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IRS May Revoke Your Passport If You Owe $

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Re: IRS May Revoke Your Passport If You Owe $

Postby Dog's_Breakfast » 12 Feb 2016, 22:10

Chris wrote:If you owe more than $50,000, you're pretty damn rich, and can easily afford it. Pay up.


I guess you haven't been following the FATCA nonsense. If you fail to fill out the FBAR forms, the penalty is 50% of the total amount you have in your foreign bank accounts the first year, and 100% for each subsequent year you fail to file. So if you have US$10,000 in a Taiwanese bank account and you didn't do FBAR for 6 years, you'd owe $55,000. And this would be true even if you had no actual income during that time, but only had the savings in the bank. I know that sounds almost too ridiculous to believe, but it's true. I would not be at all surprised if many people here on this forum could fall into this trap if they aren't careful.

If you don't know what I'm talking about, google "FATCA horror stories".

Here's just one (of many):
http://www.theguardian.com/money/2014/s ... k-accounts

I don't know anything about you Chris, but if you're a US citizen, working in Taiwan, and you've saved over $10,000 and haven't been filing FBAR reports every year, then welcome to the club of people who could be losing their passports.
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Re: IRS May Revoke Your Passport If You Owe $

Postby Okami » 13 Feb 2016, 01:54

Chris wrote:If you owe more than $50,000, you're pretty damn rich, and can easily afford it. Pay up.

Another issue is they can determine you owe this amount and it's up to you to prove it isn't true. Like DB has said, the fines and tomfoolery with this is serious. I could easily see an overseas American owned SME running horribly afoul of this.

In 10-20 years this will turn into something way more horrible if it isn't done away with soon. In much the same way the act to outlaw redlining(Community Reinvestment Act?) eventually led to the 2008 financial crisis. This is the same govt that ruled that a farmer growing grain on his own land for his own table broke a federal law because it interfered with interstate commerce.
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Re: IRS May Revoke Your Passport If You Owe $

Postby Chris » 13 Feb 2016, 03:32

Dog's_Breakfast wrote:I don't know anything about you Chris, but if you're a US citizen, working in Taiwan, and you've saved over $10,000 and haven't been filing FBAR reports every year, then welcome to the club of people who could be losing their passports.

I don't have over US$10,000 in my account here. I transfer money to my bank account in the US, as well as into investments. All of that is logged by the US government.
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Re: IRS May Revoke Your Passport If You Owe $

Postby Winston Smith » 13 Feb 2016, 08:37

It's an aggregate of maximum account balances per annum outside the U.S., so if you reach a high of $2,500 in offshore Bank A on February 3rd and a high of $5,000 in offshore Bank B on July 7th, and high of $3,000 in offshore Bank C on December 1st and don't report them all Pay Up, hombre! It's not your money anyway.
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Re: IRS May Revoke Your Passport If You Owe $

Postby Dog's_Breakfast » 13 Feb 2016, 10:09

Chris wrote:I don't have over US$10,000 in my account here. I transfer money to my bank account in the US, as well as into investments. All of that is logged by the US government.


Winston Smith wrote:It's an aggregate of maximum account balances per annum outside the U.S., so if you reach a high of $2,500 in offshore Bank A on February 3rd and a high of $5,000 in offshore Bank B on July 7th, and high of $3,000 in offshore Bank C on December 1st and don't report them all Pay Up, hombre! It's not your money anyway.


Winston makes a good point. Chris, if (for example) you have an account at both Bank of Taiwan and and Chinatrust, and you allowed $6000 to accumulate in each account before transferring it to the USA, and this happened all within the same tax year, as far as the IRS is concerned you had $12,000 in foreign bank accounts and you are required to file an FBAR. It doesn't matter that you never had more than $10,000 in Taiwan at any given time. It's the aggregate of the maximum balance in all your accounts (during the tax year) that is counted.

Chris, you said: "All of that is logged by the US government." How right you are, and that is the problem. And if you didn't report it on FBAR, you may be screwed. Please note that FBAR is not your tax return, it is a separate reporting requirement. You can be faithfully reporting all your income and bank accounts on your 1040 form with attached schedules, and still be in violation of FBAR. You must do FBAR filing online, it can't be done on paper forms (as your tax return can). Here is where you go to file:

http://bsaefiling.fincen.treas.gov/docs ... FILING.pdf

Good luck.
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Re: IRS May Revoke Your Passport If You Owe $

Postby nonredneck » 13 Feb 2016, 11:33

Doesn't the IRS have an amnesty for taxes and FBARs right now?

