Technical topics regarding tax preparation.
95 year-old and FBAR failure
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12-Jan-2016 2:08pm

I was approached today by a 95 year-old US citizen living here in the UK who has always been US tax compliant. Now that the IRS no longer answer the phone quite so helpfully, cannot mail forms overseas and the IRS have closed their overseas offices she was really in a quite a state.

Her late husband served the United States honourably and it would be an honour for me to prepare her annual US returns. I will charge as little as I possibly can, given her age, and that I would prefer her money to be spent on her care rather than accounting fees.

It is obvious from everything I heard that she has never heard of an FBAR, but should have filed these for decades. I said nothing to her, because I do not want her getting worried.

I would like to remain silent about FBARs throughout the rest of life, given her age. Are there any rules that prevent me from remaining silent?

There are two incidentally adult children who are named under Lasting Power of Attorney; but this is not currently active as the 95 year old has amazing mental capacity (indeed she is about to be published, as a publisher is interested in her autobiography).
Last edited by Guya on 12-Jan-2016 3:48pm, edited 1 time in total.

12-Jan-2016 2:18pm

Notwithstanding the lack of obligation to prepare the FBAR, the practitioner
does have an affirmative obligation to advise the client of the need to file the FBAR form and the
consequences of failing to do so. ... -04-10.pdf

Delinquent FBAR Submission Procedures ... Procedures

These procedures generally apply when the taxpayer did not fail to report any income and does not owe any tax, but innocently (non-willfully) failed to file a required FBAR, or innocently (non-willfully) failed to include an account on a previously filed FBAR. These taxpayers can go back and file the delinquent FBARs with a statement indicating why the FBAR is being filed late.

The IRS will not impose a penalty for failure to file the FBARs. If the taxpayer subsequently gets examined and discovers that the taxpayer did in fact fail to report income, penalties can then be applied.

12-Jan-2016 3:45pm

Guya, I think you expose yourself professionally if you do not notify her of this issue. Also, going forward, there are those 2 boxes for quest 7a at the bottom of Sch B. Will you check them yes and file the FBARs going forward?

I understand your desire to not upset her. I think that being less than forthright and truthful puts you at unacceptable risk.

12-Jan-2016 3:50pm

I think you'd be violating NAEA's rules of ethics.

12-Jan-2016 4:53pm

This is helpful - I'll include the work in my engagement letter, because she certainly could not deal with the forms herself. I am sure I can think of some calming way to explain this to her. I already have Power of Attorney for three of my own elderly relatives with dementia issues; so I think I'll cope OK if I simply get things done and compliant.

Doing the right thing will also stop relatives arguing after her death that I failed somehow to keep her compliant...

12-Jan-2016 5:43pm

Exactly. If you don't do your best to bring her into compliance, you will be at risk from the various powers that regulate us along with anyone who has any interest in her assets.
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