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In June 2011 when I was visiting very old parents abroad I consolidated some of their accounts in my name for a total of $11,000

Los Angeles, CA |

They are the only ones using the account there and all the money is from me (I have a 9-5 job here) given to them during many years in order to pay for daily and medical expenses (I do not claim them as dependents on my taxes). I am a US Citizen. I just read about this FBAR disclosure requirements. I am 6 months late in filing this form and I see there are all kind of criminal and civil penalties involved.What shall I do? Do I also need to amend my 2011 tax returns since I did not put this account on there? The interest is around $50 for the year 2011. In 2012 the account was under $10,000.Do I need to file a FBAR for this year? What kind of fine do I have to pay for this mistake? Can a lawyer respond to me from his or her own experience, please? Thank you.

Attorney Answers 4


  1. Best answer

    As you have identified, this is a very tricky area of the law. On this issue, you really need to consult a local tax attorney, CPA, or enrolled agent who is familiar with this area. The facts as described are a little murky, but it sounds like this is your money that was put in your parents accounts abroad. The accounts were used for medical expenses and were not transferred into your name until 2012. These facts are critical and you need to get them straight to get a solid answer. You should get all of the foreign bank account statements for as many years as you have had the accounts open, as any tax adviser will need to see these.

    You say in one place that you consolidated the accounts to $11,000 and in another place that the account was under $10,000 in 2012. You have to report any foreign accounts over $10,000, but you cannot simply avoid the filing requirement by having multiple accounts.

    Under the Bank Secrecy Act, U.S. residents or a person doing business in the United States must file a report with the government if they have a financial account in a foreign country with a value exceeding $10,000 at any time during the calendar year [so be careful about whether the account jumped over $10K at any point]. Taxpayers comply with this law by noting the account on their income tax return and by filing Form 90-22.1, the FBAR.

    Willful failure to file an FBAR carries serious potential consequences including a penalty of $100,000 or 50% of the balance each year that the account was unreported. Criminal penalties for a willful violation are up to $250,000 and 5 years in jail. This can get really draconian. Take a hypothetical account with a $100,000 balance opened 8 years ago. Assuming no change in the balance, the IRS can impose $400,000 in penalties on an account that only contains $100,000! (50% or $50,000 x 8 years.)

    Your violation sounds like it is non-willful, but this is a very fact intensive inquiry, and you have not provided enough facts.

    You have two main options: (1) voluntary disclosure; or (2) a quiet filing. You need to bring all of the necessary documentation to a tax adviser and enlist his help in making a reasoned decision. There is a 12.5% penalty for non-willful violations under the OVDP (Offshore Voluntary Disclosure Program) system, and for non-US residents, which does not apply to you, the potential for a reduced 5% penalty.

    I hope this helps. If this answer was "helpful" or was the "best answer" please mark it accordingly.


  2. I'm not sure why this appeared in the immigration forum ... I'll remove that tag so that a proper attorney can answer it.

    PROFESSOR OF IMMIGRATION LAW for over 10 years -- This blog posting is offered for informational purposes only. It does not constitute an attorney-client relationship. Also, keep in mind that this is an INTERNET BLOG. You should not rely on anything you read here to make decisions which impact on your life. Meet with an attorney, via Skype, or in person, to obtain competent personal and professional guidance.


  3. Probable a personal meeting with a business counsel would be a much more suitable venue to address this matter.

    DISCLAIMER The answer given above by the lawyer serves for educational purposes only and provides general information and a basic understanding of the applicable law. Take notice that the answer above does not create an attorney-client relationship as this website is not intended to provide anyone a specific legal advice. Anyone using the site expressly consents that there is no attorney client privilege between any person and any attorney responding. Further take notice that the site should not be used as a crude substitute for any professional and competent legal advice by a licensed professional attorney in the applicable jurisdiction. The attorney above attempted to provide competent professional information, however, the law and its applications may change frequently and vary greatly from other U.S. jurisdictions and locales. Therefore, any information and materials provided above are general in nature, and may not apply to specific factual and legal circumstances related to one’s personal legal issues. Contact an experienced criminal defense lawyer admitted to practice in your State under an attorney-client privilege to further receive a competent legal advice before making any important decisions about your particular legal issue. For further inquiries please contact: Attorney Alexander Ivakhnenko 1021 West Adams, 102, Chicago, Illinois 60607 773-562-8602 http://alexanderivakhnenko.com


  4. I agree with both counsel

    Samuel Ouya Maina, Esq. 415.391.6612 s.ouya@mainalaw.com Law Offices of S. Ouya Maina, PC 332 Pine Street, Suite 707 San Francisco, CA 94104

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