Reminder To Americans About Foreign Bank Account Reporting

[Jingthing]

Two months to go. If you are required to file this form, why wait until the last minute? The potential penalties for not filing are shockingly massive.

If you are not sure if you required to file, this link should inform you:

http://www.irs.gov/businesses/small/articl...=148849,00.html

[jazzbo]

Good notice JT however, one of two criteria for required reporting is:

2. The aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year.

I have various Thai persons of the female persuasion who help me negate this reporting requirement.

[lopburi3]

But most here using bank deposit for marriage or retirement extensions of stay would have to file. And if you are a regular filer be sure to use the current form and they recently (2008) changed and the old form is not valid.

Form

[Jingthing]

Yes, the point about aggregate accounts can be confusing. For example, if you have one account that reached 9K USD and another that reached 2K USD you must report and you must report BOTH accounts.

[craigt3365]

Thanks for reminding me...headed back to the US next week for a variety of reasons...filing taxes is one (I also have to do my mothers!).

Just out of curiosity, have you ever heard of someone getting nailed for this? I don't mean a rich person...but a normal guy with say, $25k in an account in Thailand? Again, I am going to file for sure, but just curious if you have ever heard of this. Kinda like asking if you have ever heard of a farang losing their house as it was in an "illegal" company structure.

[Jingthing]

Thanks for reminding me...headed back to the US next week for a variety of reasons...filing taxes is one (I also have to do my mothers!).

Just out of curiosity, have you ever heard of someone getting nailed for this? I don't mean a rich person...but a normal guy with say, $25k in an account in Thailand? Again, I am going to file for sure, but just curious if you have ever heard of this. Kinda like asking if you have ever heard of a farang losing their house as it was in an "illegal" company structure.

I have never heard anyone report being nailed for it. But I doubt people are going to tend to brag about it. Also, given how desperate the feds are for cash these days, I wouldn't play games with them. I hate the FBAR but I respect the rules in the same way I would respect a mafia boss.

Edited May 1, 2010 by Jingthing

[gotlost]

This is not new it has been a law fo quite a few years. I have been reporting this for 14 years.

[lopburi3]

It is designed to catch organized crime figures when they can not get them for something else so not normally used except when other factors start them checking I believe. But with computers keeping track of most accounts these days expect a major amount may get tracked down if specific flags are raised. Best to file them in any case - only takes a couple of minutes to do the form. Just remember to mail to the correct address.

[IMA_FARANG]

Good notice JT however, one of two criteria for required reporting is:

2. The aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year.

I have various Thai persons of the female persuasion who help me negate this reporting requirement.

-----------------------------

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Same here.

I have a Thai family...5 persons to support in Bangkok. It's a joint account that I use for their living expenses.

I never have to worry about that "exceeds $10,000 at any time during the calendar year" part for the 5 reasons given above.

Now I guess, however, I will have to file a report when I bring the 800K baht to a Thai bank for my retirement later this year.

----------------------

[Jingthing]

This is not new it has been a law fo quite a few years. I have been reporting this for 14 years.

Correct, not new. But last year they changed the form asking for the specific highest amount in each account. That was new.

[Jingthing]

It is designed to catch organized crime figures when they can not get them for something else so not normally used except when other factors start them checking I believe. But with computers keeping track of most accounts these days expect a major amount may get tracked down if specific flags are raised. Best to file them in any case - only takes a couple of minutes to do the form. Just remember to mail to the correct address.

On the 1040 you are supposed to check yes to having foreign accounts. So if you check that they will know about accounts. If you fail to check that intentionally, well be advised the there are increased measures to have foreign banks report info to the IRS. I don't really understand what that is going to mean yet but I would bet it is going to be easier to get caught if you lie.

Edited May 1, 2010 by Jingthing

[up-country_sinclair]

I just checked the IRS website, and I didn't see anything about filing electronically.

Will most of you be sending it EMS or just regular Thai post?

[Jingthing]

I just checked the IRS website, and I didn't see anything about filing electronically.

Will most of you be sending it EMS or just regular Thai post?

Sadly, it is IMPOSSIBLE to file the FBAR electronically. Paper forms only.

