Jobs I won't do.

[erchess]

TY for the heads up

on the two dangerous forms but could you provide cites on the penalties? Also I looked for any mention in my software of the form regarding foreign accounts and found only a place to answer yes or no to the questions about foreign accounts and foreign trusts and a place to list the country.

This part is of interest to me because if I had enough wealth to be more than just comfortable some would be overseas. The point would not be to avoid paying US Taxes but simply to be sure I had somewhere I could go if the US descended into massive civil unrest.

[JohnH]

Here's a link to IRS info on the TD F 90-22.1:

http://www.irs.gov/businesses/small/article/0,,id=148845,00.html

Back in the good old days, the penalty was only $10,000, but now it's up to $500,000 and it's disclosed right on the front page of the form. How many tax forms disclose the penalty right on the face of the form? There must be a reason for their doing this.

(I've never heard of anyone actually being assessed the penalty, but one never knows...)

Answering the Foreign Accounts question on the Schdule B is just the first step - the instructions specifically call for the TD F 90-22.1 to be filed if applicable. The bar is set very low - $10,000 aggregate in all foreign accounts.

[BOB W]

Client drops off info. I'm with a client. He starts spouting off about 10 situations relating to his return. This is in February. I look at him like what are you doing. He then hands me his info. 3 weeks later he stops by to pick up his return. I handed his raw info back to him and said I have not gotten to it yet and he needs to make an appointment. He storms out.

So my point is, if a drop-off is not routine and if any changes are not written down, I won't do the return.

[dyne]

To John H:

I have never had a client admit that they had a foreign trust or accounts.
If and when I do, I will refer him or her to a local CPA.

To Kaimana:

I AM an EA but am nearing the time I may be forced to close my business and retire due to
health problems and therefore must place restrictions upon what work I perform. I refer all of my client who I do not want to this CPA since I consider him to be the best around. A client who I referred to him said that this CPA said that he considered me to be the best around.

[JohnH]

dyne:
I like your policy. I did turn down a corporate client a couple of years ago because they had a Canadian affiliation and were required to file the corporate equivalent of the FBAR. I specificallly told them that was my reason for sending them away, especially since the CPA they were using at the time had not been filing it.

I only have a few individual clients who are required to file the FBAR, and I may just suggest that they start going somewhere else. I'd feel a whole lot better about the situation - I just don't like the form at all.

[Nashville]

Foreign Bank Account

TD F 90-22.1 is a form I don't prepare for the same reasons - penalties are too high.

John, if we are preparing a 1040, is it not incumbent upon us to complete this form? Or does our responsibility stop with simply answering the question "Yes" on Schedule B?

I have a few wealthy foreign-born clients whom I am almost certain have control over foreign money. Some of this may be powers of appointment rather than signature authority. I don't know specifically of any foreign accounts, but it is overwhelmingly probable that collectively, some of these do control them. But I've never had any of them admit to this when I've asked them the question. Some of them are visibly uncomfortable that the U S Govt is trying to pry, as if it is governmental espionage.

I haven't seen any software which prompts for the question either. All of them have a little check-box line on a menu, but none of them insert a prompt into the body of the jobstream.

I'm hardly an expert on international law, but I don't know whether the principal could be forced to disclose to the U.S. Govt their controlling interest or signature authority for a foreign bank account. Do I think they can penalize a tax preparer $100,000? Yes. Can they penalize a foreign national taxpayer for failing to disclose? Don't know. Can they penalize a U.S. citizen taxpayer for failure to disclose ? Don't know that either, but the answer might be different.

[JohnH]

Well, that is the question - are we supposed to complete the FBAR as a part of our tax preparation services or not? I contend that it's a report that is clearly required by the instructions but not a part of the tax return itself - sort of a supplemental report. My position is supported by the fact that it isn't submitted to IRS and doesn't even contain a jurat, so I don't consider it a part of a tax return. Therefore, I fill in their name, address, and SocSec# as a courtesy and make them aware that it needs to be filed, but that's as far as I go.

My software (ATX) prompts you to answer the Foreign Accounts question in Part III of Schedule B when interest and/or dividends exceed $1,500, and the instructions to check for filing requirements for the TD F 90-22.1 are right there on Schedule B beside the check box. I think the form boxes us in on making the client aware of the requirements, but the responsibility for preparing the form is still up in the air.

If I were a taxpayer with control over ANY foreign accounts, I'd be scared to death not to fill out the FBAR correctly and send it in. I'd use Certified Mail or Express mail and document my full compliance. This is even more important in the aftermath of 9/11/01, because I'm pretty sure the FBAR is tied to Homeland Security issues as well as other law enforcement initiatives. (or maybe I'm just a paranoid right-wing-nut)

Here's some more info on the IRS's position about this thing.

http://www.irs.gov/businesses/small/article/0,,id=159757,00.html

This link also spells out the various types & amounts of penalties associated with the FBAR.
In summary, I see it as a land mine...

[JohnH]

Here's an article I read today while looking up something else. It was published in July, 2008 so some of it may be a little dated.

However, it was clear to these "experts" that IRS has every intention of bringing the tax preparer into the enforcement loop (page 39). I also found it interesting that a Foreign Life Insurance Policy which has cash value should be included in the calculation of the $10,000 aggregate amount (page 40), and that the postmark might not be sufficient for timely filing (page 40). Based on that bit of information alone, I'd suggest that anyone liable for filing the report should send it in early, and use Certified Mail with Return Receipt.

[taxmandan]

I routinely ask about foreign accounts. This year, a couple who I know are expat Canadians mentioned that her Canadian retirement account became vested and she could withdraw money from it. Since the total $$ was over $100K (US) I gave her the FBAR form and strongly urged her to complete it and mail in. I will NOT prepare that form, it is not part of the tax return. But I will document that I informed a client that they may have a requirement to file that form.