I know I promised that I wouldn’t blog about FBARs anymore. (This stuff chews up too many Life Credit Units, as Just Me calls them.) But I wanted to share something with all of you that may help you make decisions.
From a correspondent by email today:
Just a quick update. I called the FBAR 1-800 number to check if my delinquent FBARs for 2005-2009 that I sent in October had been received. The lady informed me that they are not in the system as they have probably not yet been processed. She said they had millions of documents and they were still processing July.
This tells me that if you are a normal person with unfiled FBARs, now is the time to dump them into the system. Your delinquent filings will be compared against the cohort of other filings entering into the system. In your favor you have IRS overload and you have a very large bell curve distribution of taxpayers.
The hard decision is to guess how you look compared to the expected pool of filers. Among those “millions of documents” what will yours look like? You hope that the IRS behaves like Foghorn J. Leghorn. The person who opens your envelope merely glances at your FBARs, and snaps “Go, I say, go away, boy. Ya bother me.” (Sound file)
That decision is where you need to talk to someone smart and experienced.
Obligatory
This is not legal advice to you. You’d be a damn fool to make important legal decisions with serious consequences just because you read a blog post by some yutz (that would be me) on the inter webs. Especially a yutz who likes to watch cartoons with his kids.
Reader comments (3)
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Phil, in addition to your point about one’s FBAR compared against the FBARs of other people, one also must also consider one’s FBAR compared to the same person’s other filings. For instance, were FBARs filed for tax years where the filer did not “check the box” on Form 1040 Schedule B? That would an obvious red flag. Where all other forms also filed (3520, 3520, 4571 and new form 8938)? The filer must also consider whether his obligation is FBAR disclosure only, or income reporting also, and whether all foreign income was reported.
In other words, the issue isn’t only (1) IRS delays in processing millions of FBARs, and (2) how does one’s FBAR compare to the FBARs of other people, but also (3) is one’s FBAR complete vis-a-vis one’s other reporting and disclosure requirements?
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I’m still a believer of the FBAR protest by the ex-pats. If only 10-20% of ex-pats filled in fake FBARs which added another million or so on the IRS’s stack, the extra volume would bog things down a bit.
At the very least the IRS would have to waste time validating each form whether it’s possibly genuine or fake in fairness to the honest taxpayers would have taken time to file. I’m sure eventually they would then turn to the power of the internet to identify IP addresses etc and make it a federal offense punishable by death to file phony FBARs.
The government should be spending their time on REAL solutions to the US’s problems than engaging in fantasy land solutions that do not raise real tax revenues.
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I am actually waiting for a case of a US citizen living outside the US being prosecuted for not filing. In particular a US citizen by definition of most other countries tax laws and most non US tax treaties that would be defined as not having residential ties or abode in the US(In Canada for example becoming non resident for tax purposes is not as simple as just not living in Canada for more than 153 days a year there are hoops to jump through in ceasing residential “ties” to Canada)The closesest case found was a dual US China citizen living part of the time in Hong Kong and part of the time in Seattle and filing false returns not showing his Hong Kong source income. A regular contributor on Isaac Brock Society 30 yr IRS vet indicated to me that I will probably never find such a case.