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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 585
Experience:  10 years experience
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I did not know I needed to file an fbar account I have

Customer Question

Hello I did not know I needed to file an fbar for an account I have for my business, I take money in for trips and then I use the account to pay the tour guides and accommodations, I earn no income on the account, I met an auditor with irs this week and he said i needed to file fbar so i called them and they said to file for six years which i did, the largest amount i had each year was about 120,000 usd . The money comes in but then goes out immediately to various travel vendors, I did not know about fbar and my tax preparer never told me
Submitted: 1 year ago.
Category: Tax
Expert:  Tax.appeal.168 replied 1 year ago.

Hello. Happy Holidays!! It is likely that the tax preparer was not up to date with the forever changing tax laws. Six years, that brings you into compliance. I take it that it is a foreign bank account? Do you have to pay penalties and interest? You may be able to request an abatement of penalties and interest. Please tell me more about your situation. Reference the link below for more information about the First Time Penalty Abatement Waiver:

Customer: replied 1 year ago.
HI i am a 69 ayear old travel agent. I have an account in new zealand I use just to pay bed and breakfasand tour guides. I did not know about and the fbar. I was put up for an irs audit this week and he mentioned it and i went on line to read about it. i filed the six years they had on the web site but now I am afraid they will try to take my home. I am on social security with a small pension. The top amount in the account was 120 000 usd but it cleans out every few days when i pay the people for their services
Expert:  Tax.appeal.168 replied 1 year ago.

You wrote that $120,000 USD was the highest balance in the account. On average, what was the balance in the account? You are probably going to get penalized, but I don't think they will take your home. The largest penalties are imposed when the IRS finds that the taxpayer willfully did not file the FBARs. That does not sound like the case with you. I see that you requested a telephone call. I am unable to call you this evening, however, I can call you tomorrow. Examples of penalties are shown below:

  1. Penalties. The change here is a 27.5% penalty on the highest aggregate balance (in foreign bank accounts/entities or value of foreign assets) during the eight years before disclosure. That’s up from 25% in 2011 and 20 percent in 2009. The reduced 5% and 12.5% penalties remain as in 2011.
  2. 5% or 12.5%? Smaller offshore accounts will face a 12.5% penalty. People whose offshore accounts or assets did not surpass $75,000 in any calendar year covered by the new OVDP will presumably qualify for this lower rate. As under the prior programs, taxpayers who feel the penalty is disproportionate may opt instead to be examined.