there.)

Normally by mid-January or early February you can get the latest version of Publication 54 from the IRS website. That's the "official" instruction publication for overseas taxpayers and should give you a good idea of what's required each year.
Cheers,
Bev


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## DavidMcKeegan

I completely agree with Bev, we have filed hundreds of FBAR's for people and have never seen a single penalty!! The IRS just wants you caught up!


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## jimmyjam

could you please give us some more information about your credentials, and what exactly enables you to post a statement as this.

considering that they have a backlog and it takes them 2 years to get to people in the OVDI program, and if you are living abroad I understand there is no deadline whatsoever, nothing to stop them from coming back 5 years from now with your 10,000 penalties?

Thanks for filling us in a bit.


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## DavidMcKeegan

You are right, there is nothing saying that five years down the road they won't come back with fines or penalties...However, as none of us can tell the future, I can only speak from my current experience, and that is of NO penalties.
I work for a tax firm which specializes in Expatriates, we have filed thousands of returns, and have been established since 2009...We have yet to see any of our clients receive penalties.


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## amphitecna

Yeah, I have to admit, I'd like to know this, too. I did ask this when I called the Fbar people. I feel like the woman I spoke with at FBar said it was a three year statue of limitations, but I would love that confirmed.


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## Mother_in_BC

*When to file the FBAR?*

So with regards to the FBAR, do I need to submit back year (and if so, how far back?) and when should I submit them? From what I've read on the IRS site, it says there are no extensions and must be received before June 30th of the following year. With that in mind, I'm inclined to submit next February rather than submit a late filing for 2011.

Also, does this need to be submitted every year?


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## whatshouldido

McKeegans said:


> I work for a tax firm which specializes in Expatriates, we have filed thousands of returns, and have been established since 2009...We have yet to see any of our clients receive penalties.


Wow nice to see someone with true life experience of many people. Thanks for your reassuring post.

I am new to this, basically gobsmacked right now by the unfairness and trying to digest what is happening to our family.

Can I ask you, if you have helped thousands to file, surely you are also helping people to renounce?

On a recent trip to the embassy in Europe I got the feeling that many, many renunciations were going on (not just in Switzerland). But the number they publish of just 1780 seems low to me.

What do you think? Is it possible that less than 2000 people actually renounced last year?

We have no intention of ever going back to the US, and remaining a US citizen will block us from access to free choice of financial services and being able to plan for retirement, so we are seriously considering renunciation. I'm trying to come to terms with how so many people are in our situation but yet only 2000 people have renounced..


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## amphitecna

@Mother in BC: As I understand it, and I'm just muddling through. Other people who know more than I may have more enlightening information to share.

You need to submit 6 years back (or as far back as you can, if less than 6 years). I can not comment on the IRS/tax portion of this whole debacle.

I took the plunge and actually called Fbar. There are two women who answer the phones. Both are very straightforward and will tell you what you need to do. The only thing that makes me nervous is that they asked me for my name. But I'm also sadly, suspicious of my gov't and the economy of fear they've developed post 9/11 [sigh].

Because I've filed taxes all those years, and was only missing the Fbar form itself, they told me to submit all the back years I could (I only had 3), attaching a letter to each year's form explaining why it was late. Apparently not knowing about the form is common, and in their eyes a reasonable excuse (of course, they'll make that decision based on each individuals file). I attached the same letter to each form (changing the relevant information in the body of the letter to reflect the appropriate years). You must include an original signature on each form. 

I don't know if your case is the same as mine or not. They told me NOT to go through the voluntary disclosure process: "Just send those forms to us, at the address on the forms".

If you have a lawyer or accountant, then perhaps it'd be better to go through them. I can't say they eased my mind completely, but I did find the ladies at Fbar to be nice, patient, and reasonably helpful.

Good luck. Many of us are in this same boat, it seems. I think we're all sitting on eggshells over this.


