FBAR penalties and soft disclosure
Moderator: Mark T Serbinski CA CPA
-
blairgoates
- Posts: 48
- Joined: Thu Apr 14, 2011 12:35 pm
FBAR penalties and soft disclosure
Has [color=red]ANYONE[/color] in Canada had first-hand experience with penalties being assessed on delinquent filed FBAR reports filed via soft disclosure ? Does anyone know for certian of anyone who were assessed penalties on delinquent filed FBAR reports ?
I'm curious about this too, especially in light of this recent article in Forbes:
http://www.forbes.com/sites/irswatch/20 ... ng-abroad/
The most troubling paragraphs from the article are these two:
"The IRS has indicated that it will be looking for individuals who make quiet disclosures and will audit those individuals. Also, the IRS has stated that it will consider criminal prosecution of those individuals when appropriate. If criminal prosecution is not warranted, the IRS said that it will impose the maximum penalties that apply, including the penalty for willfully failing to file an FBAR — the greater of $100,000 or 50 percent of the amount in the foreign financial account for each violation.
U.S. citizens living abroad (including dual citizens) are taking a significant risk in filing quiet disclosures, particularly if they would otherwise qualify for the reduced 5 percent penalty under the IRS’s OVDI. They may find out that their quiet disclosures will not be “quiet†after all and they may face much harsher penalties when the IRS discovers and audits them."
Nelsona has repeatedly stated that s/he has no knowledge of ANYONE in the past being punished by the IRS following a quiet disclosure. But will that hold true in the future? It seems like a pure money grab on the part of the US Treasury Dept....lord knows they need it, but I deal with many long-time Canadian residents/USCs who in no way deserve this sort of harsh treatment.
I expect this will set off a firestorm of debate on "To OVDI or to not OVDI" but Forbes is a respected financial publication and there may be something to this.
http://www.forbes.com/sites/irswatch/20 ... ng-abroad/
The most troubling paragraphs from the article are these two:
"The IRS has indicated that it will be looking for individuals who make quiet disclosures and will audit those individuals. Also, the IRS has stated that it will consider criminal prosecution of those individuals when appropriate. If criminal prosecution is not warranted, the IRS said that it will impose the maximum penalties that apply, including the penalty for willfully failing to file an FBAR — the greater of $100,000 or 50 percent of the amount in the foreign financial account for each violation.
U.S. citizens living abroad (including dual citizens) are taking a significant risk in filing quiet disclosures, particularly if they would otherwise qualify for the reduced 5 percent penalty under the IRS’s OVDI. They may find out that their quiet disclosures will not be “quiet†after all and they may face much harsher penalties when the IRS discovers and audits them."
Nelsona has repeatedly stated that s/he has no knowledge of ANYONE in the past being punished by the IRS following a quiet disclosure. But will that hold true in the future? It seems like a pure money grab on the part of the US Treasury Dept....lord knows they need it, but I deal with many long-time Canadian residents/USCs who in no way deserve this sort of harsh treatment.
I expect this will set off a firestorm of debate on "To OVDI or to not OVDI" but Forbes is a respected financial publication and there may be something to this.
simple fact is that IRS has hardly enforced FBAR prior 2009, and it became well known after UBS clients being prosecuted.
and in the past, quiet disclosure is considered a decent/noble action of a taxpayer.
now, since IRS has provided twice of OVDI/OVDP -- and sure they want more than just the tax due/penalty or simple the catching up forms.. they want to collect money. Obama wants hire more IRS agents (so boost the employment rate --- remember FATCA (HIRE ACT) ?
so at this point, nobody knows how/will IRS do ? the simple fact is that IRS has FBAR law on their side -- and they can apply it.
On the otherhand, we all know -- the criminal prosecution so far has been only to offshore fat cats and those with entities...
and in the past, quiet disclosure is considered a decent/noble action of a taxpayer.
now, since IRS has provided twice of OVDI/OVDP -- and sure they want more than just the tax due/penalty or simple the catching up forms.. they want to collect money. Obama wants hire more IRS agents (so boost the employment rate --- remember FATCA (HIRE ACT) ?
so at this point, nobody knows how/will IRS do ? the simple fact is that IRS has FBAR law on their side -- and they can apply it.
