by Fresh Start Tax | Dec 30, 2012 | FBAR
FBAR FORM – FBAR Tax Help – FBAR Attorney Experts
You can contact our office if you professional tax help or FBAR representation. We have help thousands of taxpayers resolve their IRS issues and problems with the Internal Revenue Service.
Call us today and speak direct to a Tax Attorney, Lawyers, CPA or Former IRS Agents.
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What is FBAR Foreign Bank Account Reporting
If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, the Bank Secrecy Act may require you to report the account yearly to the Internal Revenue Service by filing Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR).
The FBAR is required because foreign financial institutions may not be subject to the same reporting requirements as domestic financial institutions. The FBAR is a tool to help the United States government identify persons who may be using foreign financial accounts to circumvent United States law.
Federal Tax Investigators use FBARs to help identify or trace funds used for illicit purposes or to identify unreported income maintained or generated abroad.
Tax Filers report their foreign accounts by:
1. Completing boxes 7a and 7b on Form 1040 Schedule B, box 3 on the Form 1041 “Other Information” section, box 10 on Form 1065 Schedule B, or boxes 6a and 6b on Form 1120 Schedule N and
2. Completing Form TD F 90-22.1 (PDF). You can find that form on our website, under IRS forms, home page.
Due Date for FBAR
The FBAR is due by June 30 of the year following the year that the account holder meets the $10,000 threshold. The granting, by IRS, of an extension to file Federal income tax returns does not extend the due date for filing an FBAR.
No extensions allowed
Tax Filers cannot request an extension of the FBAR due date. the filing of this form is not like the filing of a tax return, it has its own set of guidelines.
If you do not have all the information
If a tax filer does not have all the available information to file the return by June 30, they should file as complete a return as they can and amend the document when the additional or new information becomes available.
Important to all taxpayers thinking whether to file FBAR
You should know the FEDs are on a terror for non-filers of FBAR and they have become possessed. Keep in mind our the first to FBAR programs or initiatives the FEDS collected over $5.5 billion big ones. With this type of money lining the Foreign Bank Accounts and Financial Institutions IRS is not far behind.
You will be seeing many more prosecutions and news in the days and months to come.My advise to you, contact the IRS before they contact you.
Free tax consultation available for questions regarding your FBAR issues. 1-866-700-1040.
FBAR FORM – FBAR Tax Help – FBAR Attorney Experts
by Fresh Start Tax | Dec 19, 2012 | FBAR
Taxes on Foreign Accounts – Foreign & International Tax Reporting – Tax Help Consultants 1-866-700-1040
Taxes on Foreign Accounts can be very complex and tricky business. With our 206 years of professional tax help we can help steer you in the right directions.
We are Tax Experts when it comes to Taxes on Foreign Accounts and Foreign and International Tax Reporting.
Call us today for a no cost professional tax consult. 1-866-700-1040.
You will speak directly to a Tax Attorney, IRS Tax Lawyer, CPA or Former IRS Agent.
We can make sure you are taking every opportunity of all the tax laws so you pay the lowest amount allowed by law.
The Foreign Account Tax Compliance Act
(FATCA) is an important development in U.S. efforts to improve tax compliance involving foreign financial assets and offshore accounts. It certainly fills the pockets of the US government.
Under FATCA, U.S. taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS. You can call us directly to find out if the qualifications fit your case.
Reporting takes place on a Form 8938
This reporting will be made on Form 8938, which taxpayers attach to their federal income tax return, starting this tax filing season.
FATCA will require foreign financial institutions to report directly to the IRS information about financial accounts held by U.S. taxpayers, or held by foreign entities in which U.S. taxpayers hold a substantial ownership interest. Almost all countries at this time are caving in to US demands.
Financial accounts
A financial accounts includes any bank, securities, securities derivatives or other financial instruments accounts. The term includes any savings, demand, checking, deposit or any other account maintained with a financial institution or other person engaged in the business of a financial institution.