[flying]

Very appropriate acronym FBAR

[Tywais]

On the 1040 you are supposed to check yes to having foreign accounts. So if you check that they will know about accounts. If you fail to check that intentionally, well be advised the there are increased measures to have foreign banks report info to the IRS. I don't really understand what that is going to mean yet but I would bet it is going to be easier to get caught if you lie.

The check box is on the 1040 Schedule B (Interest and ordinary dividends) and not the main 1040. Suspect some may not have to file those and not see that option. The full reporting on the 90-22.1 of how much you have in overseas account and the account numbers, name and address of the institution started for the 2008 calendar reporting year.

[Jingthing]

On the 1040 you are supposed to check yes to having foreign accounts. So if you check that they will know about accounts. If you fail to check that intentionally, well be advised the there are increased measures to have foreign banks report info to the IRS. I don't really understand what that is going to mean yet but I would bet it is going to be easier to get caught if you lie.

The check box is on the 1040 Schedule B (Interest and ordinary dividends) and not the main 1040. Suspect some may not have to file those and not see that option. The full reporting on the 90-22.1 of how much you have in overseas account and the account numbers, name and address of the institution started for the 2008 calendar reporting year.

Most people with Thai bank accounts get some interest. Don't they have to report on Schedule B if filing a 1040? I always report my Thai interest there (as well as other stuff). But thanks for the clarification.

Edited May 1, 2010 by Jingthing

[maxman71]

Thanks for reminding me...headed back to the US next week for a variety of reasons...filing taxes is one (I also have to do my mothers!).

Just out of curiosity, have you ever heard of someone getting nailed for this? I don't mean a rich person...but a normal guy with say, $25k in an account in Thailand? Again, I am going to file for sure, but just curious if you have ever heard of this. Kinda like asking if you have ever heard of a farang losing their house as it was in an "illegal" company structure.

The stricter enforcement of this requirement only began last year, when the IRS offered a quasi-amnesty program that expired Oct. 15 2009. This reporting requirement has been in place since 1973, however. The initial target of this program was to capture unreported interest bearing accounts where not only the accounts weren't reported, but the interest paid as well. About 15,000 US citizens/perm residents (yes, US green card holder are also required to report) came forward. This program was initiated as a result of the UBS tax evasion scandal in the US.

Please note that if you have at least 10% ownership in a Thai co. there are other reporting forms you are required to file. Forms 5471, 926, Schedule O are among these that may apply to you. FBAR's are to be filed separate from your 1040 by June 30 for the preceding calendar year, wherein the 5471's etc get filed with your 1040.

Like any "business", it is assumed by many tax attorneys and accountants that the IRS will initially focus on bigger ticket accounts, Thai cos. with US citizen shareholders wherein the Thai co has ownership in other cos. especially if the associated cos. are in offshore "tax haven" countries and there are significant transactions taking place that result in reduced/eliminated tax exposure for the US citizen shareholder. Additionally, anyone suspected of criminal activity will also be heavily targeted.

Some other facts related to the IRS efforts:

- Major focus on "tax haven" countries. Thailand is not considered a tax haven country per se; as it has a "real" economy and a tax treaty with the US

- The IRS opened new offices in Beijing, Sydney and Panama and expanded their existing office in Hong Kong as part of this effort. Many of the 15,000 taxpayers that came forward were in the Far East.

- The IRS hired an addtional 800 auditors as part of this program

- The US Congress very recently passed a bill that required foreign banks to collect and report to the IRS US citizen ID on all their accounts.

If you have not taken the steps to get into compliance, I strongly urge you to contact a US CPA/tax attorney and find out what your options are. The sharing of informantion between US and foreign banks is only going to get more stringent in the future, not less.

This is not something to screw around with and take lightly; the penalties for non-compliance are draconian.

[maxman71]

I just checked the IRS website, and I didn't see anything about filing electronically.

Will most of you be sending it EMS or just regular Thai post?

I send mine in via FedEx and keep the airbill as part of my records. I have had too many letters lost between the Thai post and US postal service.

[Jingthing]

800 new auditors? Oy vey, I'm scared now.

[flying]

800 new auditors?

Zobama did promise jobs ya know

[jazzbo]

FBAR as appropriate acronym? how about FLSA?