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## DavidMcKeegan

Mother_in_BC said:


> So with regards to the FBAR, do I need to submit back year (and if so, how far back?) and when should I submit them? From what I've read on the IRS site, it says there are no extensions and must be received before June 30th of the following year. With that in mind, I'm inclined to submit next February rather than submit a late filing for 2011.
> 
> Also, does this need to be submitted every year?


Hello! The newest regulations request the last six years of FBAR's to be considered completely up to date. Also, you only have to file a FBAR if you have more than 10,000 in foreign accounts, so if that was not the case, don't worry about filing. 

You will have to continue to submit the FBAR for every year you have more than 10K in your accounts.

Although the deadline is June 30th, I would still recommend filing as soon as you can. Just submit the FBAR along with a note explaining your "reasonable cause" for filing late (also request that the late penalties be waived). Better late than never I always say!


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## DavidMcKeegan

whatshouldido said:


> I am new to this, basically gobsmacked right now by the unfairness and trying to digest what is happening to our family.
> 
> Can I ask you, if you have helped thousands to file, surely you are also helping people to renounce?
> 
> On a recent trip to the embassy in Europe I got the feeling that many, many renunciations were going on (not just in Switzerland). But the number they publish of just 1780 seems low to me.
> 
> What do you think? Is it possible that less than 2000 people actually renounced last year?
> 
> We have no intention of ever going back to the US, and remaining a US citizen will block us from access to free choice of financial services and being able to plan for retirement, so we are seriously considering renunciation. I'm trying to come to terms with how so many people are in our situation but yet only 2000 people have renounced..


Hi, although we have helped so many to file, we deal with renunciations much less. I do feel that the number of people renouncing each year is less than 2000, it's just not something that we see everyday (although the number of people renouncing is continuing to increase each year).

Although the taxation we face as US citizens it "unjust" (depends on who you ask I suppose), it is often more of a pain to renounce than just filing every year. And, if you are trying to renounce just to avoid paying taxes, don't bother. They will require you to get compliant before you can even think about renouncing. 

Also, if you are a high net worth individual (2 million+), they will impose an "exit tax" on you which can get very costly. In most instances, it is just easier (and cheaper) to file the additional forms each year.

However, if you do not see yourself ever living in the USA again, I can see how the additional forms would be extremely bothersome (not to mention costly if you are a high earner). 

I hope this helps a bit, It is a big decision to renounce, and I am glad you are researching your options and seeking outside opinions!


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## quincy

whatshouldido said:


> Wow nice to see someone with true life experience of many people. Thanks for your reassuring post.
> 
> I am new to this, basically gobsmacked right now by the unfairness and trying to digest what is happening to our family.
> 
> Can I ask you, if you have helped thousands to file, surely you are also helping people to renounce?
> 
> On a recent trip to the embassy in Europe I got the feeling that many, many renunciations were going on (not just in Switzerland). But the number they publish of just 1780 seems low to me.
> 
> What do you think? Is it possible that less than 2000 people actually renounced last year?
> 
> We have no intention of ever going back to the US, and remaining a US citizen will block us from access to free choice of financial services and being able to plan for retirement, so we are seriously considering renunciation. I'm trying to come to terms with how so many people are in our situation but yet only 2000 people have renounced..


I renounced last December. It wasn't very difficult. You don't have to be compliant before you do it. I filed my back returns and FBARs afterwards in January and then completed the exit tax form by June of this year. If you have more than $2million in assets, you would have to proceed very carefully. 

When I renounced in Toronto, I was the 3rd person in line to do so. I also know of many who have done the same. <snip>


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## Bevdeforges

Just how onerous the whole FBAR situation is or isn't can be a function of your financial situation. If you've got big investment accounts, especially fairly complicated ones that smack of "offshore accounts" or tax haven status, then you can be sure that the IRS is very interested in your filings.

As long as your FBAR filings jibe with your income tax filings, the IRS has much better things to do with their time.

Renunciation is a serious act with many consequences. It may or may not be something you want to consider. But it's not something that should be recommended to "everyone." And it's not a decision to be made on the basis of "something I read on the Internet."