Financial accounts also generally includes any accounts in which the assets are held in a commingled fund, and the account owner holds an equity interest in the fund (including mutual funds). Individual bonds, notes, or stock certificates held by the filer are not a financial account nor is an unsecured loan to a foreign trade or business that is not a financial institution. This is not a all inclusive list.
What about commingled funds.
The reference to “commingled fund” appears in the definition of the term “financial account” in the FBAR instructions.
The instructions state that the term “financial account” generally encompasses accounts in which the assets are held in a commingled fund and the account owner holds an equity interest in the fund.
Financial Interest
Persons or individuals with a financial interest in, or signature authority over, a foreign commingled fund that is a mutual fund are required to file an FBAR unless another filing exception, as provided in the FBAR instructions or other relevant guidance, applies.
The IRS will not interpret the term “commingled fund” as applying to funds other than mutual funds with respect to FBARs for calendar year 2009 and prior years.
Thus, the Internal Revenue Service will not apply its enforcement authority adversely in the case of persons with a financial interest in, or signature authority over, any other foreign commingled fund with respect to that account for calendar year 2009 and earlier calendar years, including hedge funds and private equity funds.
FBAR is required for accounts maintained with financial institutions located in a foreign country if the accounts hold non-cash assets. Gold , silver are examples.
An account with a financial institution that is located in a foreign country is a financial account for FBAR purposes whether the account holds cash or non-monetary assets.
Maximum value of account
The maximum value of account is the largest amount and not the average amount of currency and non-monetary assets that appear on any quarterly or more frequent account statements issued for the applicable year.
If a periodic account statements are not issued, the maximum account value is the largest amount of currency or non-monetary assets in the account at any time during the year.
Though the FBAR instructions direct filers to use the official exchange rate, the Internal Revenue Service has no official exchange rate and generally accepts any posted exchange rate that is used consistently.
FBAR is required if the account generates neither interest nor dividend income.
Other authority over a financial account means that a person, who has the power to direct how an account is invested but who cannot make disbursements to the accounts, has to file an FBAR.
FBAR is not required because the person has no power of disposition of money or other property in the account.
Exceptions to the FBAR filing requirement.
Accounts in U.S. military banking facilities, operated by a United States financial institution to serve U.S. government installations abroad, are not considered as accounts in a foreign country.
For this reason, these financial accounts do not have to be reported on an FBAR.
An officer or employee of a bank that is subject to the supervision of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Office of Thrift Supervision, or the Federal Deposit Insurance Corporation need not report that he has signature or other authority over a foreign bank, securities or other financial account maintained by the bank and only if the officer or employee has NO personal financial interest in the account.
An officer or employee of a domestic corporation whose equity securities are listed on a national securities exchange or which has assets exceeding $10 million and 500 or more shareholders of record, need not file a report concerning signature authority over a foreign financial account of the corporation.
If the person has NO personal financial interest in the account and he has been advised, in writing, by the chief financial officer of the corporation that the corporation has filed a current report, which includes that account.
Taxes on Foreign Accounts – Foreign & International Tax Reporting – Tax Help Consultants
by Fresh Start Tax | Dec 18, 2012 | FBAR
FBAR Instructions – FBAR Filing & Reporting – FBAR Experts
We are comprised of Tax Attorneys, Tax Lawyers, CPA’s and Former IRS Agents, Managers and Instructors.
We have over 205 years of professional tax experience and over 60 years of working directly for the IRS.
We can help you with the filing of FBAR, FBAR Instructions and FBAR Reporting requirements.
You may call us for a no cost professional tax consultation. 1-866-700-1040.
On June 26, 2012, the IRS announced new streamlined filing compliance procedures for non-resident U.S. taxpayers to go into effect on September 1, 2012.
