"quiet disclosure" - what if I filed FBAR?

rohitkn@gmail.com · Post by **rohitkn@gmail.com** » Mon Apr 07, 2014 2:39 pm

I know how to file 3520. I just want to be certain. For 2013 and 2014 I will do them with my US accountant who's not nearly as expensive.

Then I'll close my TFSA some time this year and won't have to do anything for 2015 that is provided I don't just leave in disgust.

I will be paying $400 for my 3520. It's a cash cow. In my case, the second option applies. So I only have to complete Part II which is pretty simple. But if a tax accountant prepares a letter for 3520-a, that's what I am after. I'll use it for 2013 as well.

You could try reading the thread 'taking a stab at 3520' or try other internet forums.

By the way, exactly who did you talk to the IRS and how? I called them, went to two of their offices and the people I ran into were complete dunces.
Thanks.

gpancio · Post by **gpancio** » Mon Apr 07, 2014 2:46 pm

How do you even know for sure whether the TFSA is a foreign trust?
My bank said that their TFSAs are not "held in trust".
Maybe the US just views them as foreign trusts anyway? Did you confirm this with an accountant?

(of course, your account could be different than mine. Mine was a deposit account, like a savings account).

I talked to the IRS by calling 267-941-1000

I don't know how great their advice is. This is the second time I dealt with them and their advice is basically just to own up and file whatever you missed (although they would not comment on 3520 nor "foreign trust". They said it was way out of their league).
But I got a contact name and ID# to quote. I'm going with this to amend my returns to report a bit of unreported income. (and to pay $20 tax.)

The 3520s remain.

rohitkn@gmail.com · Post by **rohitkn@gmail.com** » Mon Apr 07, 2014 2:57 pm

Here's what my CPA in Canada who files with the IRS told me - if it's a TFSA that isn't some specific financial instrument held by the ING direct bank, it *is* a foreign trust.

What the bank tells you is their (perhaps legal) opinion based off of reading the Canadian tax code.

You should not rely on that if you're filing with the IRS. Again this isn't legal advice.

gpancio · Post by **gpancio** » Mon Apr 07, 2014 3:10 pm

Thank you for the info.
Man, it's nothing but bad news.

I guess my best bet is to pay to have 3520/A filed for me. 2 accounts (RESP/TFSA), 4 years missed, this year (3520A is already late), and hope the IRS is ok with it.
I'll be down $3-4000 grand, probably. I'm not sure I can properly file all those forms.

rohitkn@gmail.com · Post by **rohitkn@gmail.com** » Mon Apr 07, 2014 3:39 pm

I know. It's going to be costly. I was budgeting $2000 - $3000 for amendments.

And god knows how much more for 2013. But if it brings you into 'compliance' because that's the purpose of life - fill out obscure forms or it's a bullet between the eyes, then just think of it like a blown engine replacement for your car expense.

I just shudder to think of the less privileged people in situations like ours especially those on retirement. It's a bunch of utter nonsense. Compliance is actually not the goal. For each compliant person, taxes, fines, fees and penalties are actually lost. I would not want to be this cynical but have you seen the 8398? Most canadians have an RRSP, and TFSA. Move to the states and boom 3520, 3520a, 8891, 8621 and potentially 1116

ChromiumDioxide · Post by **ChromiumDioxide** » Mon Apr 07, 2014 8:00 pm

Hello all, sorry for hijacking, I'm in a similar situation.

rohitkn - you said you'll leave the US if you have to, I was just curious if you have been contributing to a 401k or IRA while here what consequences there would be, for example could the IRA deduct any OVDP penalties from that? Or would you even be allowed back in the country without risk being arrested or something severe?

rohitkn@gmail.com · Post by **rohitkn@gmail.com** » Mon Apr 07, 2014 9:01 pm

@ChromiumDioxide
You're not hijacking. I know how you're feeling. You're in a very very tough situation as am I. I know that i paid taxes on all of my interest income in canada because I combined it with my canadian income and reported it to the CRA. I am desperately hoping to get foreign tax credits for that.

This is not tax filing or legal advice.

If 1) you don't owe that much, and 2) opened your account with income on which tax was paid, 3) opened it before you came to the US you might want to take your chances with filing an amended tax return but go through a high priced cross border CPA. Expect to budget $5000. But trust me, if you get out of it with just that cost and the tax and interest owed, go do some work of charity.

