I just spoke with a tax attorney who is rated to be one of the best in this state (MA). Luckily, he thinks my situation is OK.
We had a long chat about fbars, 8938 and OVDI during which he indicated to me some things that were a surprise:
1) Fbar penalties are per incomplete form, not per account. I was shocked by this (still am) as it seems to go against everything else you read. He said he just had a client withdraw from OVDI b/c his penalties would be less severe this way, as there was no way to prove willfulness in that case.
Has anyone else heard this?
2) He also thinks penalties for form 8938 are per incomplete form and not per account. He was unsure about this and said he would end up checking the statute. But he was absolutely sure the statute relating to fbars is per complete form and not per account.
3) He indicated that the IRS is not really to be trusted, and that it seems to be getting worse.
fbar and 8938 penalties - per account or per complete form?
Moderator: Mark T Serbinski CA CPA
Just wanted to add:
He also said that in a lot of cases the penalty would be for "negligence", which i guess is a classification of a non-willful violation, and that that only caries a $500 price tag.
If these facts are true it sounds to me like a lot of people are joining the OVDI programs unnecessarily - I'm not sure what the IRS needs to declare it a willful violation, but they must require some kind of proof.
He also said that in a lot of cases the penalty would be for "negligence", which i guess is a classification of a non-willful violation, and that that only caries a $500 price tag.
If these facts are true it sounds to me like a lot of people are joining the OVDI programs unnecessarily - I'm not sure what the IRS needs to declare it a willful violation, but they must require some kind of proof.
I think you should read the threads on this form regarding your situation, as there is a wealth of knowledge here, you just have to look for it.
With respect to Fbar penalties, read the instructions on FBAR and you will clearly see that his information is twisted, the penalty structure is pretty straight forward for one that excludes or fails to file this form.
I have never heard of a 500 dollar price tag for negligence of a non willfull violation....this would be determined by the Dept of the Treasury and the IRS, and there is no 'kds' table for that one, you are either under the category of willful, or non willfulll compliance.
If you fall under non willfull compliance you will have to convince the Tresasury why this is the case through a reasonable cause letter, which many of us had to file to substantiate our filings.
There currently is a streamlined filing procedure to get people back into compliance...I am surprised your high rated Tax Attorney didn't not mention that.
The comment that the IRS cannot be trusted is a mute point. The IRS is only following the policies and procedures that have been in place for years and years, they only decided to exercise them in the recent past.
It has been my experience that it is the Tax accounts and attorneys that cannot be trusted, not the IRS.
With respect to Fbar penalties, read the instructions on FBAR and you will clearly see that his information is twisted, the penalty structure is pretty straight forward for one that excludes or fails to file this form.
I have never heard of a 500 dollar price tag for negligence of a non willfull violation....this would be determined by the Dept of the Treasury and the IRS, and there is no 'kds' table for that one, you are either under the category of willful, or non willfulll compliance.
If you fall under non willfull compliance you will have to convince the Tresasury why this is the case through a reasonable cause letter, which many of us had to file to substantiate our filings.
There currently is a streamlined filing procedure to get people back into compliance...I am surprised your high rated Tax Attorney didn't not mention that.
The comment that the IRS cannot be trusted is a mute point. The IRS is only following the policies and procedures that have been in place for years and years, they only decided to exercise them in the recent past.
It has been my experience that it is the Tax accounts and attorneys that cannot be trusted, not the IRS.
I have read the penalty statutes for both the fbar and the 8938. As to the fbar, it does read in parts as though the penalty is per form. However the IRS has already made their stance on that clear, and when you read the IRS penalty guidelines for fbars the language uses "per violation".
It ALSO states that multiple penalties per form should ONLY be assessed in the most egregious cases.
The language for form 8938 is very similar to that used for form 3520, and it is difficult to interpret whether they mean per form or per asset. One big difference is that (I think) form 3520 really is a separate form for each trust, whereas form 8938 contains info on multiple assets in a list. The statute for the initial penalty suggests to me that it could be for multiple foreign assets, whereas the "continuation" penalties clearly indicate that the penalty is "per failure" (to report).
I've yet to come across and 8938 penalty victims, but would love to hear their stories.
It ALSO states that multiple penalties per form should ONLY be assessed in the most egregious cases.
The language for form 8938 is very similar to that used for form 3520, and it is difficult to interpret whether they mean per form or per asset. One big difference is that (I think) form 3520 really is a separate form for each trust, whereas form 8938 contains info on multiple assets in a list. The statute for the initial penalty suggests to me that it could be for multiple foreign assets, whereas the "continuation" penalties clearly indicate that the penalty is "per failure" (to report).
I've yet to come across and 8938 penalty victims, but would love to hear their stories.