These procedures FBAR Filings are being implemented in recognition that some U.S. taxpayers living abroad have failed to timely file U.S. federal income tax returns or Reports of Foreign Bank and Financial Accounts (FBARs), Form TD F 90-22.1, but have recently become aware of their filing obligations and now seek to come into compliance with the law.
All of these new tax procedures are for non-residents including, but not limited to, dual citizens who have not filed U.S. income tax and information returns.
Description of the New FBAR Filing Streamlined Procedure
This streamlined procedure is designed for taxpayers that present a low compliance risk.
Very important to know and understand.
All tax submissions will be reviewed, but, as discussed below, the intensity of review will vary according to the level of compliance risk presented by the submission.
For those taxpayers presenting low compliance risk, the review will be expedited and the IRS will not assert penalties or pursue follow-up actions.
Higher Risk Cases
Submissions that present higher compliance risk are not eligible for the streamlined processing procedures and will be subject to a more thorough review and possibly a full examination, which in some cases may include more than three years, in a manner similar to opting out of the Offshore Voluntary Disclosure Program.
Taxpayers utilizing this procedure will be required to file all delinquent tax returns, with appropriate related information returns for the past three years and to file delinquent FBARs (Form TD F 90-22.1) for the past six years.
Tax Payments or Payment Due
Payment for the tax and interest must be remitted along with delinquent tax returns.
Retroactive relief for failure to timely elect income deferral on certain retirement and savings plans where deferral is permitted by relevant treaty is available through this process.
The proper deferral elections with respect to such arrangements must be made with the submission.
Eligibility
This procedure is available for non-resident U.S. taxpayers who have resided outside of the U.S. since January 1, 2009 and who have not filed a U.S. tax return during the same period.
These taxpayers must present a low level of compliance risk as described below
Amended returns submitted through this program will be treated as high risk returns and subject to examination, except for those filed for the sole purpose of submitting late-filed Forms 8891 to seek relief for failure to timely elect deferral of income from certain retirement or savings plans where deferral is permitted by relevant treaty.
It should be noted that this relief is also available under the Offshore Voluntary Disclosure Program.
All tax returns submitted under this procedure must have a valid Taxpayer Identification Number (TIN).
For U.S. citizens, a TIN is a Social Security Number (SSN).
For individuals that are not eligible for an SSN, an Individual Taxpayer Identification Number (ITIN) is a valid TIN.
Compliance Risk Determination
The IRS will determine the level of compliance risk presented by the submission based on information provided on the returns filed and based on additional information provided in response to a Questionnaire required as part of the submission.
Low Risk Tolerance
Low risk will be predicated on simple returns with little or no U.S. tax due. Absent any high risk factors, if the submitted returns and application show less than $1,500 in tax due in each of the years, they will be treated as low risk and processed in a streamlined manner.
The risk level may rise if any of the following are present:
a. If any of the returns submitted through this program claim a refund;
b. If there is material economic activity in the United States;
c. If the taxpayer has not declared all of his/her income in his/her country of residence;
d. If the taxpayer is under audit or investigation by the IRS;
e. If FBAR penalties have been previously assessed against the taxpayer or if the taxpayer has previously received an FBAR warning letter;
f.. If the taxpayer has a financial interest or authority over a financial account(s) located outside his/her country of residence;
g. If the taxpayer has a financial interest in an entity or entities located outside his/her country of residence;
h. If there is U.S. source income; or
i.If there are indications of sophisticated tax planning or avoidance.
Taxpayers wishing to use these streamlined procedures must:
1. Submit complete and accurate delinquent tax returns, with appropriate related information returns, for the last three years for which a U.S. tax return is due.
Please note:
that all delinquent information returns being filed under this procedure should be sent to the address below with the rest of the submission.
2. Include at the top of the first page of each tax return “Streamlined” to indicate that the returns are being submitted under this procedure. This is very important to ensure that your returns get processed through these procedures.