On the otherhand, we all know -- the criminal prosecution so far has been only to offshore fat cats and those with entities...
nelsona is this fear mongering? or are we lambs going to the slaughter with a quiet disclosure?
http://features.withersworldwide.com/sy ... _int_p.pdf
http://features.withersworldwide.com/sy ... _int_p.pdf
they did not make it up -- they just repeat what IRS has been saying all along. Of course, they use this for their business.
again, FBAR was hardly enforced before OVDP/OVDI, and it will be enforced now and more so after OVDI -- the Gov needs credibility as well as revenue.
Once FATCA becomes effective, they will get all the data, that is why they offer this OVDI --so it is cost effective -- and offer "reasonable" exit for taxpayers.
again, FBAR was hardly enforced before OVDP/OVDI, and it will be enforced now and more so after OVDI -- the Gov needs credibility as well as revenue.
Once FATCA becomes effective, they will get all the data, that is why they offer this OVDI --so it is cost effective -- and offer "reasonable" exit for taxpayers.
Financial planner in the Winnipeg Free Press saying quiet disclosure is the best bet:
"Most U.S. citizens living in Canada don't owe taxes and have therefore have not avoided them. They have only failed to file and disclose. CRA announced this week it will not collect filing penalties for the IRS but will continue to collect taxes for them as required by the tax treaty.
"I can't advise U.S. citizens on their best course of action, just make them aware. However, I can say we have a very good success rate (so far) with "quiet disclosure" and compliance."
http://www.winnipegfreepress.com/opinio ... 50563.html
"Most U.S. citizens living in Canada don't owe taxes and have therefore have not avoided them. They have only failed to file and disclose. CRA announced this week it will not collect filing penalties for the IRS but will continue to collect taxes for them as required by the tax treaty.
"I can't advise U.S. citizens on their best course of action, just make them aware. However, I can say we have a very good success rate (so far) with "quiet disclosure" and compliance."
http://www.winnipegfreepress.com/opinio ... 50563.html
-
blairgoates
- Posts: 48
- Joined: Thu Apr 14, 2011 12:35 pm
CRA Announcement ?
Can ANYONE provide me a link to this CRA announcement or some kind of verification. I have searched all over and just see references but no first hand statement from CRA.
-
baby_king_bob
- Posts: 14
- Joined: Tue Oct 13, 2009 7:00 pm
There is a lot of confusion regarding language on this issue.
When the IRS states that they intend to chase those who do a "quiet disclosure", they are referring to quiet disclosures as an alternative to OVDI. Keep in mind that OVDI is for individuals **with underreported tax liabilities**
If you have no underreported tax liabilities and are therefore filing outside of OVDI, this is not the kind of 'quiet disclosure' the IRS cares about.
Quiet disclosure as an alternative to OVDI? If they catch you, lube-up.
When the IRS states that they intend to chase those who do a "quiet disclosure", they are referring to quiet disclosures as an alternative to OVDI. Keep in mind that OVDI is for individuals **with underreported tax liabilities**
If you have no underreported tax liabilities and are therefore filing outside of OVDI, this is not the kind of 'quiet disclosure' the IRS cares about.
Quiet disclosure as an alternative to OVDI? If they catch you, lube-up.
"When the IRS states that they intend to chase those who do a "quiet disclosure", they are referring to quiet disclosures as an alternative to OVDI. Keep in mind that OVDI is for individuals **with underreported tax liabilities** "
Can you point us to a public source that says this? (I want this to be true - I also want to get it absolutely right.)
Can you point us to a public source that says this? (I want this to be true - I also want to get it absolutely right.)
http://www.irs.gov/newsroom/article/0,, ... 27,00.html
A2 says:
"The objective (of OVDI) is to bring taxpayers that have used undisclosed foreign accounts and undisclosed foreign entities to avoid or evade tax into compliance with United States tax laws."
My lay reading of which is: if you haven't been avoiding or evading tax by non-reporting of foreign accounts, then OVDI isn't for you.
A2 says:
"The objective (of OVDI) is to bring taxpayers that have used undisclosed foreign accounts and undisclosed foreign entities to avoid or evade tax into compliance with United States tax laws."
My lay reading of which is: if you haven't been avoiding or evading tax by non-reporting of foreign accounts, then OVDI isn't for you.
-
Concerned Cdn
- Posts: 4
- Joined: Wed Aug 31, 2011 3:54 am
Does anybody have any evidence in the way of emails from IRS where they state answers to questions. ie: no penalty for quiet disclosures if you do not owe US taxes. Or whether you can use FAQ 17 to file FBAR and prior years returns at the same time. I find the FAQ are basically useless because they are so broadly worded and contradictory to what normal IRS practice has been. Thanks