Filing FBAR 2007 to 2010

Last week, while I was on vacation, my account suddenly emailed me about the need to file FBAR. Having done a bit of research on this, I am now completely confused and somewhat scared. I am a Brit living in the US as a LPR and have filed my taxes on time every year, but never submitted any FBAR forms.

My account says, all I have to do is provide a list of my foreign, ie British accounts, with account numbers and highest balances for each in the years 2007 to 2010. He makes it sound really simple and straightforward, nothing to worry about. But then I googled and found all kinds of horror stories...

If anyone could share their experiences and/or knowledge of this I would be grateful.

Hi I'm going through the same at the moment.  I've contacted a tax advisor. Will let you know when I get specific advice on how to proceed.

Thanks - but my accountant says the forms have to be filed by June 30!

He also says all this isn't aimed at "people like me" but just to catch tax evaders who are trying to hide assets overseas.

I hope he is right. Any reassurance would be welcome!

Myra, how much do you have in foreign accounts, if it is under $10k there's no need to file FBAR. If it is over $10k  then you have to do FBAR. Also any interest and gains from those accounts should be included on your US tax forms along with credits for foreign tax paid whatever the balance of the accounts.

I am really surprised that I have had no real responses to my question. Surely I cannot be the only one going through this?

My accountant says that this FBAR has been around for a while but that they are only now starting to enforce it. Anyway, I have signed the forms and he is sending them off today. Not sure what happens to them though - is it true that they are just filed and no acknowledgement of any kind is sent back?

I'm just rather confused by all this and would still appreciate feedback from anyone who has any experience or knowledge of this.
 

You are not asking in the right place - this is a site for Americans in the UK. Try
http://britishexpats.com/ which is better for a Brit in the US.

Although this law is the same for all us, the experience is likely to be different. People living in the US are undeniably subject to US law and also more accessible to the IRS. All the news stories about people prosecuted for FBAR violations seem to be about US residents. See, for example:
http://federaltaxcrimes.blogspot.com/

I think us US expats can justifiably feel aggrieved about the application of US law to people living outside of the US. Unfortunately, we've been thrown in the same sack with a dodgy dentist from NJ with a Swiss Bank account.

I am really surprised that I have had no real responses to my question.

It's not really a case of anyone ignoring your post, but more a case of not knowing how to respond. No, you are not alone in this. A quick scan of this site, the Britishexpats site, Englishforum.CH, and major news outlets turns up numerous examples. It appears that many tax consultants have a backlog of pending cases. Since the IRS has years to act on the filings, there must be a number of people out there with all fingers and toes crossed. The problem arises when asked for a likely outcome. The simple answer is no one could even guess the outcome of any case.

The IRS seems content for the 'horror stories' to make the headlines. But we never hear of those that have back filed, with reasonable cause, and been successful. Right now, it appears that everyone is lumped in with Weller's dodgy dentist, and therefore subject to the same harsh penalties. As nun points out, if you have been reporting the accounts and any interest or gains on your yearly 1040's, then resolution 'could' be straightforward, but it's not guaranteed.

I'll give you my honest first thoughts when I originally read your post: Do you want the same accountant handling the back filing (with its attendant risks) after they missed the obvious for years? I will add that it appears a number of US based accountants are ignorant of the requirements.

A forewarning: if the accounts have more than $50,000 aggregate value, starting with 2011 returns, you must complete Form 8938 in addition to FBAR. After looking at the latest proposal for this form (June 2011), relevant tax returns will become 'manuscript' in size.

We all understand your concern, and wish you the best.

Thank you very much, OAP.

One of the things that puzzles me is the fact that the highest balance of each account has to be declared. Because I keep transferring money between checking and savings accounts, someone looking at my forms might think that I have a lot more money than I do. So with this new form that you mention, is there a risk that I might be asked to prove that I do not have more than $50k? (Some of the savings accounts are e-based and don't issue statements. I actually had to ring up the bank to find out highest balances for previous years because the online statements only cover the most recent 15 months.)

I truly feel a bit lost with all this and am beginning to lose faith in my accountant (who had been recommended to us as being familiar with expat tax filings). I cannot believe that he sprang this on me just a week before the deadline.

I am actually planning to retire and return to England, and return my Green Card as I have no plans to live in the US in the future. My accountant says all I need to do is file one final tax return at the end of the year and that will be it. Again, I am wondering whether this is really that simple?

Hi again Myra,

The reasoning is perplexing, but yes, you may end up reporting a total sum of funds twice the amount (or more) than you actually have due to the transfer of funds between current (or old and new) accounts. A parent may have savings in one account, then transfer that to a dedicated account (in the parent's name) to fund a child's university expenses, and the child may spend all the money in one year. For the IRS, the fact that there are no longer any funds in existence doesn't matter, and an FBAR would indicate twice the amount of (real) funds that ever existed in the first place. The same applies for the new (2011 tax year) Form 8938. If they are foreign assets and meet the 'aggregate' $10,000 or $50,000 levels for FBAR and 8938, they must be reported. Reporting on Form 8938 only begins for 2011, so there is no way anyone will be liable for late (or past) filings before April 15 of 2012 (8938 will be filed with 1040).

The calculation is very black and white: if the 'aggregate' results are over the respective amounts, they must be reported. If they are below the respective amounts, no reporting is required. (There is a caveat: 1040, Schedule B must be filed if you have any foreign accounts. If you have 'debit cards' for your UK accounts, they must be reported on your FBAR and 8938 as well. There are other 'assets' that must be reported, particularly on 8938.)

I can not comment on the surrender of your green card. Your best bet is the 'Britishexpat' forum (see Weller's post above). Recommendations on that site seem to favour Peter Newton, a US/UK tax advisor based in the US. Some of those who post on that site also post here, so maybe they could add more. The true expert on this site is guya. Although he is UK based, he may also be aware of the procedures. In the end, I would recommend direct communication with a truly international professional rather than comments posted by amateurs such as myself.