3. Submit payment of all tax due and owing as reflected on the returns and statutory interest due and owing.
For returns determined to be high risk, failure to file and failure to pay penalties may be imposed in accordance with U.S. federal tax laws and FBAR penalties may be imposed in accordance with U.S. law.
Reasonable Cause
Reasonable cause statements may be requested during review or examination of the returns determined to be high risk. For a summary of information about federal income tax return and FBAR filing requirements and potential penalties.
Also,submit complete and accurate delinquent FBARs for the last six years for which an FBAR is due.
FBAR Instructions – FBAR Filing & Reporting – FBAR Help
by Fresh Start Tax | Dec 18, 2012 | FBAR
FBAR Deadline for Filing – Penalty Abatement
We are comprised of Tax Attorneys, IRS Tax Lawyers, CPA’s and Former IRS Agents. We have over 206 years of total tax experience and over 60 years of direct work experience at the IRS in the local, district and the regional offices of the IRS.
Contact us today for a no cost professional tax consultation.
When does FBAR need to be filed:
On or before June 30th of the year following the calendar year being reported.
The FBAR is not filed with the filer’s federal income tax return.
The granting by the IRS, of an extension to file federal income tax returns does not extend the due date for filing an FBAR. The two have nothing to do with one another.
Taxpayers may not request an extension for filing the FBAR.
The FBAR is an annual report and must be received by the Department of the Treasury in Detroit, Michigan, at one of the two addresses below, on or before June 30th of the year following the calendar year being reported.
Federal law requires that any U.S. person or entity with a financial interest in, or signature or comparable authority over, any foreign financial account file an annual Report of Foreign Bank and Financial Accounts, Form TD F 90-22.1 (“FBAR”) if the aggregate value of such account exceeds $10,000 at any time during the calendar year.
Except for those taxpayers of individuals who are covered by the exception discussed below, FBARs for 2011 must be received by the Department of the Treasury by June 29, 2012.
Prior Alert
As discussed in a prior Alert, in June 2011 the Financial Crimes Enforcement Network (“FinCEN”) extended the FBAR filing deadline for 2010 and earlier calendar years to June 30, 2012, for certain employees or officers of investment advisers registered with the Securities and Exchange Commission who have signature authority over but no financial interest in certain foreign financial accounts of persons who are not investment companies registered under the Investment Company Act of 1940.
In Notice 2012-1, FinCEN further extended this deadline for another year. Accordingly, FBARs for 2012 and earlier calendar years for persons described in this paragraph will now be due by June 30, 2013.
Who Must File an FBAR
United States persons are required to file an FBAR if:
1. The United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; and,
2. The aggregate value of all foreign financial and bank accounts exceeded $10,000 at any time during the calendar year to be reported.
United States person means United States citizens; United States residents; entities, including but not limited to, corporations, partnerships, or limited liability companies created or organized in the United States or under the laws of the United States; and trusts or estates formed under the laws of the United States.
Exceptions to the Reporting Requirement
Exceptions to the FBAR reporting requirements can be found in the FBAR instructions.
There are filing exceptions for the following United States persons or foreign financial accounts:
a. Certain foreign financial accounts jointly owned by spouses,
b. United States persons included in a consolidated FBAR,
c. Foreign financial accounts owned by a governmental entity,
d. Foreign financial accounts owned by an international financial institution,
e. IRA owners and beneficiaries,
f. Participants in and beneficiaries of tax-qualified retirement plans,
g. Certain individuals with signature authority over but no financial interest in a foreign financial account,
h.Trust beneficiaries and,
i. Foreign financial accounts maintained on a United States military banking facility.
Where do I file the FBAR?