I read elsewhere that the filing deadline changed to be April 15, with overseas residents receiving an automatic extension to June 15, which is fifteen days earlier than the original deadline. You can fine an extension now. These changes take effect next year.

https://americansabroad.org/issues/fbar ... e-changed/
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Re: IRS May Revoke Your Passport If You Owe $

Postby Dog's_Breakfast » 13 Feb 2016, 12:48

nonredneck wrote:Doesn't the IRS have an amnesty for taxes and FBARs right now?


Sort of. To qualify, you have to file and get all your paperwork in order before the IRS detects the violation and contacts you. Once they send a letter informing you that you have not complied with the law, it's too late and you could be facing massive fines and possible loss of your passport.

In order to good with the IRS, you have to:

1) File FBARs for the past six years.

2) File tax returns for the past three years, listing those foreign accounts. If you did file but didn't list the foreign accounts, you have to file amended returns. Along with the 1040 form, you'll probably need to attach schedule B and form 8938.

It's my opinion that the majority of Americans in Taiwan and elsewhere abroad are pretty clueless about FBAR. They may have been filing their tax returns, but not the separate FBAR reports which they never heard of. The instructions for form 1040 make no mention of FBAR. The only clue I know of is on Schedule B, where it says:

At any time during 2015, did you have a financial interest in or signature authority over a financial
account (such as a bank account, securities account, or brokerage account) located in a foreign
country? See instructions . . . . . . . . . . . . . . . . . . . . . . . .

If “Yes,” are you required to file FinCEN Form 114, Report of Foreign Bank and Financial
Accounts (FBAR), to report that financial interest or signature authority? See FinCEN Form 114
and its instructions for filing requirements and exceptions to those requirements.


That's nice, but if you go looking for FinCEN Form 114 on the IRS website, you won't find it. The form has to be filed electronically, there is no mention about this anywhere in the IRS publications, you have to figure it out yourself. Not everyone is a tax expert or a computer genius, but you are expected to be both to keep out of trouble.

These rules, by the way, apply to green card holders as well as US citizens. Those with expired green cards that they never formally renounced are also caught in the loop. Of course, green card holders don't have to worry about losing their US passport since they don't have one.
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Re: IRS May Revoke Your Passport If You Owe $

Postby nonredneck » 13 Feb 2016, 13:41

The IRS took down Capone, so they are to be feared. I'm 100% compliant. I researched this FBAR crap before I moved and have filed all my taxes and FBARs since I moved.
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Re: IRS May Revoke Your Passport If You Owe $

Postby Stretch » 22 Feb 2016, 00:41

Chris wrote:If you owe more than $50,000, you're pretty damn rich, and can easily afford it. Pay up.


No, that is not much. Note that this is not 50k per year, it is total owing over whatever period in the past plus compound interest penalties. US taxes their citizens working overseas, even when they consider themselves to have left USA permanently. The only way to stop owing US taxes is to revoke citizenship or have zero income, so there is really no way to avoid it.

Since US has quite high tax rates, with both federal and state taxes to pay, it only takes a few years to accumulate this amount. Also they charge exorbitant default interest rates (far higher than any credit card) so a small amount can compound into a big amount very quickly.
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Re: IRS May Revoke Your Passport If You Owe $

Postby Abacus » 22 Feb 2016, 06:28

Dog's_Breakfast wrote:
Chris wrote:If you owe more than $50,000, you're pretty damn rich, and can easily afford it. Pay up.


I guess you haven't been following the FATCA nonsense. If you fail to fill out the FBAR forms, the penalty is 50% of the total amount you have in your foreign bank accounts the first year, and 100% for each subsequent year you fail to file. So if you have US$10,000 in a Taiwanese bank account and you didn't do FBAR for 6 years, you'd owe $55,000. And this would be true even if you had no actual income during that time, but only had the savings in the bank. I know that sounds almost too ridiculous to believe, but it's true. I would not be at all surprised if many people here on this forum could fall into this trap if they aren't careful.

If you don't know what I'm talking about, google "FATCA horror stories".

Here's just one (of many):
http://www.theguardian.com/money/2014/s ... k-accounts

I don't know anything about you Chris, but if you're a US citizen, working in Taiwan, and you've saved over $10,000 and haven't been filing FBAR reports every year, then welcome to the club of people who could be losing their passports.


FATCA and FBAR are an absolute fiasco that has done nothing to address the problem that they wanted to address (Americans evading taxes by using offshore accounts).

But

That article does not even remotely come close to backing up your theoretically penalties that could be imposed horror stories that you describe. Right now Americans are being denied foreign bank accounts because of this ridiculous nonsense but there aren't any actual horror stories of the penalties that you describe. That part is theoretical (which is rightfully concerning).
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