DIRECTIONS FOR FILING FBAR (FORM 114) FOREIGN FINANCIAL ACCOUNT REPORT ON LINE - THIS IS DUE 6/30/15 FOR 2014

You can download step by step directions for filing the Form 114 (FBAR) to report your foreign financial accounts HERE   If you need help filing this form or want a CPA/Attorney  to file the form for you email us at ddnelson@gmail.com.   Also if you have questions on whether or not you should file the form or need to file ones for past years (the statute of limitations is six years which means if you are required to file the form you should file the past six years) please contact us. www.expatattorneycpa.com 

This means if you had combined highest balances in your Mexican Bank and Stock accounts of $10,000 US (when converted from Pesos) or more in 2014 you must file this form.  This includes accounts you own and those you just sign on but do not have any interest in!  Penalty for not filing this form is $10,000 or more per year and possible criminal penalties up to five years in prison.

INTERCAM PRESENTATION IN IXTPA AND ZIHUATANEJO MEXICO RE US EXPATRIATE TAXATION, FBARS, ETC.

See Don Nelson's presentation for INTERCAM  in Ixtapa and Zihuatenajo Mexico on FBARS, and US taxes in Mexico for Americans Living in Mexico below:

Don D Nelsons, Attorney CPA presentation in Ixtapa Mexico

Visit his informative websites full of valuable and  informative information at www.TaxMeLess.com and www.expatattorneycpa.com 

US Expatriate and International Tax Expert to Speak in Puerto Vallarta, Mexico on February 12, 2014

FATCA AND IRS REPORTING FOR DUMMIES - INVESTING IN MEXICO MADE EASY

INTERCAM GRUPO FINANCIERO will Present a Seminar on February 12, 2014 in Puerto Vallarta at the Hotel Marriott Casa Magna featuring Don D. Nelson, US Attorney and CPA.  He is a US expatriate and international tax expert who has been assisting Americans in Mexico for over 23 years.  The seminar will be at 6pm.

He will speak on:

• IRS filing requirements for reporting Mexican and other foreign financial accounts and how to avoid penalties for failing to file in a timely manner.
• The new form 8938 required to report Mexican and other foreign financial assets
• The new on line filing requirements for FBAR (foreign bank account reporting).  Yes you can no longer file on paper.
• IRS Reporting for Mexican Businesses, Corporations, and real estate.
• What to do if you have not been filing your US tax returns or foreign assets reporting forms and how to reduce or avoid the high penalties that may be imposed.
• Current IRS audit procedures and policies for expatriates.
• And he will answer your other questions on US taxation of those who live and work in Mexico

Don's informative and useful tax websites are located at www.TaxMeLess.com and www.Expatattorneycpa.com

Contact intercam at 52-322-2090696 to reserve your space.

Mr. Nelson will also be presenting a seminar in Melaque  on February 13th at 6pm in the Hotel Cabo Blanco.  Call (315) 3556341 to make reservations or learn more.

FATCA for Americans Living In Mexico and Required US Reporting Seminar on 6/21 in Los Cabos

Please be certain to confirm your reservation if you wish to attend.       F.A.T.C.A FOR DUMMIES EVENT When Friday June 21st, 2013 From 5:00 PM to 9:00 PM Add to Calendar    Where Hotel Playa Grande Avenida. Playa Grande1 Plaza Nautica. Cabo San Lucas 23450 Baja California Mexico    Dear Friend, Intercam-Interbanco is pleased to invite you to our conference & cocktail on Tax Reporting for USA Tax Payers living abroad and the Foreign Account Tax Compliance Act (FATCA). Each topic will be addressed under the Financial and Legal perspectives by two experts on the field, respectively.    Speakers: Ing. Eduardo Garcia Lecuona    Don D. Nelson Attorney at Law, CPA.      We look forward to see you on Friday, June 21st at the Playa Grande Hotel, in Cabo San Lucas. Conference: 5:00pm. Cocktails and hors d'oeuvres will be served affter the conference.    "Don't forget to register and prepare your questions"       More Information       Sincerely,         Follow Us

NEW IRS TACTIC WILL LOCATE HIDDEN FOREIGN FINANCIAL ACCOUNTS IN MEXICO

Most expats in Mexico understand that under US FATCA law the banks in Mexico will be reporting the the foreign bank accounts held by US taxpayers and green card holders to the IRS.  Many have felt that their accounts with INTERCAM, MONEX and other non bank financial institutions in Mexico are safe from IRS scrutiny. Suddenly,  that is no longer the case.

