tag:blogger.com,1999:blog-1519969502186924526.post386386176822755084..comments2023-10-24T08:00:53.865-05:00Comments on Federal Tax Crimes: To OVDI or Not to OVDI - That is the Question (Of Quiet Disclosures and Doing Nothing) (5/23/11)Jack Townsendhttp://www.blogger.com/profile/14469823736335455874noreply@blogger.comBlogger500125tag:blogger.com,1999:blog-1519969502186924526.post-16316120435570179512015-06-22T00:56:53.220-05:002015-06-22T00:56:53.220-05:00Thank you for this informative post. I just want t...Thank you for this informative post. I just want to share a good source for tax forms<br />and tutorials - PDFfiller. It has a ton of Tax Forms. It helps me fill out a needed form neatly and gives me the option to esign. http://goo.gl/yoGwr2Reynaldo Rivasnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-50365166362453896842013-04-06T15:48:29.883-05:002013-04-06T15:48:29.883-05:00Thank you, Anonymous! I understand that I have to ...Thank you, Anonymous! I understand that I have to put both of MY accounts (savings and checking) and they would have to go under Part 2 on the FBAR (accounts owned separately). However, under which part should I put my dad's account? There is no part, where it says report accounts where you have other authority and financial interest! This is why I am confused, and I was asking Jack if I should put my accounts under part 2 and then add an explanation why the amount is seen twice, and also explain that I transferred it to my dad, but because I did not find the right place where to put his account, I simply decided to write an explanation and disclose his account number and name. It' s kind of confusing.. I know :) What do you think? Have you heard of similar situations?What Nownoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-67525580441112209292013-04-05T15:34:12.494-05:002013-04-05T15:34:12.494-05:00The FBAR requirement is that, if the aggregate tot...The FBAR requirement is that, if the aggregate total of all accounts at any time during the year was $10K or more, then you must report all accounts. The scenario you describe (transfering funds) is quite common so on the FBAR you would report both accounts and the highest balance each held, even though it was the same money.<br /><br />If the money in your father's account is yours then that account should be reported as well, since you had signature OR OTHER authority (the other authority is being able to tell your father to send you the money which is yours) and you also had a financial interest in a foreign account (since the money was yours.)<br /><br />Any interest income belonging to you (whether the acct is in your name or in your father's name) should be reported on your tax form.<br /><br />Since commingling funds complicates things, I would strongly suggest that your father have separate accounts one for his money and one for yours, ideally in separate banks so the bank doesn't goof and make deposits/withdrawals from the wrong account.<br /><br />Your father as a non US person has no FBAR obligation. You do for the account that holds your funds.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-2411273293315284582013-04-04T10:52:46.222-05:002013-04-04T10:52:46.222-05:00Hello Jack,
I didn't file an FBAR or report m...Hello Jack,<br /><br />I didn't file an FBAR or report my worldwide income for 2011. Therefore, I decided to go ahead and amend my 2011 tax return and file a late FBAR. For 2012 however, I had one savings account with more than $10K abroad and another checking with $0. I wanted to transfer the money into my dad's account, and the bank said that they had to transfer the money from my savings into my checking, and then into my father's checking. So when I looked into my bank statements the transferred amount occurred in both accounts! Does this mean that I have to report both of my accounts on the 2012 FBAR (under Part 1 I guess)? And if yes, should a provide a letter explaining why this occurred twice? Also, I do not have any signature authority over my dad's account, but the money that I transferred are still mine and I can simply tell him to transfer them if I need it. Does this mean that I have to report his account and if yes, where exactly on the FBAR? I am asking because I do not see a place, where is says report accounts with NO signature authority but WITH financial interest in it. Part 4 on the FBAR is totally the opposite! My dad is not a U.S. person. Thank you and I hope I placed this comment in the right discussion :)What Nownoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-34419352523488139322012-09-30T22:12:50.419-05:002012-09-30T22:12:50.419-05:00When I initially commented I appear to have clicke...When I initially commented I appear to have clicked on the -Notify <br />me when new comments are added- checkbox and now whenever a comment <br />is added I receive 4 emails with the same comment. There has to be a means you can remove me from that service?<br />Cheers!