[maxman71]

800 new auditors? Oy vey, I'm scared now.

A couple of more things people need to be aware of:

1)If someone has had overseas account(s) that are subject to reporting, and have had them for years, and not reported them previously, but now decide to start reporting them and report any interest on their 1040, beware of this: The FBAR form requires to reveal when the accounts were opened. Talk about a smoking gun.

2) If a US citizen has signatory authority/control over ANY foreign account, i.e. nominee Director of a Thai Ltd. co. for example, who can sign checks, make withdrawals, etc,. and those accounts in aggregate with their personal accounts meet the threshold, then the co. account must also get reported. If you file FBAR's for your Thai co accounts, you will most likely need to file the 5471's, etc. The 5471's, 926's, Schedule O's and associated statements are tough to understand at first and provide a blueprint for your financial life overseas. The 5471 requires the foreign company Income Statement and Balance Sheet, as well as a whole host of other information, like are there any other US citizen officers of the co and if so, who they are. It requires the names, addresses, and ID#'s of all shareholders. This is just a partial list.

If anyone falls into the categories above, I can't stress enough the importance of getting competent professional US tax advice.

[Dakhar]

Thanks for reminding me...headed back to the US next week for a variety of reasons...filing taxes is one (I also have to do my mothers!).

Just out of curiosity, have you ever heard of someone getting nailed for this? I don't mean a rich person...but a normal guy with say, $25k in an account in Thailand? Again, I am going to file for sure, but just curious if you have ever heard of this. Kinda like asking if you have ever heard of a farang losing their house as it was in an "illegal" company structure.

I don't think I have been "nailed" for this, but I can say that I did report the accounts and the money etc, and the IRS sent me a letter requesting "further information" regarding these acounts etc etc. I gave the info (rather minor, a missing signature on a form) and I have not heard from them since. I haven't really hidden any money to speak of, but if they want to nail people on "compliance" and not actual tax evasion well then I imagine there is a lot of money to be generated.

Obama did say he was going to "mine" expats (so to speak) & looks like he is holding true to his word. I don't mind so much, but I just don't like feeling some one is pointing a gun at my head in order to do so.

[bushwacker]

Just out of curiosity, have you ever heard of someone getting nailed for this? I don't mean a rich person...but a normal guy with say, $25k in an account in Thailand?

I don't think I have been "nailed" for this, but I can say that I did report the accounts and the money etc, and the IRS sent me a letter requesting "further information" regarding these acounts etc etc. I gave the info (rather minor, a missing signature on a form) and I have not heard from them since. I haven't really hidden any money to speak of, but if they want to nail people on "compliance" and not actual tax evasion well then I imagine there is a lot of money to be generated.

Obama did say he was going to "mine" expats (so to speak) & looks like he is holding true to his word. I don't mind so much, but I just don't like feeling some one is pointing a gun at my head in order to do so.

HAHAHAHAHAHA .... HIHIHIHIHIHIHI Truly America is the home of the free. Too funny!

[tutsiwarrior]

I filed my tax return and the FBAR and used the Thai EMS service...took about 8 days for both, one to Austin, TX and the other to Detroit...cost 600 baht per item and you can track the delivery on the internet...

btw, always keep the receipt from whichever service that you use to send these documents...one year the idiots in Austin managed to lose my 1040, then levied a failure to file charge, immediately started to charge interest on penalties and etc...I sent them a copy of the tax return, my courier receipt and way bill and told them to pull their heids outta their asses...the missing documents then miraculously re-appeared, penalties canceled and OK...

Edited May 2, 2010 by tutsiwarrior

[maxman71]

Thanks for reminding me...headed back to the US next week for a variety of reasons...filing taxes is one (I also have to do my mothers!).

Just out of curiosity, have you ever heard of someone getting nailed for this? I don't mean a rich person...but a normal guy with say, $25k in an account in Thailand? Again, I am going to file for sure, but just curious if you have ever heard of this. Kinda like asking if you have ever heard of a farang losing their house as it was in an "illegal" company structure.

