FBAR help - only just found out about it (student loan money)

It looks like the person in that thread had some bad advice, though... All the stories of people being burned that I've read involve either huge amounts of money or simply going through totally the wrong process due to bad advice.  Thus my care in attempting to do this the right way around.  As far as I know I owe no tax (I declared all my earnings when I made enough to even bother with, and all my earnings are taxed in the UK anyway at a much higher rate - despite the fact I never made enough to actually be required to file Federal taxes in the first place - or at least that was my accountant's reading of things when I filed Federal taxes this year on a whole $900 of income from a work-study-type-job), so I'm under the impression 'reasonable cause' is all I need.  If not, well - given I have basically no money aside from my student loans, payment of penalties would be very interesting. 

I am tempted to wait until after this supposed statement comes out later this month that is meant to address people with small accounts who were unaware of the filing requirement, and see what comes of that. A bad idea, I'm sure, but I am very curious.

I'm mostly irritated that information on this seems to be very sketchy. There's no little handbook given to people who move overseas that lets them know about anything they need to do while abroad (passports do have a reminder to report overseas income, but that's all).  I only really knew about the taxation thing because my home state is irritating about taxation matters and I've always been hyper aware of checking income, particularly interest income.  But the FBAR was never mentioned to me by anyone - not the university (which has a sizable American society, and given we all get our loans the same way, I would expect that someone over the years would have mentioned this and would thus disseminate that info to the general American population at the university), not my bank (and I would have thought that being one of the largest banks in the world, it would have at least mentioned it - but I always read through my mail inserts and at no point did they mention this), nor anyone I ever contacted about international tax matters over the years.  It seems we are left to discover this (always too late) in our own time; and even the press releases I've read are not entirely clear about who needs to report.  Some seem to suggest that banks even do this on their own (or that they should - again, it's unclear).  I am perfectly happy to jump through any hoops the US government sets up for me - which I have done with taxes - but I have to know the hoops are there in the first place in order to jump through them.  In my opinion, they are simply not being public and straightforward enough about this requirement. I would expect shedloads of press releases (particularly abroad), mentions at universities with many American students, for it to pop up on the screens of accountants at tax time, for banks to at least *mention* it when they see your nationality.  And I would expect these things as a matter of courtesy.  If 'ignorance is no excuse', then why does it seem like they want to keep it a secret?

Sorry for the rant there...

I visited the IRS at the American consulate yesterday about something else, but the FBAR topic came up incidentally.   My FBAR is in order, but based upon the conversation, Americans in the UK would be well advised to do their FBAR's going back 6 years and hope that they haven't underpaid tax in any of those years.

When I did my first FBAR, I applied every teeny-weenie bit of my wordsmithing skills to a compellingly sound and fully defensible reason for not having done it earlier.  Hopefully all you are doing the same.

When I did my first FBAR, I applied every teeny-weenie bit of my wordsmithing skills to a compellingly sound and fully defensible reason for not having done it earlier.  Hopefully all you are doing the same.

My PhD is in English literature and criticism, so I think I have wordsmithery covered. ;-) (wonder if 'have had my nose in a book continuously for the past 5 years and have not had more than a moment to look up' is reasonable cause... Just kidding).  That being said, I tend to find simplicity is best when dealing with official people, and so the letter as stands is very straight-forward.  

In other news, I think this is the statement the IRS was meant to issue. The language is fairly clear: http://www.irs.gov/newsroom/article/0,,id=250788,00.html , and it looks like ignorance may well be an excuse (so long as they believe there was ignorance in the first place, which is, of course, the issue in most cases).

NOTE:  people wanting to follow the link above should remove the final comma so that you'll navigate correctly...

Fixed the comma issue - could have sworn I put a space there when I typed it.

Ignorance of FBAR requirements is a possible reasonable cause but you will need good evidence why you could not have known.

The lesson for Americans abroad has always been to file every year both US income tax returns and also FBAR forms (reporting non-US bank and financial accounts). US government numbers indicate that several million honest folks around the world have simply not been doing this.

Just this past week, after many years of requests, the IRS have at long last relented and agreed publicly not to charge penalties if there is “reasonable cause” for not sending in all of the forms on time. As with so much of the tax law, reasonable cause is a complicated concept which can only be decided based on the specific facts in each case.
http://www.irs.gov/newsroom/article/0,,id=250788,00.html

This new IRS rule does mean that every time an FBAR is sent late the IRS is expecting a letter explaining why penalties should not be charged. This letter is a document that needs extremely detailed and careful drafting. Getting just a few words wrong could truly lead to huge penalties - in some cases even running into the millions of dollars.

