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FBARs: Prepare them or Refuse them?


Lion EA

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Why or why not?

Have a potential client that wants her tax preparer also to file her FBAR for her UK bank account and "some strange kind of pension." Not sure I want to do that. Before I quote on her tax returns (she dropped off copies of 2019), I'd like to hear some pros and cons from you that prepare FBARs. Or, no longer prepare them.

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When the TDF form was filed It was a mixed bag.  That changed when the FBAR filing is allowed only on the FINCEN site .  I provide general FBAR filing requirements but do not want the liability of doing so. My 3 individual clients with foreign assets all file their own FBAR and provide a copy to me.  The FBAR for a US trust is filed by the trustee, who also provides a copy to me. 

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Yeah, I heard the scream of Liability as soon as I received her email.

I have about three clients that I remind and check up on their FBAR requirements, but all file themselves. In fact, one decided that their Singapore bank account wasn't needed with their US TDBank account with online bill paying and a credit card, so she closed it years ago and filed her last FBAR the following year.

I have enough to do to keep up with the IRS/Congress enacting tax laws. And, I do take CE in international issues, previously scheduled a webinar for next week re FBARS because I do have to advise my clients.

Thank you, everyone, for sharing your thoughts.

I'm leaning toward declining this client.

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In my annual cover letter with the engagement letter, I include a full paragraph

U.S. citizens and residents have an obligation to disclose a financial interest in any foreign bank accounts.  Title 31, Section 103.24 of the Code of Federal Regulations (“CFR”), 31 CFT 103.24, applies to any person or entity subject to the jurisdiction of the U.S., having a financial interest in, or signature authority over, a bank, securities or other financial account having a value exceeding $10,000 (at any time) in a foreign country.  The Foreign Bank Account Reporting (FBAR) is now done with FinCEN Report 114, Report of Foreign Bank and Financial Accounts and is only available online through the Bank Secrecy Act E-Filing website, (http://bsaefiling.fincen.treas.gov/main.html).   Please see this website for full details.  NOTE: This is now due April 15.  There are substantial civil and criminal penalties prescribed for failure to file.  The civil penalty can be as much as $10,000, regardless of whether the violation is willful.  Criminal penalties are much more severe.  Please consider the dollar value of any foreign accounts carefully.  Please call with questions.

I do not and will not prepare myself.  All the information the client needs is, I think, shown here.  It's enough for me to manage the usual things!

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48 minutes ago, Lion EA said:

Thorough explanation, Margaret. I may steal this.

Feel free and to edit, too.  I probably got the gist from AICPA and instructions.  Anyway, it has worked and my clients that need to do this now also even let me know that they have filed.  I use the Questionnaire in ATX and one section is Foreign Reporting.  I require a completed questionnaire to prepare returns so the onus is on the client.  If those questions are answered in the affirmative and they don't let me know they've filed, I ask and remind them of the requirements. 

Somehow I've managed to gain several German clients (citizens now, green cards, other) and US expats in Australia (now dual citizens) so try to keep on top of this.

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Just now, Abby Normal said:

I don't think most of my clients would be capable of filing an FBAR. If I didn't have notes on how to do it, I'd be lost every year. The system is way too complicated, unclear and doesn't always work as you would think.

That's why I state to call with questions.  The first and only one I did was with a German client sitting with me.  I typed in the information for him but it was his account and he had all the numbers.  He was about 80 and not so great on the computer at the time.  All the others now are all quite computer literate and are all professors of something.  They can manage.  Most of my other clients, yeah, could not, but they also do not have foreign accounts so no worries.

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The only problem I have with Form 114 is the apparent incompatibility of BSA's site with Nuance PDF Pro; I must revert to Adobe Reader to complete the return online and so I keep that application on a computer separate from my main ones -- but only because Adobe insinuates itself into other applications to become the default PDF reader.
How is inputting Form 114 online substantially different from preparing and e-filing other tax forms?  My clients pay me for the time it takes me to do that, are sent a copy of the form to review and must return a signed & dated copy of Form 114a.  The BSA site allows me to save and print a copy of the form, and sends two acknowledgements of e-filing, one at once and the other later.  Even better, no extra form is required to request an extension of time to file past April 15.
I may have been lucky to have begun my career in the international tax department of a firm which trained me to monkey around with lots of different forms, but don't law changes throw that at us every year?  Form 114 is simpler than 8938 and 2555 and 1116, for instance, and providing it helps keep clients who've posted overseas or have non-US accounts from before.  I regret only that the demise of TDF 90-22.1 probably cost my ol' hometown some nice jobs -- all too scarce in the wake of globalization.

