OVDP Attorney Houston
FINCEN114 due June 30th for the 2015 taxation year, reporting beneficial interest or signature authority in non-U.S. financial accounts where the annual aggregate highest balance is greater than $10K U.S.
Those who meet the substantial presence test for residency in the U.S., do not escape the FBAR filing requirement. Essentially this residency test causes one to become a ‘resident alien”, classified as a U.S. person, and consequently subject to various annual U.S. filing requirements.
Canadians Caught in the FBAR
Canadian caught by the foregoing would be snowbirds that are consistently present in the U.S. about 120 days in three consecutive years or those working in the U.S. on a visa/work permit that fall into residency rules.
The FBAR filing requirement does not take a treaty-based disclosure (IRS Form 8833) into account. Only IRS Form 8938 (‘Statement of Foreign Financial Assets”) that came out in 2011 (and attached to a U.S. tax return if there is a requirement to file that return) has in its regulations, an exemption from filing as it respects the foregoing treaty disclosure.
Other IRS information returns such as the 5471 for your interest in your Canadian corporation; IRS Form 3520/3520-A for your interests in a Canadian trust or even IRS Form 8865 for your interest in a Canadian partnership would come under their respective filing requirements. Regulations need to be examined to determine if there is a simplified filing requirement of the information return. Generally, without a successful reasonable cause defense, a minimum $10k U.S. penalty for unfiled information returns may be levied.
Were your actions willful? The following factors show willfulness to evade:
Setting up trusts or corporations.
Filing some forms and not others.
Reporting one account but not another.
Using another passport.
Telling your bank not to send statements.
Using code words in communications.
Visits in person.
Cash deposits and withdrawals.
Moving money from one bank or country to another.
Not telling your return preparer.
Mansoor Ansari J.D., LL.M. (TAX)