My opinion is that individuals who have  not been fully compliant should act within the next few weeks by:
1. Making absolutely sure every FBAR has been filed for the last 6 years
2. If anything “irregular” shows up, file these late FBARs within the next few weeks, together with a reasonable cause request
3. Always – without fail – get a professional opinion on the reasonable cause wording because the risk is just too big for anyone to ever try to do this without help.

This is great advice.  Thanks guya

When I was in there what prompted the discussion was a clown at the next window who was trying to denounce his citizenship because he had been *hammered* with a severe penalty.   It turned out that the IRS had caught him first before he could make a disclosure, and when they catch you first your life turns into a nightmare.  They gave him the forms to denounce his American citizenship (the fool), and told him that he would still have to pay anyway which was news to me.  And him.  I think he didn't believe them.

And after he left, I asked how come somebody can't just say "I didn't know" forever until they get caught?  And the agent (I have had the same IRS agent there for about 17 years by the way - he's the real old one who speaks Russian), any he explained that if they catch you first everything changes.

People should be filing their FBAR for the past six years.  And I'm starting to think people should do it even if they don't have to in case there's a *bleep*-up along the way that means they should have filed.

And like guya pointed out:  your wordsmithery should be masterful, and knowing American guvvies, I would suggest not trying to palm off any crap because they will have read it all before from lots of people trying to palm off a load of crap as to why they didn't disclose.   All this is opinion only.    

Getting just a few words wrong could truly lead to huge penalties.

[...]
3. Always – without fail – get a professional opinion on the reasonable cause wording because the risk is just too big for anyone to ever try to do this without help.

Any suggestions of who to go to for help? I'm fairly good at the whole writing dealie, but finance is not my area and I wouldn't want to get burned because of a missed buzz-word. 

People should be filing their FBAR for the past six years.  And I'm starting to think people should do it even if they don't have to in case there's a *bleep*-up along the way that means they should have filed.

And like guya pointed out:  your wordsmithery should be masterful, and knowing American guvvies, I would suggest not trying to palm off any crap because they will have read it all before from lots of people trying to palm off a load of crap as to why they didn't disclose.   All this is opinion only.   

No intent to pass off random excuses.  The letter as it runs (more or less): I didn't know, and here are all the people I would have expected to tell me about this who didn't; even if I did know, the presentation of the law to the public is largely unclear and seemingly contradictory, and I would not have filed because I wold have assumed it didn't pertain to me (which is true - while reading things last week, most of these articles and basically anything that didn't come directly from the IRS - and even then a few things that did- were directed only at investors and businesspeople); I have filed as soon as I out; etc; etc. A fairly standard list of reasons for reasonable cause, I suspect, but it's the truth.

Oi!  You left out the most important parts!    

What did you do *immediately* when you found out about FBAR? 

How do you assess your prospects for reporting FBAR in the future?

The most important things they want to read.  But remember that it's an *opinion* only.  I am actually clueless on matters arising under US tax laws.

Oh, those are all in there too (called up the IRS and helpline the day I found out; am, of course, perfectly happy tomfile from now on).  I'm sort of using the guidelines in the statement about what is considered reasonable cause to create the structure and content. 

I meant to say earlier - thanks to all of you for being so helpful with all of this. 

I composed my letter over the course of about 6 days, structuring, composing, and what-not.  I am prone to anacolutha in my writing and had to be sure they were ironed out.

Was it all a waste of time?  No, not with that much on the line.   But I'm sure you'll be fine.   

I composed my letter over the course of about 6 days, structuring, composing, and what-not.  I am prone to anacolutha in my writing and had to be sure they were ironed out.

Was it all a waste of time?  No, not with that much on the line.   But I'm sure you'll be fine.   

I hope so! 

I have a tendency to babble when nervous (even in writing), so I will probably need to do a lot of excision work.  Out of curiosity, how long was yours? I've read recommendations that say short and sweet is best; others suggest a super detailed argument. 

Thanks again, everyone. 

Three paragraphs:  how I found out and what I did when I found out.  My current situation in the UK and history of transparency and compliance.  And finally, how I took control and stabilized the FBAR reporting situation for the future. 

No lame excuses.  No stupid reasons, in fact no reasons at all  .  No blaming statements.  No contrived crap.  No broken eyeline.  Just business.  Pure focus on the business at hand.   It's a business letter.  Wordsmithing all the way.  It took about a week to compose!

But that's *me*.  It might or might not be the recipe for everybody else.  Everybody has their own approach.   

Short, concise, no cruft. Mine was A) I'm sorry, B) I was unaware of my responsibility, C) I have included the required filings, D) I will be sure to stay up to date in the future, E) I'm really, really sorry. That's all they care about.

ETA: I was in the same situation you were, with student loan money in personal accounts.