I don't think I have been "nailed" for this, but I can say that I did report the accounts and the money etc, and the IRS sent me a letter requesting "further information" regarding these acounts etc etc. I gave the info (rather minor, a missing signature on a form) and I have not heard from them since. I haven't really hidden any money to speak of, but if they want to nail people on "compliance" and not actual tax evasion well then I imagine there is a lot of money to be generated.

Obama did say he was going to "mine" expats (so to speak) & looks like he is holding true to his word. I don't mind so much, but I just don't like feeling some one is pointing a gun at my head in order to do so.

I do think they are going after the bigger fish, at least at first. Just after the close of the amnesty program on Oct. 15 2009, it was reported that some US citizen living in Sydney coughed up USD 100 million. Now I don't recall if it was a 100 million account, or his back tax bill was 100 million. But the point is, there are a lot of people out there with 7 figure+ accounts playing games with offshore accounts linked to other offshore trusts, etc and getting away without paying a nickel in taxes on it. Thailand is not a country that is commonly associated with tax havens; people with big money don't come here looking to park large sums to hide it. But I'm sure there are plenty of US citizens that haven't filed tax returns in years thinking once they are out of the US, they are out of sight and out of mind.

I also recall reading some US tax lawyer blogs that said while the IRS got 15,000 people to come forward, many of those were smaller accounts that in some cases people didn't know they had, i.e. from an overseas inheritance, etc. Many bigger fish decided to take their chances and stay at the bottom of the pond. There are about 6.5 million Americans living overseas and then there are the ones still living in the US with offshore accounts. There are a lot more out there that haven't come forward and the IRS knows that, I believe, hence the continued legislation to flush them out: the new law requiring foreign banks to report US citizens' account info to the IRS was initiated after the amnesty program ended, for example. The laws surrounding renouncement of citizenship have also been tightened.

It has also been reported just recently that there has been a significant increase in Americans wanting to renounce their citizenship as a result of the crackdown on offshore accounts. These are the bigger fish. And, another bill was passed just recently that people who do renounce their citizenship, will need to pay "exit taxes" that effectively would be the same as if the person died and estate taxes kicked in + extras.

I don't like a microscope up where the sun doesn't shine either, but if anyone wants anything resembling a functioning gov't, taxes are required.

Further FYI -- I think this program started under Bush actually. Not defending Obama because I can't stand him either. Also, I would not be surprised if Obama begins whittling away at the "expat deduction." Although the Dems in Congress did relent and exempted us from ObamaCare so long as we meet the 330 days outside the US requirement to qualify for the expat deduction.

[mellow1]

Although I remember this topic being discussed last year, I really never give it much attention. Being an expat on a modest pension somehow made me feel that it didn't apply to me. I keep enough for the visa requirements, and haven't thought about it in the past. Our bank account is a joint account with my (Thai) wife, and I'm hoping that the Thais don't report their citizens account info to another country. This is not an effort to avoid taxes, since I doubt the amount would increase what I have to pay. I hate doing taxes, and more paperwork is even more unwelcome. Having screwed up on the amnesty deadline (which I didn't know about) I would have to do taxes going 6 years back. I don't even want bad dreams that bad. Maybe closing the current account and starting a new one will keep me under the radar, and I can come clean next year by declaring the new account. Do the Thais even have such an information disclosure agreement with the US? Are the Banks here required to do this extra paperwork?

[tutsiwarrior]

I didn't file a US tax return for 16 years as I thought that it wasn't required as I was living and paying taxes in other countries, had no assets or dependents in the US and etc...I then ran into another US expat who knew the score and he said 'oh, dear...you could be in a lot of trouble...'

on further investigation from a tax accountant in BKK I found that filing retro-actively for 6 previous tax years will satisfy any IRS curiosity in this regard without any penalties...however, this was 7 years ago and with all the recent legislation I'm not sure what the story presently is...

[Jingthing]

The FBAR asks WHEN you opened the accounts? That is news to me. Did that start this year? I haven't filed for 2009 tax year yet but last year it didn't ask that.

[flying]

I keep enough for the visa requirements, and haven't thought about it in the past. Our bank account is a joint account with my (Thai) wife,

I did not know that was possible....I always thought the account to satisfy visa's had to be in the expats name alone.

I would think if a joint account is in fact allowed you have no worries

Edited May 2, 2010 by flying