FBAR for prior years

Technical topics regarding tax preparation.
#21
Guya  
Posts:
859
Joined:
21-Apr-2014 8:08am
Location:
London, United Kingdom
Bob is correct - FBARs are overall very time consuming and confusing and clients do not value that time adequately. Many clients have no idea what foreign accounts they have.

Let's pick on me. I live in London. Pretend I was a US citizen and I was your client for this example. What foreign accounts do I have. Yes I have 2 or 3 banks accounts; that's easy. However, is my Sydney Australia Opal transit Card that is roughly AUD$20 in credit an account? Are my 3 Transport for London Oyster cards (2 of which are over-drawn) foreign accounts? Which of my several UK pension plans are foreign accounts? Are gift cards I was given for Xmas from British supermarkets foreign accounts (all UK supermarkets have banking licenses as they all offer bank accounts)? Which of my British credit cards are foreign accounts (they are all sometimes in credit because I pay the same amount each month to simplify my life)? Is my online Lottery account FBAR reportable? How about my (several years dormant) online gambling accounts that I have forgotten how to log into?

These circumstances are fairly typical...how about my iPhone / Apple Pay in the UK...and every other electronic wallet you can think of...

What is the risk for the preparer if any of these items were missed; just $10,000 for each...could be...
PS – Greeting from London, England. Grey and rainy ...
 

#22
FLAcct  
Posts:
446
Joined:
21-Apr-2014 2:47pm
Location:
Florida
I'm wondering if any of us have checked to see if their E&O insurance will cover FBAR penalties since this is not a tax return, but a Treasury filing.
 

#23
EADave  
Posts:
1427
Joined:
22-Apr-2014 9:25pm
Location:
Texas
That's why I like this site. It gives me an opportunity to nearly have a heart attack without ever having to, say, swim with sharks or skydive. I can just tell you guys what I get myself into and then let all the blood drain out of me when I realize I could have just put my head in a tiger's mouth! And you you never judge me to boot!!

Thank you Bob and Guya for your responses. My clients I mentioned aren't that sophisticated, but you are right, I have no idea if they are not telling me the entire truth and maybe their memory is no good anyway. I'm gonna Google "London Oyster Cards".

Alright, now I'm gonna go eat a triple cheese burger and jump out of a perfectly good airplane!
 

#24
skassel  
Posts:
680
Joined:
22-Apr-2014 6:04pm
Location:
San Mateo County, CA
CrickTaxEA wrote:The problem is FinCen is under Treasury not the IRS. That means only an attorney can represent a taxpayer in these matters.


I hope you are not saying that only attorneys can complete FBAR's as that is absolutely not true.
Steve Kassel, EA
 

#25
Frankly  
Moderator
Posts:
2454
Joined:
21-Apr-2014 9:08am
Location:
California
skassel wrote:
CrickTaxEA wrote:The problem is FinCen is under Treasury not the IRS. That means only an attorney can represent a taxpayer in these matters.

I hope you are not saying that only attorneys can complete FBAR's as that is absolutely not true.

More than that, an EA or CPA can represent a taxpayer with regard to FBAR, OVDP, etc. Just fill out the 2848 with the appropriate tax matters listed.

If one is not comfortable dealing with foreign asset reporting and doesn't want to learn about it, it's fine to farm it out to another professional. A tax attorney doesn't necessarily have anymore knowledge of the subject than an EA or CPA.
 

#26
Posts:
325
Joined:
29-Apr-2014 3:22pm
Location:
Los Angeles
This is news to me. This article spells out what I've learned from several seminars I've taken:

https://www.irsmedic.com/2013/03/19/irs ... -attorney/

This is from 2013, are you saying this has changed? if so, my bad I guess I missed that. I remember when the 3rd party preparer function was added to FinCen but I don't remember hearing that also allowed the use of the 2848. Also I'm not saying we cannot prepare FBAR's I'm saying that generally it's a bad idea. Why? Read this except from one of the regular newsletters I get from the Wolfe Law Group:

Tax practitioners, both Attorneys and CPAs, who have tax clients who have committed tax crimes (e.g. Tax felonies: willful evasion of tax, obstruction of tax collection et al) may not have an attorney-client privilege for taxpayer communications to them. Since the attorney-client privilege belongs to the client, the client’s intent determines whether the exception applies. For those tax practitioners, who continue representing non-tax compliant taxpayers (who remain non-tax compliant despite being informed of their legal obligations by the tax practitioner) they may subject themselves to IRS/CID investigation and US Dept. of Justice criminal prosecution for two separate felonies: conspiracy to evade taxes (18 USC 371), and misprision of a felony (18 USC 4).

Under the crime-fraud exception to the attorney-client privilege, a client’s communications to their attorney is not privileged if made with the intent of committing or covering up a crime or fraud which may include “tax crimes” including: willful evasion of tax, conspiracy to commit tax evasion, obstruction of tax collection, filing a false tax return et al. In the recent 2016 case of oil investor Morris Zukerman a Manhattan judge ordered his attorneys to appear before a grand jury to give testimony (which Trial court order was upheld by the US Court of Appeals 2d Circuit). In the face of his attorneys having to potentially appear before a grand jury and give adverse testimony (contrary to his interests), Zukerman plead guilty to two felonies for tax crimes: tax evasion, and obstructing tax collection and awaits sentencing.

