Foreign Bank Account

[Slippery Pencil]

Anyone have experience filing past due TD F 90-22.1 forms regarding foreign bank accounts?

A friend has been using HRB's Taxcut for years to prepare his own return. This is the first year the software has asked him about foreign bank accounts and he has had a foreign account for 3 years. I told him I'd either be able to help him out or help him find an expert in this area. I don't think there's anything too complex here I just want to make sure I can get the penalties waived.

Is the irs fairly lenient in waving penalties on this? I think he had reasonable cause: His return is fairly basic (one W-2, no house), the software claimed it was as good as having a professional prepare the return, the software never informed him of a requirement to file. If we attach a statement explaining all of this, will the penalties be waived?

In regard to an foreign requirement expert, is Brian Levy still around? If I recall correctly he did a lot of foreign filings. If my friend wants someone who has dealt with this numerous times I'm wondering if Brian would be qualified.

Thanks,

dave

[Lion EA]

I think the requirement is over $10,000 in an overseas account. Read the directions to see if it's necessary to file and to see if they say anything about late filing.

[kcjenkins]

Dave, are you saying he has had over $10K in that foreign bank account all three years? If so, he's screwed, unless he's in the Cabinet. The penalties are harsh, and the IRS is not at all forgiving on that one. It's going to be hard to get anyone to buy the idea that he has that much money overseas and did not even think to ask a professional if that made a difference or needed to be disclosed.

[Slippery Pencil]

The instructions don't state much of anything, which is why I'm asking if anyone has experience with a waiver request. All the instructions state is:

Extensions of time to file federal tax returns do not extend the time for filing this report. There is no extension of time available for filing this report. If a delinquent FBAR is filed, also attach a statement explaining the reason for the late filing. See “When and where to file” (above) for filing instructions.

The account is with goldmoney.com, which is a storage facility. With the huge rise in gold, the account rose above $10,000 two or three years ago. If it is only a storage facility, I don't think it needs to be reported. However, the website states:

Is GoldMoney regulated?Since 1 April 2008 GoldMoney has been licensed to operate in Jersey as a money service business (MSB) and is regulated directly by the Jersey Financial Services Commission (JFSC). GoldMoney's MSB license can be verified by going to the JFSC's website at the link below and clicking on the letter "N" to see Net Transactions Limited's (the legal entity that operates GoldMoney) listing:

http://www.jerseyfsc.org/money_service_bus...ities/index.asp

Aside from being a regulated entity in Jersey, Net Transactions Limited (NTL) has been domiciled in Jersey since 1 April 2008. NTL's status as a Jersey-domiciled company can be verified on the JFSC's website at:

http://www.jerseyfsc.org/registry/namesear....aspx?id=127166

That makes me think it needs to be reported. Now maybe, since it has been licensed as a MSB since April 1, 2008, there are no past due reports. But I don't really know how it was operating prior to that date.

[kcjenkins]

Sounds like you might be able to get some help from GoldMoney itself. At least I would ask them first.

Here's an interesting post on this issue from another board that was posted last July.

"I just returned from an AICPA meeting of various tax committees, technical resource panels and task force groups. As some of you know, I'm a member of the International Tax Technical Resource Panel, Chair of a task force on reporting requirements for CFCs and a member of a task force on the TDF 90-22.1 form to report foreign financial accounts.

We had some extensive discussions about this form and the AICPA will be making some recommendations to Congress to eliminate some of the unnecessary problems this form causes for tax preparers and their clients. In the course of our discussion, the Chair of the FBAR task force commented that a high ranking IRS manager has informed his field agents that they should demand at least 6 years of penalties for a failure to report their foreign accounts and/or any reports required for foreign corporations, partnerships, trusts, etc.

The non-willful filing penalty can be waived by the IRS in the case of a reasonable cause for non-willful failure to file the form. But an IRS representative who is involved with administration of this form told our task force that not knowing about this form is no longer considered to be a reasonable cause for non filing and that not being informed by a tax preparer is no longer going to be considered a reasonable cause."

Another interesting bit of data:

IRS to Provide Quick Responses to FBAR Questions

People with questions about Form TD F 90-22, Report of Foreign Bank and Financial Accounts (FBAR) can now get fast responses from the IRS via e-mail

[ [email protected] ]. The IRS will answer questions relating to the preparation of an FBAR directly through e-mail. For questions relating to

interpretive guidance of the Bank Secrecy Act regulations the IRS will send an immediate response containing the name and contact information of the

employee who will handle the inquiry.

Individuals wishing to provide comments or feedback on IRS services regarding FBAR forms are welcome to use the e-mail [ [email protected] ]

address. The e-mail system will not accept actual FBAR forms. Account holders must still file those forms at: U.S. Department of the Treasury, P.O. Box 32621, Detroit, MI 48232-0621