The IRS has started to issue John Doe Court Subpoena's to US Banks that act as clearing houses (or correspondence banks) for foreign financial companies including stock brokers, money exchange companies, etc ordering them. to provide the IRS with records that will identify US taxpayers with

foreign financial accounts.

The IRS will then match the documents received pursuant to the subpoena with those who have filed FBAR forms (TDF 90-22.1) and for those who have not reported those foreign financial accounts will impose penalties of $10,000 or more and possibly seek criminal prosecution.  Recently the IRS convicted an 89 year old lady for not reporting her foreign bank accounts.

It does not appear the IRS has yet  started this procedure on Mexican accounts but no doubt they will begin soon. Therefore there is still time to file your FBAR forms for current and past years under the existing Offshore Disclosure Program or other methods that are available to avoid or reduce penalties.

We have helped well over a hundred expats living in Mexico catch up and successfully avoid or reduce penalties. We can also help you.  Visit our website at www.TaxMeLess.com  for more information and for help.

Remember your 2012 FBAR form must be received by the IRS prior to 6/30/13.  It cannot be extended.  In many situations you may have to also report those accounts on Form 8938 filed with your personal tax return also.

Effective January 1, 2013 Mexican Will Exchange Gringo Financial Information with the US

The United States has entered into its second  bilateral exchange of financial and tax information agreements regarding the implementation of FATCA with  Mexico.  This new agreementd targets non-compliant U.S. taxpayers owning foreign accounts.The agreement will be  become  on January 1, 2013.
The reciprocal nature of the United States' agreement with  Mexico will allow the countries to use the automatic exchange of information to discover non-compliant taxpayers. The good old days of "what happens in Mexico, stays in Mexico" are almost gone. Because the Mexican Hacienda expects to use this agreement to collect taxes from Mexicans hiding their US financial activities in the US from the Mexican tax authorities, both Mexico and the US will benefit.

Now is the time to start reporting to the IRS all of your previously unreported Mexican business and financial activities before this new program is geared up.  If later the IRS discovers you have unreported income or assets in Mexico, and you have not been filing the proper reporting forms with your tax return, it most certainly will impose high monetary penalties and will most likely also seek criminal penalties. The average prison sentence for tax evasion usually runs 3-4 years.  

We can help you catch up. Email us at ddnelson@gmail.com or visit our website at www.TaxMeLess.com  

 

AGREEMENT BETWEEN THE DEPARTMENT OF THE TREASURY OF THE UNITED STATES OF AMERICA AND THE MINISTRY OF FINANCE AND PUBLIC CREDIT OF THE UNITED MEXICAN STATES TO IMPROVE INTERNATIONAL TAX COMPLIANCE INCLUDING WITH RESPECT TO FATCA

See below for the full text of the agreement just entered between the USA and Mexico under the FATCA rules that sets forth the exchange of financial  and TAX information of US Citizens and taxpayers with accounts and financial interests in Mexico and Mexican Citizens with financial interests and accounts in the United States.

MEXICO - US FATCA AGREEMENT FOR EXCHANGE OF INFORMATION - TEXT OF AGREEMENT 

FBAR (TDF 90-22.1) FORMS ARE DUE ON 6/29 OR 6/30/12 FOR 2011- CAN BE FILED ON LINE - HUGE PENALTIES I NOT FILED

Your TDF 90-22.1  (FBAR form) where you must report to the IRS your foreign bank and financial accounts must arrive at the designated address by 6/29/12 or be filed on line no later than 6/30/12.  No extensions are allowed. You must report accounts owned by you or that you have signature authority or control over.


You must report your Intercam accounts, Mexican bank accounts, and other Financial Accounts in Mexico

This form must be filed for your 2011 foreign financial accounts highest balances during 2011 exceed $10,000 US. Therefore, you need to combine these highest balances to determine if you need to file this form. Foreign financial accounts (but not limited to these) which must be on the form include:

• Bank and savings accounts
• Stock Brokerage Accounts
• Pension plans
• Cash surrender value in foreign life insurance and annuities
• Gold held by another company or person for safe keeping.

Best to file the form Certified mail with return receipt so you have proof of filing or by DHL, UPS, or Fed Exp.

If you are required to file this form, you may also be obligated to file Form 8938 with your personal US tax return.

Link to download  paperTDF 90.22.1(FBAR): http://www.irs.gov/pub/irs-pdf/f90221.pdf

Link to file TDF 90-22.1 on line: http://bsaefiling.fincen.treas.gov/Enroll_Individual.html

Potential Penalties for Not Filing or Filing Late:

The following chart highlights the civil and criminal penalties that may be asserted for not complying with the FBAR reporting and recordkeeping requirements.