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I do lots of FBARs, but 95% of my clients are expats abroad or foreign nationals in the US.  And most of my clients have the Form 8938 filing requirement so I have all the information already.  I give them the option of self-preparing or preparing them for them for a fee.  Other software providers allow you to prepare the forms within their software (Drake and CCH Axcess).  Sadly ATX does not.  But I just use the PDF from the BSA website and submit them directly after getting the 114a signed.

 

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ProSeries also allows filing of the FinCen from within the program, although it isn't very intuitive for me to get to the form.  But I agree that if the foreign assets are enough to trigger the 8938 you might as well go ahead with the FinCen form.  I do wish the information carried from one form to the other though.  That would make it a piece of cake. 

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12 hours ago, Lion EA said:

Are you saying that we preparers are required to prepare and e-file FBAR if we prepare a return including Form 8938?

If so, I may be firing a couple clients who file their own FBARs.

No. I am saying that if form 8938 is required... we must attach it to 1040. Failing to do so, our filing is not complete and talking about liabilities... might come in play.

 

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Knowing I'm reluctant to file the FinCEN form, I skimmed through their 2019 return, just looking at the forms, to see if I could meet the price they wanted to pay. No way!

He earns over $400,000, so things like NII and phaseout of QBID come into play, CT and NY returns, FL condo rental w/missing depreciation schedule, FIVE partnerships such as oil & gas/passive loss carryovers and restaurants in NJ, huge mortgage interest so may be some refinances with non-buy/build/renovate uses, many interest/dividend accounts plus stocks, and lots of other forms/schedules. And, she'll start drawing her UK "some strange kind of pension" next year.

I gave her my price range, which is well over what they want to pay, and told her I will not file the FinCEN, mostly because it's feeling like these would be problem clients after all her emails. She was nice enough to call me this morning to thank me for looking over their returns and is picking up her 2019 folder shortly.

Thank you, everyone, for your thoughts and experiences with FBAR.

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2 hours ago, Lion EA said:

Knowing I'm reluctant to file the FinCEN form, I skimmed through their 2019 return, just looking at the forms, to see if I could meet the price they wanted to pay. No way!

He earns over $400,000, so things like NII and phaseout of QBID come into play, CT and NY returns, FL condo rental w/missing depreciation schedule, FIVE partnerships such as oil & gas/passive loss carryovers and restaurants in NJ, huge mortgage interest so may be some refinances with non-buy/build/renovate uses, many interest/dividend accounts plus stocks, and lots of other forms/schedules. And, she'll start drawing her UK "some strange kind of pension" next year.

I gave her my price range, which is well over what they want to pay, and told her I will not file the FinCEN, mostly because it's feeling like these would be problem clients after all her emails. She was nice enough to call me this morning to thank me for looking over their returns and is picking up her 2019 folder shortly.

Thank you, everyone, for your thoughts and experiences with FBAR.

When I skimmed over your post, I first thought $400 was what they wanted to pay.  But then I thought, "sounds like $400 should be a reasonable fee for looking over that return (before declining)".  🙂

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I would've charged to do a thorough review, but I just turned the pages and added in my head $100 or $50 until I reached the end of their return! And, gave them a broad range. I gave them NO tax advice re errors (small) or tax planning.

I did charge an hourly rate recently for a review of 2019 returns to a gal in a divorce who wanted to understand the tax consequences of MFS vs MFJ and also of her soon-to-be ex's proposal. And it resulted in a new client, MFS for 2020.

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$450 is what they have been paying for their tax returns (and FBAR?) here in pricey Fairfield County CT. I was able to see immediately that I would not take only $450, but they asked me about FBAR before I ever received their envelope with returns. I spent very few minutes paging through their return and giving them a price rage much more than $450. Perhaps I shouldn't have agonized over FBAR filing until I had their full picture, but it was new to me and I was glad to hear all your thoughts and advice. I would've given more thought to filing their FBAR if their return had been one that I considered a $450 return!

You bring up an interesting point, though. Perhaps I should charge prospective clients for reviews. Do you all do that? Then, maybe, apply some part of the review fee to their first tax returns if they become clients? I've only charged for reviews as a consulting engagement for tax planning &/or things like the divorce situation I mentioned.

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