Fatca

[Nashville]

No, not Fat Cat, you idiot...FATCA. Foreign Account Tax Compliance Act.

The thing that makes you answer about the signature authority and foreign trust on Schedule B.

Just discovered one of my clients has had signature authority for years and years and has never used it, so he forgot about it. Now he sets up an online approval authorization and we realize he has been answering the question wrong all these years.

And the account balance is quite often over $10,000. He has never filled out a TD- thingee.

Penalties are HUGE and are assessable every year the thingee is not filled out. Any advice other than to see a FATCA lawyer??

[veritas]

I wouldn't worry

The penalty can't exceed $250,000 for failure to file. Fraud is a cool half million.

[erchess]

Seriously

I think your client needs to call a FATCA lawyer asap and I think you also need FATCA representation on two issues. You need advice on whether to formally disengage from all work for this client and you need to be prepared in case the client and his lawyer turn on you.

[S T]

Well maybe all is not - what about a plea for "reasonable cause"

I just googled Fatca abate penalties, and a lot of hits some as current as in the last few weeks or month. - I don't believe that you or your client are the only ones.

Govt would rather have compliance I do believe, so there is still "hope" in abating any penalties. But then I seem to be the "eternal optimist" in mitigating damages.

Sandy

[Snaggletooth]

Not as Purported

IRS official position is that they view penalty abatement as "reasonable and understanding."

Some of the same literature that claims this also tells us that their real practice is anything but...looking at this as another source of revenue.

[Matt Sova]

Td F 90-22.1

I had a similar situation with a client a few years ago. I discussed the issue with a Chartered Accountant in Vancouver that does a lot of cross border work and followed his advice. File the TD F 90-22.1 for the last six years along with a letter explaining why it was not done previously. Explain in the letter that going forward the forms will be completed in a timely manner. It worked.

I just got a new client this year with the same type of situation. Previously went to HRB, and we completed the forms back to 2005. The problem is I produced the form by year from my software. With this one the IRS sent a letter stating the 2005 - 2007 were incorrect because they were on the old form. So the lesson here is use the most current version of the form, fill in all the information correctly, and send it to the IRS office in Detroit per the instructions along with a letter explaining why they were not completed timely.

[veritas]

Doesn't

I had a similar situation with a client a few years ago. I discussed the issue with a Chartered Accountant in Vancouver that does a lot of cross border work and followed his advice. File the TD F 90-22.1 for the last six years along with a letter explaining why it was not done previously. Explain in the letter that going forward the forms will be completed in a timely manner. It worked.

I just got a new client this year with the same type of situation. Previously went to HRB, and we completed the forms back to 2005. The problem is I produced the form by year from my software. With this one the IRS sent a letter stating the 2005 - 2007 were incorrect because they were on the old form. So the lesson here is use the most current version of the form, fill in all the information correctly, and send it to the IRS office in Detroit per the instructions along with a letter explaining why they were not completed timely.

the form actually go to the Department of the Treasury? I was under the impression the IRS did not have access to this information. It is used by homeland security?

[New York Enrolled Agent]

the form actually go to the Department of the Treasury? I was under the impression the IRS did not have access to this information. It is used by homeland security?

There appears to be confusion in this thread between the FBAR filing requirements (a form sent to the Department of the Treasury) and the reporting requirements of FATCA ( a form 8938 sent to the IRS as part of a tax return). The original post said FATCA but the reference to the $10K threshold suggests FBAR.

[veritas]

Thanks for the info

I had a similar situation with a client a few years ago. I discussed the issue with a Chartered Accountant in Vancouver that does a lot of cross border work and followed his advice. File the TD F 90-22.1 for the last six years along with a letter explaining why it was not done previously. Explain in the letter that going forward the forms will be completed in a timely manner. It worked.

I just got a new client this year with the same type of situation. Previously went to HRB, and we completed the forms back to 2005. The problem is I produced the form by year from my software. With this one the IRS sent a letter stating the 2005 - 2007 were incorrect because they were on the old form. So the lesson here is use the most current version of the form, fill in all the information correctly, and send it to the IRS office in Detroit per the instructions along with a letter explaining why they were not completed timely.

We have one we are dealing with. Fortunately 2011 lacerte will allow us to generate the form for any prior year.

[AccTaxMan]

I think your client needs to call a FATCA lawyer asap and I think you also need FATCA representation on two issues. You need advice on whether to formally disengage from all work for this client and you need to be prepared in case the client and his lawyer turn on you.

How much recourse does his client have against him? His client has hired the OP to prepare his individual income tax return. The FBAR is not part of the individual income tax return. Is the OP also liable to make sure that the client files his FBAR since he prepares the individual income tax return for that client?

[erchess]

Interesting Question

In my opinion the answer is likely to come down to who has the better lawyer. For example how many of us would have what evidence to the contrary if the client said we told them not to worry about FACTA or FBAR or FUBAR or anything else in particular?