<br /><i>My web site</i> - <b><a href="http://301binaryoptions2.com" rel="nofollow">bbinary</a></b>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-6823592417054531872012-08-06T14:35:43.795-05:002012-08-06T14:35:43.795-05:00I can't give you legal advice about your uniqu...I can't give you legal advice about your unique facts. I am confident that all the relevant facts include more than you present here. However, just going on what you offer here, one good option for you may be to file an amended return and delinquent FBAR for 2010 as well as for 2011. I think that technically there is no requirement that you file a delinquent FBAR for 2010 but it will established good faith. You say that you are going to also file a 2011 FBAR which might be a good decision in your case. It is the delinquent 2011 FBAR that might get attention (although that is even problematic). But, one you have decided to file the delinquent 2011 FBAR, in your facts (again just looking at the facts you offer), then filing the delinquent 2010 FBAR becomes almost automatic with the amended return for 2010.<br /><br />Jack TownsendJackTownsendnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-15596324815784199242012-08-05T20:24:05.719-05:002012-08-05T20:24:05.719-05:00Hi Jack,
I have a situation where I am out of comp...Hi Jack,<br />I have a situation where I am out of compliance for FBAR for last 2 years. I had filed for extension for this year tax return and I just met with my new CPA yesterday and learnt about FBAR requirements. I had transferred over 100,000.00 to my native country last year and before that year I had about 15,000 in my account and under reported interest income of about $400. So..<br />- 2010 Tax return has less $400 in interest reporting<br />- 2011 tax return is yet to be filed<br />- no FBAR was filed due to not aware of this requirement, my old CPA didn' tell me and have not even filed schedule B for 2010.<br />- I may have some tax due for interest income (may be less than $50 per year for couple more previous years) but no FBAR required because the account balance was less than 10K<br /><br /><br />So I am thinking of filing a month late FBAR for 2011, file tax return for 2011 in next few weeks, file amended tax return for 2010 to include $400 and pay about $100 in taxes due.<br />Do you think I am missing anything or should I also file FBAR for 2010?<br /><br /><br />Certainly not join the discloser program as I think I am not a candidate for that, but your suggestion will be a valuable in the this regard.<br />You don't know how much help you are doing to people like us through this blog and I can't thank you enough for this. God bless you!TimeIsRunningOutnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-71617026557305072542012-07-19T00:22:12.911-05:002012-07-19T00:22:12.911-05:00I have the same experience. I sent three different...I have the same experience. I sent three different checks for all 8 years (taxes, penalties, and interest) in September. I was again billed for difference of Interest in June 2012, which I paid with one check. Now I received a notice from IRS for 2008 taxes and failure to pay penalty and Interest.<br />I called the 800 contact number and after holding for 30-40 minutes an unfriendly person answered. When I tried to explain that this is part of my OVDI package and it is paid in full, that person had no clue about OVDI. I was told that the money is not applied to correct years and to contact my agent.<br />I am surprised they don't research the account before sending notices.<br />They can make mistakes, but we pay unreasonable, harsh penalty for not knowing about a form.uknoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-87009250964724580482012-07-18T07:55:14.652-05:002012-07-18T07:55:14.652-05:00@ desparate It appears that the even though the IR...@ desparate It appears that the even though the IRS posts all your<br />payments to 2007, some other Service Center may check what you should have<br />paid each year and if something is owed, it may try to collect. <br /><br /><br /> <br /><br /><br />My payment was also posted to 2007. When I read on this blog that the IRS was<br />doing this, I called to find out what the situation was in my case. The representative<br />I spoke to said that there had been “activity by another Service Center”<br />related to 2007 and 2009. This matched<br />exactly when I had owed some taxes under the SOL (Statue of Limitations) – 2007<br />and 2009. <br /><br /><br /> <br /><br /><br />To date, I have not received any collection notices. However, in 2009, I owed only USD 20 in taxes<br />so I doubt it was worth their while to try to start collection procedures, but<br />this is only speculation on my part.