Most American citizen expats are able to file their tax returns in good faith and will never be hassled by the IRS. Those with larger incomes and more at stake probably should find tax advice through a qualified enrolled agent, tax accountant or tax attorney. You'll pay for the advice, but if the amounts involved are large enough, then it's an investment (and it's tax deductible for US tax purposes).
Cheers,
Bev


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## Mother_in_BC

Thanks for the help. I agree it seems relatively easy to remain compliant once caught-up, but it sure feels invasive and I can't see how anybody benefits. It's hard to see how having millions of people file reams of paper is useful to the IRS. (I have heard there are ~7 million expats, most of whom I am guessing have more than $10,000 in combined assets. To fly the family home costs $5,000...)

If I had enough money to worry about evading tax I wouldn't choose England, Canada, France or Australia...


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## Bevdeforges

Mother_in_BC said:


> Thanks for the help. I agree it seems relatively easy to remain compliant once caught-up, but it sure feels invasive and I can't see how anybody benefits. It's hard to see how having millions of people file reams of paper is useful to the IRS. (I have heard there are ~7 million expats, most of whom I am guessing have more than $10,000 in combined assets. To fly the family home costs $5,000...)
> 
> If I had enough money to worry about evading tax I wouldn't choose England, Canada, France or Australia...


I think everyone is in agreement that this is invasive and generally a PITA. OTOH, we can take some small comfort in picturing the IRS drowning in reams of duly filed paperwork that basically does nothing for them - all in the hopes of finding some anomaly that might yield up some unpaid taxes. (OK, then there is the issue of why the US should be entitled to taxes on income sourced abroad.... but that's another issue for another thread.)\

BTW, the number I've seen thrown around on Americans living overseas is something like 4 to 6 million. That's supposed to be based on the US Consulate estimates of the number of Americans in their jurisdictions.
Cheers,
Bev


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## whatshouldido

McKeegans said:


> it is often more of a pain to renounce than just filing every year. And, if you are trying to renounce just to avoid paying taxes, don't bother. They will require you to get compliant before you can even think about renouncing.
> 
> Also, if you are a high net worth individual (2 million+), they will impose an "exit tax" on you which can get very costly. In most instances, it is just easier (and cheaper) to file the additional forms each year.



Many people like you (journalists especially) seem to say that people are renouncing to (a) avoid taxes and (b) not have to fill in those boring annoying forms.

Can I please add some perspective on this because I feel very strongly, after coming into compliance I have been observing the situation for almost 10 years and trying to reconcile living abroad with a US nationality.

IT is not about filling in forms or even having some day to pay several thousands in (DOUBLE) taxation to a country where you do not live or benefit from any services.

It IS about:

(a) not being able to stand any more the "climate of fear" instilled by the IRS, the threats of confiscation should anything go amok, and the attitudes of homelanders who don't understand why someone living in France, for example, needs to open a French bank account.

(b) changing rules, stricter and tightening all the time.... level of complication escalating, cost of getting legal advice or help steadily increasing, etc etc. over the 10 years of my in-depth and motivated observation, with lawyers at my side who cost over 20,000$, I have seen things get steadily worse and worse for expats EVERY SINGLE year. Every single time the law changed I thought, oh bloody he.. I should have renounced LAST year.

For example, the FEIE which many on this forum love to cite as a reason nobody should worry about citizenship based taxation, is on the table to be cut. And I have never seen them back out of anything detrimental to expats yet, so.... 


(c) just plain fairness and human justice. I spent several years i the US as a child and I had to recite the pledge of allegiance every day. "For Liberty and Justice for All" is ingrained in my brain. This situation is so contrary to every principle of liberty and justice that my entire being has trouble accepting and making sense of it. Living a law-abiding life in your country of residence, and yet being tracked down and threatened by your birth country and discriminated against in your everyday transactions where you live... these are not things I would ever have dreamed I would experience as an EMIGRANT from the US.


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## eucitizen

*great video to share*

It's not just about income tax.

You can skip the first 90 seconds as it starts a bit slow, around 1:40 they get into it.