Going back to Canada is something I am considering because of the way i am feeling. I feel incredibly stupid for coming here and getting a job. If you do OVDP, you agree to the penalties. Not paying up could get you extradited from canada. You could do OVDP and opt out.

gpancio · Post by **gpancio** » Tue Apr 08, 2014 6:23 am

@rohitkn
Any chance I can get the name of the guy you talked to in Toronto?
I live in Toronto, and I'm looking for help.

So they didn't try to recommend ovdp for you? To me it would be preferrable to just amend old returns and back file the 3520s. It sounds like that's similar to what the accountant is suggesting you do, and if it works then i'd like to go that approach.

I could contact you offline, assuming your username is your email address for real, if you are willing to reveal the name.

Thanks.

gpancio · Post by **gpancio** » Tue Apr 08, 2014 10:11 am

I keep going back and forth from "file 3520/A's by myself" to "hire someone".

When I think of doing them myself, the complexity seems too much. When I look into hiring, I see reviews of various firms in which people had horrible experiences with the firm, like the preparers had no idea what they were doing.

So I still don't know.

ChromiumDioxide · Post by **ChromiumDioxide** » Tue Apr 08, 2014 12:04 pm

There must be many Canadians who come to work in the US who didn't file an FBAR because they were unaware they had to, the penalty is so ridiculously harsh.

In my case I only have one return (for tax year 2012) which would need amending (I came to the US in 2011 but for the 2011 return I was a non-resident alien and so filed a 1040NR, and the FBAR, 8891, 8938 only apply to resident aliens right?). Does anybody know if there might be some avenues to pursue due to the fact its only one return and the most recent?

If we file amended returns and then the IRS notice that and consequently notice we haven't filed FBARs what are the actions they could take?

ChromiumDioxide · Post by **ChromiumDioxide** » Tue Apr 08, 2014 12:21 pm

@rohitkn you've said you've been thinking about moving back to Canada and have spoken with your current employer about it. I was wondering if you've yet had the chance to do any research into possible consequences such as:

- would you be able to continue working for your currently employer or a future US employer while based in Canada?

- if you could but IRS meanwhile noticed you didn't file an FBAR while you were here then could they impose penalties in the form of deductions from your US pay check?

- if you have 401K or IRA savings then could IRS prevent you accessing those funds?

If you pay all the tax you are due to the IRS before you moved back to Canada then the above wouldn't be applicable as there's nothing for IRS to reclaim of course.
However I'm looking at it from the point of view of the FBAR consequences, i.e. would the IRS say you didn't submit an FBAR while you were here so you're subject to such and such penalties and so we're going to try and get you for those.

I think I'll have to file for an extension to give me time to digest everything and I guess need to hire a CPA.

ChromiumDioxide · Post by **ChromiumDioxide** » Tue Apr 08, 2014 12:30 pm

BTW have you seen this about being able to file an 8891 with a 1040X

http://hodgen.com/new-official-easy-fix ... ituations/

rohitkn@gmail.com · Post by **rohitkn@gmail.com** » Tue Apr 08, 2014 12:43 pm

@chromium

Thanks for the link. nelsona covers this. According to nelsona, this is only for Canadian residents, not US residents.

I do have a feeling, though i am not sure as this isn't legal/tax advice, that within 1-2 years of living in the US and after doing what your link says, you might just be in the clear.

gpancio · Post by **gpancio** » Tue Apr 08, 2014 3:32 pm

Once I settle down and look at it (and the various help threads on this forum), filling out 3520/A doesn't seem *too* bad.
There are a few areas that are confusing (am I a beneficiary? (yes?) was there a distribution? (no? no money left the account...) but I think I can give them a good shot.

It seems that others on this forum have gone through the pain of back-filing 3520/A's, and got through ok with no penalties.

sunnysga · Post by **sunnysga** » Tue Apr 08, 2014 3:42 pm

For whatever this is worth - when I was backfiling 3520/A, I remember getting the advice from the professional I hired, that I should stagger the mailings. So, for example, mail completed 3520/A for 2009 (if that is your first filing). Wait a week. Mail 2010's completed forms. Wait a week. Then 2011. This person wasn't completely sure if it mattered, but suggested I do it anyway (as opposed to mailing it all in one package, and drawing attention to the fact that I was backfiling all at once). It seems like they would figure it out pretty fast the other way, as well. Anyway, that is the advice I was given....

Also include a letter explaining why you are late with your filings - attach to each year's forms.

It all worked out fine with me. The IRS kept sending me letters that they needed more time to assess. I have a HUGE wad of letters from the IRS. I stopped getting worked up after awhile when I saw them stuffed daily in my mailbox. Then, the beautiful letters came which wrapped it all up and said it was all OK. :)