<br /><br /><br /> <br /><br /><br />Previous posters have written that it has been hard to stop<br />these collection efforts. Why not<br />contact the Taxpayer Advocate Service (TAS)? <br />You have paid your taxes owed and the IRS is threatening you with fines<br />by a certain date. Maybe you can<br />convince the TAS to help you while you continue to work on trying to contact<br />the numbers that were suggested to you. <br /><br /><br /> <br /><br /><br />Yes, it would be good to know from Jack why posting to 2007<br />could be advantageous.anon5percentnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-39634711222386152912012-07-18T05:49:41.813-05:002012-07-18T05:49:41.813-05:00Thank you, Jack, for your response. You confirmed ...Thank you, Jack, for your response. You confirmed my<br />thoughts: Why is her account considered to be my account and why am I even<br />entering the OVDP? <br /><br /><br /><br /><br />The reason I have been advised to enter the OVDP relates to<br />my separate accounts in Canada (a personal bank account >$10K and an RRSP<br /><$10K). Between 2000 and 2005, the interest from the Canadian account was reported<br />on Schedule B and taxes paid. Beginning in 2006, after moving to a different<br />state, a new accountant handled my annual return. Each year he was provided<br />with the interest earned statement, but it was only this past April that I paid<br />enough attention to discover he had not included the Canadian interest on my<br />tax returns for 2006-2010. For the past five years, the interest on my own<br />account is minisicule, varying between $25 and $130 each year. The interest on<br />the RRSP is less than $200/year. <br /><br /><br /><br /><br />So, for a total of $1000 in interest that was not reported over<br />a five year period, along with having my name on my mother’s account/estate,<br />and the inheritance I received from her (which briefly put my account above $75K), I<br />have been advised to enter the OVDP and then opt out. Oh yes, and to pay both an accountant and an<br />attorney thousands of dollars to go through the process all because I trusted<br />an accountant who turned out to be careless (or incompetent). <br /><br /><br /><br /><br />Personally, I think a QD is a better option for my situation<br />because I was not hiding money and I believe I can show reasonable cause that this<br />was not willful. From reading your blog I<br />also recognize regardless of whether I enter/opt out of the OVDP or do a QD, I need<br />to be prepared to go through an audit. Yes, I will be talking with my attorney<br />about bifurcation and a QD.<br /><br /><br /><br /><br />Thank you again, Jack, and the other contributors to this<br />blog for your collective wisdom, experience and insights.Caregivernoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-72125350183016156672012-07-17T21:29:55.593-05:002012-07-17T21:29:55.593-05:00Thanks Jack a lot. The penalty is for 'failure...Thanks Jack a lot. The penalty is for 'failure to pay', plus interest at 6% for oct to dec 2008, then 5% for jan to march 2009, then on at 4% till today. She said she can see the big check applied towards 2007 but CANNOT HELP ME. The number she gave me is in Austin, but while talking to me she said it is in Phila?? Just a big confusion. Can you tell why the 2007 application may be good for me? The letter I got says due on Aug 02 2012, after that they will add more penalty and intt. I am afraid Aug 02 will be upon me in no time w/o any relief. I did pay in a lump sum - tax, intt plus 20% penalty specified in 2011 OVDI. What are other folks facing? Thanks.desparatenoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-91439642115608416022012-07-17T20:00:04.696-05:002012-07-17T20:00:04.696-05:00I did the same with a big fat check, but was never...I did the same with a big fat check, but was never asked where the money should be credited. It does not matter for which year -- it is the total 8 years of tax owed. There must be some confusion in the first place. Did you write OVDI on memo on the check ? Mine is so fat that it covers the in lieu penalty as well,<br /><br /><br />There is some confusion on my side too. At first, I was told that I had owed another couple thousand and then was told that I should get some refund. <br /><br /><br />IRS FAQ has never asked us to write check for every year (in my case, I have years that IRS owes me money due to PFIC calculation).ijhttp://ij.org/noreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-20355523851092901642012-07-17T19:51:31.600-05:002012-07-17T19:51:31.600-05:00I think the IRS is posting all payments to 2007. ...I think the IRS is posting all payments to 2007. I could get into some technical reasons that may be good for you, but the glitch you have encountered is that you are getting notices for 2008. You should just be patient and keep calling / waiting for a return call. <br /><br />I do have a question regarding the 2008 notice. You say that tax, interest and penalties were included. Penalties should not be included until assessed in the OVDP. If the assessment were based on the return, until you have agreed to the 20% penalty, there should be no penalty. You might ask about that also.