Send completed forms to:
U.S. Department of the Treasury
P.O. Box 32621
Detroit, MI 48232-0621
If an express delivery service is used, send completed forms to:
IRS Enterprise Computing Center
ATTN: CTR Operations Mailroom, 4th Floor
985 Michigan Avenue
Detroit, MI 48226
FBAR Deadline for Filing – Penalty Abatement’s – FBAR Filing, Representation
by Fresh Start Tax | Dec 16, 2012 | FBAR
Reporting Foreign Income – Filing FBAR and Tax Forms
We are Tax Attorneys, Lawyers, CPA’s and Former IRS agents, managers and instructors. 1-866-700-1040
We have over 206 years of total tax experience and over 60 years of total IRS tax experience.
Receiving Income from Foreign Income
Many United States citizens and resident aliens receive income from foreign sources. There have been recent reports about the interest of the Internal Revenue Service in taxpayers with accounts in Liechtenstein.
The interest of the IRS, however, extends beyond accounts in Liechtenstein to accounts anywhere in the world.
The IRS reminds you to report your worldwide income on your U.S. tax return.
If you are a U.S. citizen or resident alien.
You must report income from all sources within and outside of the U.S. This is true whether or not you receive a Form W-2 Wage and Tax Statement, a Form 1099 (Information Return) or the foreign equivalents.
If you are a U.S. citizen or resident alien, the rules for filing income, estate and gift tax returns and for paying estimated tax are generally the same whether you are living in the U.S. or abroad.
Employees working for a foreign government or an international organization in the U.S. are subject to some special tax rules.
The tax treatment of their compensation can vary according to whether the employee is a US citizen, a dual citizen, a green cardholder lawful permanent resident, or a foreign citizen without a green card.
Self Employment Tax
US citizens working in the U.S. must report self-employment income under the Self-Employment Contributions Act. SECA makes the contributions to the U.S. Social Security and Medicare systems for self-employed individuals.
Self-employment tax is computed on Schedule SE, Self-Employment Tax, and reported on line 56 of the 2009 Form 1040. U.S. citizens working for foreign governments and organizations outside of the U.S. are not subject to self-employment tax.
Green Card Holders
Green card holders and foreign citizens employed by a foreign government or international organization are not subject to self-employment taxes and may not voluntarily participate in the U.S. social security system. Call us for new details.
U.S. employees pay self-employment tax because the foreign government or organization is not liable for the employer’s portion of the contribution to the U.S. system.
These employees are not self-employed for any other federal tax purposes. They may not claim deductions for expenses on Schedule C. They are not qualified to establish a Simplified Employee Pension (SEP) Plan and there is no allowable deduction on line 28 of Form 1040 for contributions to any such plan.
There is much more available on this but by calling a CPA at our office we can go over all the details.
U.S. citizens and green card holders may claim deductions for un-reimbursed employee business expenses arising from their employment on Form 2106, Employee Business Expenses. The deduction is claimed on line 21 of Schedule A, Itemized Deductions, on the Form 1040.
These expenses are miscellaneous itemized deductions subject to the 2 percent of adjusted gross income limitation.
U.S. citizens and green card holders who expect to have tax due at the end of the year must file estimated tax payments because their compensation is not subject to withholding. The estimated payments ensure that employees have paid their proper amount of tax throughout the year.
Making ES Payment and Dates
Estimated payments are made using Form 1040ES, Estimated Tax for Individuals. Forms are filed quarterly:
1. April 15th,
2. June 15th,
3. September 15th, and
4. January 15th.
There is a penalty for failure to make estimated tax payments.
Foreign citizens working in the U.S. for foreign governments and international organizations are generally exempt from U.S. income tax and self-employment tax on compensation.
Foreign citizens receiving U.S. source income other than compensation such as interest, dividends, rents, royalties, etc. are generally subject to U.S. income tax. Tax treaty exemptions may apply to this income.
This income is reported on Form 1040-NR, U.S. Individual Income Tax Return Non-resident. Estimated payments may be required depending upon the amount received.
If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad.
Your worldwide income is subject to U.S. income tax, regardless of where you reside.
When to File
If you are a U.S. citizen or resident alien residing overseas, or are in the military on duty outside the U.S., on the regular due date of your return, you are allowed an automatic 2-month extension to file your return and pay any amount due without requesting an extension.
