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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7329
Experience:  15years with H & R Block. Divisional leader, Instructor
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I have filed FBAR for last 2 years (2010,2011) disclosing all

Resolved Question:

I have filed FBAR for last 2 years (2010,2011) disclosing all the foreign bank accounts and Insurance policy accounts. In year 2012 I moved out of US for work and did not file any FBAR ie by June 30 2013. Although there is no new account and I have always paid taxes on any income generated through foreign accounts. Do I still need to file a late FBAR for year 2012. If so what are the possible penalties for filing FBAR for year 2012 now.
Submitted: 11 months ago.
Category: Tax
Expert:  Robin D. replied 11 months ago.

Robin D. :

Hello and thank you for using Just Answer,

Robin D. :

Yes, you still need to file the FBAR if your accounts fall into the amount for required filing.

Robin D. :

For taxpayer at the highest penalty category the penalty is 27.5% of the highest aggregate balance during the full eight years prior to the disclosure.

Robin D. :

That is not to say that the IRS will automatically apply a penalty for not filing the form.

Robin D. :

If you have been reporting the interest on the accounts and including them in your US return then the IRS may grant abatement from the penalty.

Robin D. :

For a taxpayer with offshore accounts that, in aggregate, don’t surpass $75,000 in any calendar year a 12.5% penalty rate would apply.

Customer:

12.5 % of maximum aggregate balance if the value of account does not surpass $75000

Robin D. :

The system keeps showing you entering and immediately exiting CHAT

Customer:

oh I am online

Robin D. :

Good

Robin D. :

I thought you could not view

Robin D. :

My goal is to give you excellent service. If you are satisfied, please rate me. If you have follow-up questions on this same topic, use the reply box below. To start a new conversation with me on a new topic request me again.

Customer:

could you answer my last question

Robin D. :

The penalty would be on the value of the account(s)

Robin D. :

The % is lowered if the value is not more then $75000

Robin D. :

Not a % of the value

Customer:

but then 12.5 % of something

Robin D. :

12.5% of the value would be the penalty owed

Robin D. :

That would be the penalty amount

Robin D. :

Let me put it a different way

Customer:

so if account has say 12000, it would be 12.5 % of 12000

Robin D. :

Yes, The IRS would drop the penalty to the 12.5% instead of the higher

Customer:

but there is no way to estimate the possible penalty

Robin D. :

If your accounts are less than the $75,000 then use the 12.5% of your account values

Robin D. :

That would be your estimate

Robin D. :

The IRS will determine whether the violation was due to reasonable cause based on all the facts and circumstances. Taxpayer’s explanation for why he failed to timely file an FBAR appears reasonable in view of the facts and circumstances of the case. Since the IRS determined that the FBAR violation was due to reasonable cause, no FBAR penalty will be asserted.

Robin D. :

You will need to explain why you did not file the FBAR

Customer:

ok, and there is no way that this will be waived if this is non willful

Robin D. :

The IRS will determine whether the violation was due to reasonable cause based on all the facts and circumstances. Taxpayer’s explanation for why he failed to timely file an FBAR appears reasonable in view of the facts and circumstances of the case. Since the IRS determined that the FBAR violation was due to reasonable cause, no FBAR penalty will be asserted.
You will need to explain why

Robin D. :

Your next question is most likely what is reasonable cause.

Customer:

yes

Robin D. :

As you were filing you knew it was required, so you would need an extenuating circumstance. That is really going to be difficult too because you say you knew the info to add the amount to the filing of the returns themselves.

Robin D. :

As you did include the income (that is great) then you could just give the true reason and request they abate based on your past compliannce

Robin D. :

There is a good chance that they will not apply penalty especially as it is one year and you have included the income

Customer:

In my case my reason was lack of understanding on to FBAR requirements,

Customer:

as I did disclose these accounts earlier

Robin D. :

There is a good chance that they will not apply penalty especially as it is one year and you have included the income, they do understand that it is confusing

Customer:

and thought the disclosure is one time thing unless new accounts are generated

Robin D. :

Then tell them that exactly and remind that you did include on the actual tax return

Customer:

ok, Do you offer services in writing such explanations

Robin D. :

Just Answer is a question and answer site only with no contact outside the site. I can say that the simpler the better.

Customer:

Do insurance polices count towards 10000 limit

Robin D. :

If they are annuities yes. Most accounts outside the US are counted. Let me look for specifics on Insurance. One sec.......

Customer:

ok

Robin D. :

A foreign life insurance policy is now reportable as a “foreign financial account” if the insurance policy is owned by a U.S. person and the policy has a cash surrender value. The reporting requirement applies to the policy owner, if he/she is a U.S. person.

Customer:

so must have a cash surrender value

Robin D. :

Yes

Robin D. :

FBAR requirement to foreign annuity policies that have a cash surrender value and are owned by U.S. persons. Under the new regulations, such annuity policies are considered a “foreign financial account”, reportable via the FBAR by the policy owner. Such annuities are reportable even if they are deferred annuities and there are no present annuity payments.

Customer:

or sum assured

Customer:

ok

Customer:

thank you for your assistance

Robin D. :

You are most welcome

Robin D. :

The fact that you included is your best help

Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7329
Experience: 15years with H & R Block. Divisional leader, Instructor
Robin D. and 4 other Tax Specialists are ready to help you

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