<br /><br />Best,<br /><br />Jack TownsendJackTownsendnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-40464077215939475092012-07-17T19:32:03.856-05:002012-07-17T19:32:03.856-05:00First, it is not clear to me why you are joining O...First, it is not clear to me why you are joining OVDP, but if you are you will want to consider opting out. You make the decision whether to opt out at the end of the OVDP process, but if indeed you know now you are an opt out candidate, I am not sure why you would want to join OVDP in the first place.<br /><br />Second, provided that you have reasonable proof that it was your mother's account, it will not be considered your account. Hence, if your mother was not a U.S. resident, at least during her lifetime, the account would have no U.S. tax noncompliance. Depending upon the laws of Canada, the same may be true during the period that the account was in the estate. You would have had FBAR filing requirements from the point you were added to the account, but since it was not your account, there is no U.S. tax noncompliance. So, I infer from your second paragraph that you did file the 2011 FBAR and either have or will file correct 2011 1040s. So, if those assumptions are correct, even in OVDP, there should be no penalties. However, I have made some assumptions and encourage you to consult your attorney for more nuanced discussion of these issues in your specific fact situation.<br /><br />Now, addressing your specific questions (and again your attorney is best situated to advise you, I will not provide specific advice but I think the answer will be whether you can convince the IRS that although you appeared as account owner or signatory, the account was your mother's. You have to marshall the evidence for that, but I find that the IRS is reasonable with some reasonable indication that the account is not yours. Work with your lawyer on that. That should make the Foreign Tax Credit question moot. But, logically, if the IRS were to insist that some or all of the account were yours, then it should allow the credit. (The only problem I could see is that the foreign tax appears to have been paid for your mother's tax obligation to Canada, but that should be proof that the earnings and thus the account were hers also.)<br /><br />Again, your best advice will come from your attorney.<br /><br />Best,<br /><br />Jack TownsendJackTownsendnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-60706732905273083252012-07-17T18:49:57.780-05:002012-07-17T18:49:57.780-05:00Jack, I have a technical question regarding double...Jack, I have a technical question regarding double taxation on<br />interest earned. <br /><br /><br /><br /><br /><br />Situation: I am a green-card holder living in the US (since<br />2000). In 1999, my mother added me to her bank account in Canada and named me as<br />executor of her estate. After she became ill, I took over the management of her<br />finances. She died in 2008. The highest<br />balance in her account, even with proceeds from the sale of her home, was less<br />than $180K. When alive, she paid Canadian taxes on the interest earned in her<br />bank account. After her death, the estate paid Canadian taxes on the interest earned.<br />Her estate was settled in 2011 with disbursements made to my two siblings and<br />myself. Until this year, I didn't file an FBAR for her account as I did not<br />know they were required. My new accountant told me about FBARs and research lead me to learn about the OVDI/OVDP and the draconian penalties. As most readers here can relate - from that day forward my life has changed. Fortunately, I also found your invaluable blog. A tax attorney recommends that I enter the OVDP (as quickly as possible) so I am preparing to amend<br />my returns for 2003-2010.<br /><br /><br />Question: Will I also be required to pay taxes on the<br />interest earned in her account (i.e., double taxation), or, can I receive<br />Foreign Tax Credits (F1116) for the taxes she paid? <br /><br /><br /><br />My logic is that if the IRS considers her account to be "my account" then the taxes she already paid should be applicable.Caregivernoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-39190171336664181712012-07-17T18:16:31.042-05:002012-07-17T18:16:31.042-05:00I need urgent advice: We entered 2011 OVDI, sent t...I need urgent advice: We entered 2011 OVDI, sent the package in sept 2011. Sent in one check for all the 8 years - 2003-2010. In nov 2011, we received a letter from IRS asking where the money should be credited. We wrote back saying it is for 2003-2010 OVDI. Now, today we got a letter from IRS saying we owe tax plus intt. and penalty for 2008. I called them, she said the big fat check is credited to 2007. she was unable to help me. She said call Phila at (267) 941-1607. I did. I had to leave a call back number. What is going on? What is the timeline of 2011 OVDI closures? I regret not having sent separate checks for the 8 years, but that is not what the irs said in the FAQs. Please please advice.....desparatenoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-16448671304405535162012-07-15T18:07:39.513-05:002012-07-15T18:07:39.513-05:00@anon, As soon as I settle with IRS, I will do t...