Capital gains and AMT on the sale of your house.
Capital gains and AMT on the realization of your (perhaps locally tax free) pension fund.
Gift tax on things you shared with your spouse and children.
Reporting penalties.
Limitation of access to banking services.
Foreign spouses and extended family members (parents in law) getting fed up.
That's what it's really about.


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## Edelweiss

*Quiet filing and other thoughts*

I was particularly interested in the comment made by McKeegan as the firm I used in the UK to prepare 6 years of 1040s and 6 years of FBARs (plus a timely filed 2011) made the same statement that none of their many hundreds of quiet filings had penalties assessed by the IRS. The statement was even broader than that as they said that no one in the tax preparation community in London had ever had penalties assessed. I hope and pray this is indeed the case. If not, I am bankrupt as my entire life earnings flowed through foreign bank accounts. Unfortunately, I have another 5 3/4 years of checking the mail with dread.

In my own case, I concluded some time ago that I wanted to renounce. For me, it qualifies as the ultimate no brainer. My brother did it a few years ago. I am hoping that I can find a way to qualify under the exemption as I have Swiss citizenship by right of birth and meet the other tests. Unfortunately, at the time I was born, Switzerland extended citizenship automatically to the children of Swiss fathers and foreign mothers but not to Swiss mothers and foreign fathers. This was amended and made retroactive in the 1980s. The Swiss consulate considers me Swiss by registration in 1988. If any one knows whether the IRS would accept that, after the fact, I should have been a dual citizen from birth I would love to know. It would be a massive win for me.

The amount of tax is not really the driver for me. I paid $74 for 2010 but the return is 60 pages long. The real issue for me is the cost of compliance, what I will call the "worst common denominator" effect of falling between two tax systems, and the real, persistent and increasing threat of financial armageddon associated with "information forms". The cost of US tax compliance is extortionate. In London, the starting point for a discussion on fees seems to be $4,800 (£2,000 for 1040, £500 for FBAR plus 20% VAT on both) and rising. After a disastrous experience with a UK based adviser, I am experimenting with a US based adviser and hope to cut the cost by 2/3rds. Off the shelf tax software is useless as it's just not sophisticated enough. 

The "worst common denominator" is a real pain because it negates tax efficient investing in most instances. A UK ISA is not recognised by the US and an IRA is (I think) not available to me because I don't have US earned income. On the same dividend income from non-ISA UK investments, I am taxed at rates up to 32.5% in the UK and 35% in the US (plus the interest charge because it's a PFIC).


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## Edelweiss

McKeegans said:


> I do feel that the number of people renouncing each year is less than 2000, it's just not something that we see everyday (although the number of people renouncing is continuing to increase each year).


While browsing FBAR and renunciation I ran across a pdf of people's experiences of renunciation at the Isaac Brock Society. It's called the consulate report directory and is linked in their sidebar. On page 81, someone is describing their pretty recent experience of renouncing in Berne, Switzerland and the consular official there is stated as having said that "she does four renunciations a day". 

If true, that consular official alone would account for about 800 renunciations per year, nearly half the total worldwide. Switzerland is a country of just 7 million. I guess it's possible that Switzerland has a disproportionately large number of people who renounce because 1) it is a low tax country and there would be a greater benefit of not being liable for US tax and 2) US persons are finding it increasingly difficult to establish an account in Switzerland as Swiss banks seem to be at the forefront in shedding US customers. 

It does however suggest anecdotally that the official figures are understated.


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## quincy

I am in a similar situation as I was born to Canadian parents in the US. I moved to Canada as a kid and have been here for 40 years. I registered myself as a Canadian when I was an adult. I requested my citizenship record from Canada, and according to them, I am Canadian from birth. I don't think the IRS can argue that I wasn't Canadian at birth. Maybe you can get your citizenship record from Switzerland that will state you are Swiss from birth.


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## Bevdeforges

We're not here to discuss renunciation. If you want more information about that, I suggest you find one of the many forums out there dedicated to the topic, or read up on the requirements for renunciation on your local US consulate website or the State Department website.

I'm going to close this thread as we seem to have exhausted the original topic.
Cheers,
Bev


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