three way to go, i do not know which is the best.
A file f8891/FBAR for the last 6 years -- this is called quiet disclosure.
B. join OVDI --- run into risk for penalty on base -- for you that is a lot money
C. PLR ask for private letter ruling -- IRS has posted a lot these kind letters -- and all have been granted to make late election on f8891.
It seems to me, A is the best choice -- for your case -- simple RRSP problem
DUAL - for Nelsona
Moderator: Mark T Serbinski CA CPA
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canuckfan1
- Posts: 2
- Joined: Thu Aug 18, 2011 11:46 pm
Thank you Nelsona and Tsanaha for your replies. I just talked to a guy here in Phoenix who advertises himself as a cross border specialist and he said I should definitely join ovdi. He said if I just filed the fbars and the 8891's I would definitely get a full audit and then face possibly huge penalties. But if i do the program then I would be penalized 25% of the highest balance over the last eight years which would actually be about 50% of the current balance. On top of that, if I withdraw the money to pay the penalty, Canada is going to withhold another 25%. Neither option sounds great, but I am leaning towards just filing the fbars and the 8891's. Does anyone know of someone who did this who was declined the deferral or who was then audited and raked over the coals?
this guy may just want to help himself with this busniess. i do not know how many people have done QD (file fbar/f8891) and never got in trouble. but i do know that some have done with private letter ruling -- and IRS has published letters in favour of granting late election.
the key is the deferral election, if you get that, you pay no fine. if you do not get it, then it will be a lot money -- fbar penalty even if in OVDI that will be 25% on the peak of FMV.
i am currently in OVDI -- not because just RRSP, i have other issue. My RRSP is also in OVDI -- and i asked for late deferral election -- it is a reasonable request -- as i waived statute limitation -- back to 2003, and redo all my tax. Then what is the reason for IRS not to let taxpayer to make this election when this process is REDO ?
even if it comes a deny -- then there is a chance RRSP (if you have never cashed out or put money in), then OVDI offer 5% penalty.
I am not a pro, but I would say that, if I were you, I would just do the fbar/f8891 for the last 6 years.
the key is the deferral election, if you get that, you pay no fine. if you do not get it, then it will be a lot money -- fbar penalty even if in OVDI that will be 25% on the peak of FMV.
i am currently in OVDI -- not because just RRSP, i have other issue. My RRSP is also in OVDI -- and i asked for late deferral election -- it is a reasonable request -- as i waived statute limitation -- back to 2003, and redo all my tax. Then what is the reason for IRS not to let taxpayer to make this election when this process is REDO ?
even if it comes a deny -- then there is a chance RRSP (if you have never cashed out or put money in), then OVDI offer 5% penalty.
I am not a pro, but I would say that, if I were you, I would just do the fbar/f8891 for the last 6 years.
by the way, if this country is ruled by the law that include tax law, then
the result should be same for RRSP f8891/FBAR missing filing on any of these three solutions
1. queit disclosure
2. ovdi
3. private letter ruling
because taxpayers want to correct the mistake, and IRS should treat them the same whatever method they want to correct the mistake.
the result should be same for RRSP f8891/FBAR missing filing on any of these three solutions
1. queit disclosure
2. ovdi
3. private letter ruling
because taxpayers want to correct the mistake, and IRS should treat them the same whatever method they want to correct the mistake.
[quote="tsanaha"]my understanding is that if you do it "quiet disclosure", that means, your amending (f1040x) back tax go to the system without any attention from IRS --- that is all done with machine. Your FBAR does not go to IRS anyway..
if you send a letter to IRS, that means you ask for attention, that may let them ask you go to OVDI if not full audit your past returns.
just my 2cents.[/quote]
No, FBAR goes to IRS's Detroit Computing Center. So it does go the IRS, and in any case it is available to them. The only difference is that the FBAR form is ALSO available to other government agencies, since its not subject to US tax confidentiality restrictions.
In any case, old FBARs are going to get attention, so maybe it is better to send letter. hard to say.
if you send a letter to IRS, that means you ask for attention, that may let them ask you go to OVDI if not full audit your past returns.
just my 2cents.[/quote]
No, FBAR goes to IRS's Detroit Computing Center. So it does go the IRS, and in any case it is available to them. The only difference is that the FBAR form is ALSO available to other government agencies, since its not subject to US tax confidentiality restrictions.
In any case, old FBARs are going to get attention, so maybe it is better to send letter. hard to say.
From what I've read, in the past even people who had large accounts and real possibility of criminal exposure could 'quietly' disclose and get away with it. Now, the IRS has become much stricter about enforcing FBAR laws (and they have new teeth, what with FATCA laws, summons and the like).
So, I don't think one can rely on the past as a guideline to what the IRS will do going forward. Any honest practitioner will admit that there is great uncertainty.
Realistically though, they are not going to come after someone who resides outside the US and has few US assets (unless there is an indication of serious tax evasion) because such people could just renounce US citizenship/green card etc. Even if you live in the US and have only an RRSP account, then it should not be that much of a problem (I suspect), since you can elect deferral. But if some has other unreported offshore accounts or income sources, it becomes problematic and OVDI may be best option (especially if someone has been filling in Schedule B question about foreign accounts incorrectly).
So, I don't think one can rely on the past as a guideline to what the IRS will do going forward. Any honest practitioner will admit that there is great uncertainty.
Realistically though, they are not going to come after someone who resides outside the US and has few US assets (unless there is an indication of serious tax evasion) because such people could just renounce US citizenship/green card etc. Even if you live in the US and have only an RRSP account, then it should not be that much of a problem (I suspect), since you can elect deferral. But if some has other unreported offshore accounts or income sources, it becomes problematic and OVDI may be best option (especially if someone has been filling in Schedule B question about foreign accounts incorrectly).
ovdi is after those who hide big money offshore, that does not seem to apply to expat US citizens who are not really hinding money (they should put money where they live).
for immigrants, they are not hiding either but "forget" reporting is the problem. one can argue that local tax is paid and it is not really to avoid paying tax (it does to USA tnough).
for IRS. ovdi is a cheap/cost effective to bring all into comliance regardless who they are, and the penalty is stiff.
yes, for small missing report, for expat US citizen, just do catch up/FBAR/1040x may face little risk for audit/criminal prosecution, while joining OVDI is for sure to get some penalty (if there is under report).
it is just a matter of choice, if you are willing to face this uncertainty.
for immigrants, they are not hiding either but "forget" reporting is the problem. one can argue that local tax is paid and it is not really to avoid paying tax (it does to USA tnough).
for IRS. ovdi is a cheap/cost effective to bring all into comliance regardless who they are, and the penalty is stiff.
yes, for small missing report, for expat US citizen, just do catch up/FBAR/1040x may face little risk for audit/criminal prosecution, while joining OVDI is for sure to get some penalty (if there is under report).
it is just a matter of choice, if you are willing to face this uncertainty.