Taxpayers who cheat on their taxes either by not filing tax returns, filing false/fraudulent tax returns, fail to disclose offshore bank accounts/ holdings and/or foreign financial assets if construed as willful tax evasion have no attorney-client privilege for their tax crimes (IRC Section 7525), have no attorney-client privilege for their continuing willful evasion of tax (crime-fraud exception). They place their tax advisors in harm’s way for criminal prosecution for conspiracy to commit tax evasion, and misprision of a felony. In addition, dependent on their involvement for the purchase of assets, with the tax evasion proceeds, tax advisors may subject themselves to additional jeopardy for money laundering, wire fraud and mail fraud (each additional 20 year felonies). So, if there is no attorney-client privilege, and a risk of criminal prosecution what should a tax advisor do in response? Best plan is to get expert advise and if necessary withdraw from representation before it is too late.


This is the conclusion of a pretty detailed article that starts with the Panama Papers debacle and the over 3,000 US taxpayers that have been uncovered so far. He also explains the many ways someone can get tripped up with their foreign accounts/assets. Two big ones are bankruptcy court and divorce proceedings. In both cases they're required to disclose everything they own worldwide under court order and refusing to disclose leads to a contempt charge and of course lying under oath is perjury. Once this stuff is in open court the IRS/DOJ has full access to it.

This is why I've said before that while I have assisted a few people who are not computer savvy to access the FinCen website and fill in the blanks, I've never done an FBAR myself because I've not created an account and don't intend to.

Bob
 

#27
skassel  
Posts:
680
Joined:
22-Apr-2014 6:04pm
Location:
San Mateo County, CA
If that article had any credence, no one could or would ever represent delinquent taxpayers for fear of criminal prosecution. It's utter nonsense.
Steve Kassel, EA
 

#28
Frankly  
Moderator
Posts:
2454
Joined:
21-Apr-2014 9:08am
Location:
California
CrickTaxEA wrote:This is from 2013, are you saying this has changed?

Since 2013 the old TDF 90–22.1 is obsolete. FinCen 114 is the new way to report.

Re 2848, see FAQ #48, which also has a link to a properly completed form with the appropriate tax matters and acts listed. https://www.irs.gov/individuals/interna ... 12-revised
 

#29
kathyt  
Posts:
445
Joined:
21-Apr-2014 7:42am
Location:
Lake Charles, LA
Thanks Steve, after reading the above article from CricktaxEA I, felt like EADave, having a heart attack without skydiving. I will sleep much better tonight.
 

#30
Frankly  
Moderator
Posts:
2454
Joined:
21-Apr-2014 9:08am
Location:
California
CrickTaxEA wrote: Also I'm not saying we cannot prepare FBAR's I'm saying that generally it's a bad idea. Why? Read this except from one of the regular newsletters I get from the Wolfe Law Group...

Mr. Wolfe (esq) writes a lot of interesting bloggy things and while I've never found anything to be factually incorrect, he does seem to be an alarmist. He's prone to presenting the worst-case scenario with warnings of what might happen should you make a misstep. Attorneys tend to be that way. How many situations do we get into that are actually "worst case"?
 

#31
Posts:
325
Joined:
29-Apr-2014 3:22pm
Location:
Los Angeles
I read about adding FBAR's to the 2848, thanks for that. I doubt I'll ever do that but at least I know about it.

Attorneys tend to be that way. How many situations do we get into that are actually "worst case"?


Of course I get that but, all it takes is one to ruin your day. People are extremely secretive about these things which is why you may not have the full story. Like the attorney at the seminar said, when it comes to foreign family connections and money your clients are liars. They tend to come from cultures who never, ever give up private financial information beyond the bare minimum. This is why Guya said what he said and is why my friend who works with a lot of foreign people doing business in the US won't touch FBAR's either. The primary presenter at that seminar is a CPA who has a firm specializing in this area but he never handles these cases by himself. It's always with an attorney under Kovel and that's how his talk started after the introductions. "Let me tell you about Kovel".

When people talk about representation in this area, this is all I'm saying. It may not be a good idea to do it by yourself but if someone is comfortable doing that, great.

Bob
 

#32
Guya  
Posts:
859
Joined:
21-Apr-2014 8:08am
Location:
London, United Kingdom
This decision earlier this week in this case (https://cdn.ca9.uscourts.gov/datastore/ ... -16214.pdf) is relevant as many clients will use transfer agents such as TransferWise, CurrencyFair (and their competitors https://www.icomparefx.com/transferwise-competitors/) to move currency. These online transfer agents will it seems all need to be reported on FBARs. (Please be aware that FirePay referred to in the case discussion shut down in 2007.)
PS – Greeting from London, England. Grey and rainy ...
 

#33
Posts:
325
Joined:
29-Apr-2014 3:22pm
Location:
Los Angeles
Great case. When you read it it's obvious that FirePay would require an FBAR but this shows just how detailed your questioning needs to be, I can see people failing to mention this because they think it doesn't matter. The footnote describing how the IRS tried to change the definition at the last minute concerning the two Poker sites shows how they try to throw crap at the wall...I loved the phrase "too little, too late". Years ago I was trained to give an auditor every possible thing to sustain our argument because if it goes to appeals, you can't show them something that you didn't give to the original auditor. I see the same principle applies to an appeals court too.

Bob
 

#34
zl28  
Posts:
2065
Joined:
22-Apr-2014 10:27pm
Location:
usa
i also like to stay away from filing these forms.

in fact on my one page organizer, i have about 5 questions
and they are all about foreign financial accounts.

this way i have something from them in writing.

also be careful not to say foreign bank accounts, but rather
foreign financial accounts.

here's a video from the IRS from several years ago that i thought
was pretty good.

http://www.irsvideos.gov/ElectronicFBAR/
 

Previous

Return to Taxation



Who is online

Users browsing this forum: Anderly, ChrisGCPA, DAJCPA, Google [Bot], Google Adsense [Bot], GRobCPA, HowardS, ImposterTax712, Jeff-Ohio, JoJoCPA, ManVsTax, MAPCPA60, Seaside CPA, TheGrog, Trailman423 and 184 guests