Sch B, Part III

Technical topics regarding tax preparation.
#1
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Prospect is a US citizen and resident of a foreign country. Has foreign accounts. Files an FBAR annually.

2020 return was filed solely to claim the RRC that was not paid out via EIPs. No income or activity other than that. Zero income and no tax liability. A Schedule B with Part III was not filed with this return.

Technically, a Schedule B with Part III is not required to be filed if a 1040 is not otherwise required to be filed. i.e. You don't have to file a 1040 just to file a Sch B. However, in this situation, a 1040 was filed. Do we need to amend and include a Sch B? Penalty exposure for failure to file a Sch B or appropriately fill out Part III when the taxpayer has a foreign account is pretty egregious.

Thoughts? Please assume an extension was not filed.

Chances the IRS will automatically assess a penalty if we file amended with a Sch B?
 

#2
dave829  
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ManVsTax wrote:Penalty exposure for failure to file a Sch B or appropriately fill out Part III when the taxpayer has a foreign account is pretty egregious.

I'm curious --- what penalty are you referring to? I'm not aware of any penalty for failure to file Sch. B or to fill out Part III when the taxpayer has a foreign account.
 

#3
Nilodop  
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One person's comment:
While there is no penalty for failing to file 1040 Schedule B, the non-filing may lead to an audit, which may reveal unreported offshore or foreign banks accounts — and result in significant fines and penalties.
. https://www.goldinglawyers.com/file-sch ... gn-income/
 

#4
dave829  
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The penalties are for failing to file the FBAR, Forms 8938, 3520, 3520-A, 5471, etc., but I don’t know of any penalty for failing to file Form 1040 Sch. B or failing to fill out Part III of that form.
 

#5
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I think you guys are right...for some reason I thought there was a penalty for not filling out Part III correctly or filing the form if a return was filed and it was necessary to file Sch B.

Much ado about nothing....apologies.
 

#6
sjrcpa  
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So how does this client live if he has no income?
 

#7
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This prospect is married to a non-resident alien and is a stay at home spouse.
 


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