Offshore Voluntary Disclosure Initiative / Tax Amends - Part II

r2itemp · Post by **r2itemp** » Sun Jul 31, 2011 7:31 am

Do we need to report the mortgage loan account information if we had home loan on a property in foreign country? I was under the impression that we don't need to disclose mortgage loan accounts in FBAR or this OVDI reporting but it seems a tax firm is asking everyone to report this also. Is it correct? I think since it is not actually an account but a loan, we don't have to report. Please let me know..

r2itemp · Post by **r2itemp** » Mon Aug 01, 2011 7:48 pm

Friends,

Any one? Do we need to report mortgage accounts (homeloan accounts) towards FBAR?

lsgv100 · Post by **lsgv100** » Sat Aug 06, 2011 12:14 am

Greyfri,
So do you think a case has more chance for an audit because i go with traditional VD. I haven't filed FBARs, but accounts have > 75K but
the earned income is very less which i didn't report. My attorney says, since i don't have any previous issues with IRS and since they have
to actually prove that i have willfully committed the crime by not disclosing the accounts, it is very little chance (<3%) that IRS will go after the
accounts who took Traditional VD.

greyfri;402889Also, the IRS will likely do a full audit in such cases. Even for people who have primarily wage income, and clean tax returns, that involves hassles, and there could very well be items that cause some issues (itemized deductions such as medical or job search, charitable deductions, basis for Schedule D sales etc.).

The potential penalties under opt out or traditional VD should also be considered: number of violations (number of accounts * number of years) * non willful penalty. The maximum non-willful penalty is 10K, but its likely to be considerably lower for smaller accounts. On the other hand, a lot of small accounts (each FD would be a separate account, a joint account may be counted twice, duplications may not be removed) and years could add up quickly even for small penalty violations. Its possible that people with particularly good cases might get off with nothing other than tax penalties. One poster here mentioned 2 violations (1 account, 2 years) total of $200 or so in unreported income -- such a person might do far better with opt out. On the other hand, for people with not-so-small accounts and significant unreported income, the IRS may even try and claim willfulness (the Schedule B question about foreign accounts could be significant here).

One poster mentioned that he/she had filled all FBARs. If all accounts were reported for all years, then there are no FBAR violations and it should just be a matter of amending returns to include all unreported income for all open years ( likely 6) + interest.

binarysemaphore · Post by **binarysemaphore** » Sat Aug 06, 2011 10:48 am

This is becoming nightmare of epic proportions for me.Can they ask us to explain each and every entry in the statement ?

r2itemp · Post by **r2itemp** » Sat Aug 06, 2011 10:14 pm

Guys,

Is it too late to start the process now? I haven't started yet. Is getting pre-clearance a MUST? Please post your comments/experience.

Thanks.

zen · Post by **zen** » Sat Aug 06, 2011 11:05 pm

r2itemp;403247Guys,

Is it too late to start the process now? I haven't started yet. Is getting pre-clearance a MUST? Please post your comments/experience.

Thanks.

Yes. You should definitely request for pre-clearance. You can also call the hotline to check if you can just send the package after you are cleared. I think it should be fine.

zen · Post by **zen** » Sat Aug 06, 2011 11:06 pm

Quick question: When you are filing amended tax returns for year 2003, should we be using the 1040X for 2003? I noticed that there is some difference between 2003 1040X & 2010 1040X form.

chal · Post by **chal** » Sat Aug 06, 2011 11:53 pm

zen;403263Quick question: When you are filing amended tax returns for year 2003, should we be using the 1040X for 2003? I noticed that there is some difference between 2003 1040X & 2010 1040X form.

Zen - are you in the civil phase now. Could you tell us the approximate time it took to clear step 2? - Thanks.

chal · Post by **chal** » Sat Aug 06, 2011 11:56 pm

zen;403263Quick question: When you are filing amended tax returns for year 2003, should we be using the 1040X for 2003? I noticed that there is some difference between 2003 1040X & 2010 1040X form.

I don't know, but please check post 752/753 on this thread.

zen · Post by **zen** » Sun Aug 07, 2011 1:27 am

chal;403268Zen - are you in the civil phase now. Could you tell us the approximate time it took to clear step 2? - Thanks.

I'm now preparing all the documents to submit my final package. The second phase took around 2 weeks i.e. getting a letter from IRS CI saying that I need to submit everything before Aug 31.