For a calendar year return, the automatic 2-month extension is to June 15.
If a taxpayer is are unable to file your return by the automatic 2-month extension date, you can request an additional extension to October 15 by filing Form 4868 before the automatic 2-month extension date.
Remember, any tax due payments made after June 15 will be subject to both interest charges and failure to pay penalties.
Reporting Foreign Income – Filing FBAR and Tax Forms
Where to File
If you are a U.S. citizen or resident alien (Green Card Holder) and you live in a foreign country, mail your U.S. tax return to:
Department of the Treasury
Internal Revenue Service Center
Austin, TX 73301-0215
USA
Estimated tax payments should be mailed with form 1040-ES to:
Internal Revenue Service
P.O. Box 1300
Charlotte, NC 28201-1300
USA
by Fresh Start Tax | Dec 15, 2012 | FBAR
Delinquent FBAR, Late Filing – Get rid of FBAR Penalties, Settlement
If you have a delinquent or late filing contact us today and we will be able to go over all the options to get you back in the system worry free.
There are several different options and depending on your particular case and history we will be able to work out settlement, filing and abatement options.
Each case is based on its own set of circumstance such as:
1. Amounts of money involved,
2. Filing history,
3. Number of amounts,
4. Movements of funds,
5. Intent and willfulness.
After a review of these question a plan is set in motion for you to get through this both worry and stress free.
Exceptions to the FBAR filing requirement?
Military Banking Facilities
Accounts in U.S. military banking facilities, operated by a United States financial institution to serve U.S. government installations abroad, are not considered as accounts in a foreign country.
For this reason, these accounts do not have to be reported on an FBAR.
Officer or Employees of a Bank
An officer or employee of a bank that is subject to the supervision of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Office of Thrift Supervision, or the Federal Deposit Insurance Corporation need not report that he has signature or other authority over a foreign bank, securities or other financial account maintained by the bank, if the officer or employee has no personal financial interest in the account.
An officer or employee of a domestic corporation whose equity securities are listed on a national securities exchange or which has assets exceeding $10 million and 500 or more shareholders of record, need not file a report concerning signature authority over a foreign financial account of the corporation, if he has no personal financial interest in the account and he has been advised, in writing, by the chief financial officer of the corporation that the corporation has filed a current report, which includes that account.
FBAR Penalties
The IRS code as it relates to FBAR Penalties – Its the Examiner Discretion
- The IRS tax examiner may determine that the facts and circumstances of a particular case do not justify asserting a penalty.
- There is tremendous discretion the examiner has on these case.
- If there was an FBAR violation but the examiner determines that a penalty is not appropriate, the examiner should issue the FBAR warning letter, Letter 3800.
- When a tax penalty is appropriate or justified , the IRS has established penalty mitigation guidelines to aid the examiner in applying penalties in a uniform manner.
- The IRS tax examiner may determine that a penalty under these guidelines is not appropriate or that a lesser penalty amount than the guidelines would otherwise provide is appropriate or that the penalty should be increased (up to the statutory maximum). The examiner must make such a determination with the written approval of the examiner’s manager and document the decision in the work papers.
- Factors to consider when applying examiner discretion may include, but are not limited to, the following:
- Whether tax compliance objectives would be achieved by issuance of a warning letter;
- Whether the person who committed the violation had been previously issued a warning letter or has been assessed the FBAR penalty;
- The nature of the violation and the amounts involved; and,
- The cooperation of the taxpayer during the examination.
- Given the magnitude of the maximum penalties permitted for each violation, the assertion of multiple penalties and the assertion of separate penalties for multiple violations with respect to a single FBAR form, should be considered only in the most egregious cases.
Call 1-866-700-1040 and speak directly to a tax professional.
Delinquent,Late FBAR Filing – Get rid of FBAR Penalties, Settlement
