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Delinquent Reports of For. Bk. Accts. Form 90-22.1
Posted by taxwizmdr on 06/17/2009 - 15:40
For years, one of my oldest friends has been delinquent with his returns. He lives in Europe and travels constantly. I finally got him caught up, and now he is finally going to file his first and timely TDF 90-22.1. He has not filed all his many past-year Reports of Foreign Bank Accounts, going back to 2002.
I am trying to obtain information for him as to what might be the best course of action. I believe the penalties are horrendous--20% of the total value of accounts. And would that be for each year?? I believe that the penalty can be waived, for reasonable cause, but that's obviously a gamble. What would you recommend? That he just file the 2008 and be timely hereafter? Many thanks!!!
Michael Rothschild, EA, MFA California
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Action plan for delinquent FBARs
Michael,
1. Get bank data for '03 through '08.2. Run pro-forma Form 1040X to see if additional tax is due.3. If no (e.g., unreported income offset by foreign tax credit), look at the IRS FAQ and follow Q & A #9.4. If additional tax is due, your friend has problems and needs to thing thru the alternatives, which are (a) run away; (b) full boat amnesty with the massive penalty; or (c) the "gamble" alternative you identified; or (d) combination of (b) and (c).
Phil Hodgen, International tax attorney, Pasadena, CA -- http://hodgen.com | http://foreignbankaccountamnesty.com | Twitter @philiphodgen