@anon, As soon as I settle with IRS, I will do the sate. That would be only to correct income (thus state tax), there is nothing offshore/inshore that matters. Most states have 10 years SOL to collect tax -- so when I have my federal redo, that is likely to affect all the years of OVDI.<br /><br /><br /><br />Keep in mind, that State charges higher interest rate (something like 10%) which may cause a lot money even it has no such thing as FBAR.ijhttp://ij.org/noreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-5233412489541894772012-07-15T08:10:42.848-05:002012-07-15T08:10:42.848-05:00for state that do not have a parallel ovdi program...for state that do not have a parallel ovdi program, do you pay the tax for the years the SOL has expired or do you have to pay from 2003 onwards?anonnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-62992040231664934062012-07-14T01:22:29.813-05:002012-07-14T01:22:29.813-05:00Thought I would draw your attention to a recent Ta...Thought I would draw your attention to a recent Tax Notes International article by Steven Mopsick. A copy of the proposal has been posted at Isaac Brock Society. It is called Tax Justice for Americans Abroad. Here is the link. <br />http://isaacbrocksociety.ca/2012/07/13/tax-justice-for-americans-abroad-by-steven-j-mopsick/Just Menoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-91733363103657830862012-07-13T15:28:08.215-05:002012-07-13T15:28:08.215-05:00QD and GF are strategies only for those without cr...QD and GF are strategies only for those without criminal exposure. If there is no criminal exposure, the only exposure is audit exposure. The IRS has articulated no difference in penalties regardless of how the taxpayer is audited (in this case QD or GF). So, since QD probably involves higher risk of audit, GF may be the way to go for persons with the right facts.<br /><br />Of course, as you know, GF does require squeaky clean filings going forward. But that is required regardless of which strategy is used.<br /><br />Jack TownsendJackTownsendnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-28794477699843200952012-07-13T14:16:55.851-05:002012-07-13T14:16:55.851-05:00Jack,
GF looks like to tell IRS -- go figure -:...Jack,<br /><br /> GF looks like to tell IRS -- go figure -:) As it gives IRS some room for speculation (were these accounts there in the past ?)ijhttp://ij.org/noreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-43346249975033360612012-07-13T13:03:12.084-05:002012-07-13T13:03:12.084-05:00I really can't answer the question on the limi...I really can't answer the question on the limited information you offer. Making an optimal (not perfect) choice among the alternatives (OVDI, QD and GF) requires a judgment call based on all the facts. Then, if QD is required, the judgment cal as to how many years requires consideration of nuanced facts.<br /><br />However, I find that, in many cases, a QD is not really better than a GF.<br /><br />Jack Townsend<br /><br />Best,<br /><br />JackJackTownsendnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-74451803384697554432012-07-13T12:39:50.095-05:002012-07-13T12:39:50.095-05:00Jack, i have a question, would filing a QD for 09 ...Jack, i have a question, would filing a QD for 09 and 10 1040x and likewise for fbar and not going back 3yr on 1040 and 6 yrs on fbar okay considering 07 and 08 1040 has little unreported income or would ovdi be better considering non-willful ?anon1noreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-34729636536755759532012-07-13T06:09:07.930-05:002012-07-13T06:09:07.930-05:00Maybe when you opt out, you can sign an extension ...Maybe when you opt out, you can sign an extension form for tax assessment only for years that you have a refund due :) I presume that when the IRS countersigns the form, they are bound by the extension of SOL and are required to pay refunds even for years for which the refund SOL would be closed. <br /><br /> Researchernoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-81932007433971657152012-07-12T17:32:10.454-05:002012-07-12T17:32:10.454-05:00I had the same, but I did not know how to get refu...I had the same, but I did not know how to get refund back (with what interest rate), so I just put zero (asking no refund), but later I sent form 1116 for foreign tax credit to my examiner who is working on to give me some refund. <br />It is good to get some refund to offset tax -- not so much money back but it would look better when you net tax owed to IRS is less -- that would be a good argument for less FBAR penalty. <br /><br />Remember the whole OVDI/FBAR crack down is about offshore tax evasion, when after all the examining process is finished and we can show we owe very little tax -- that would contradict IRS's claim -- we are all tax cheats. ijhttp://ij.org/noreply@blogger.com