Violation	Civil Penalties	Criminal Penalties	Comments
Negligent Violation	Up to $500	N/A	31 U.S.C. § 5321(a)(6)(A) 31 C.F.R. 103.57(h)
Non-Willful Violation	Up to $10,000 for each negligent violation	N/A	31 U.S.C. § 5321(a)(5)(B)
Pattern of Negligent Activity	In addition to penalty under § 5321(a)(6)(A) with respect to any such violation, not more than $50,000	N/A	31 U.S.C. 5321(a)(6)(B)
Willful - Failure to File FBAR or retain records of account	Up to the greater of $100,000, or 50 percent of the amount in the account at the time of the violation.	Up to $250,000 or 5 years or both	31 U.S.C. § 5321(a)(5)(C) 31 U.S.C. § 5322(a) and 31 C.F.R. § 103.59(b) for criminal. The penalty applies to all U.S. persons.
Willful - Failure to File FBAR or retain records of account while violating certain other laws	Up to the greater of $100,000, or 50 percent of the amount in the account at the time of the violation.	Up to $500,000 or 10 years or both	31 U.S.C. § 5322(b) and 31 C.F.R. § 103.59(c) for criminal The penalty applies to all U.S. persons.
Knowingly and Willfully Filing False FBAR	Up to the greater of $100,000, or 50 percent of the amount in the account at the time of the violation.	$10,000 or 5 years or both	18 U.S.C. § 1001, 31 C.F.R. § 103.59(d) for criminal.  The penalty applies to all U.S. persons.
Civil and Criminal Penalties may be imposed together.  31 U.S.C. § 5321(d).

When to Include your Mexican and Other Financial Assets on Form 8938 and FBAR forms

The IRS has released a chart giving some guidance on  what you need to include in  the FBAR form (TDF 90-22.1) and what types of assets are included in the new 2011 form 8938.  The best course of action is always to  include a financial asset in the appropriate form(s) even if the IRS is not clear what should be included. CLICK HERE TO GO TO THE IRS CHART ON 8938 AND FBAR  items to be included or excluded.

Complete Form 8938 and TDF 90-22.1 Guidance In Simple Chart Form

The IRS has just published further information on when to file forms 8938 (to report foreign financial assets) and TDF 90-22.1 (FBAR) to report foreign financial accounts. Their guidance clarifies when foreign currency and precious metals located in foreign countries must be reported. The Chart is easy to understand and can be read HERE.

If the value of  the assets in your Fideicomiso, Mexican bank accounts and Mexican corportion exceed the thresholds set forth in this table, they must be reported on this form as well as on Forms 5471, 3520, 3520A, etc.

If you wish assistance in preparing these forms or wish to have your own self prepared forms reviewed by an expert contact us.

IRS Issues Explanation of When it will not charge Penalites for filing FBARs (TDF 90-22.1 forms) Late

FBAR filing requirement

As a United States citizen, you may be required to report your interest in certain foreign financial accounts on Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR).  For information about FBAR reporting requirements, including reporting exceptions, seeForm TD F 90-22.1 and the IRS FBAR Frequently Asked Questions.

 How to file an FBAR

For information about how and where to file an FBAR, see Form TD F 90-22.1 and the IRS FBAR Frequently Asked Questions.

If you learn you were required to file FBARs for earlier years, you should file the delinquent FBARs and attach a statement explaining why they are filed late.  You do not need to file FBARs that were due more than six years ago, since the statute of limitations for assessing FBAR penalties is six years from the due date of the FBAR.  As discussed below, no penalty will be asserted if IRS determines that the late filings were due to reasonable cause.  Keep copies, for your record, of what you send.

  Possible penalties for failure to file FBAR

If you fail to file an FBAR, in the absence of reasonable cause, you may be subject to either a willful or non-willful civil penalty.  Generally, the civil penalty for willfully failing to file an FBAR can be up to the greater of $100,000 or 50 percent of the total balance of the foreign account at the time of the violation.  See 31 U.S.C. § 5321(a)(5).  Note that this penalty is applicable only in cases in which there is willful intent to avoid filing.  Non-willful violations that the IRS determines are not due to reasonable cause are subject to a penalty of up to $10,000 per violation.  There is no penalty in the case of a violation that IRS determines was due to reasonable cause.  For more information about the FBAR penalty, see Form TD F 90-22.1.  For information about the reasonable cause exception to the FBAR penalty, see IRM 4.26.16, Report of Foreign Bank and Financial Accounts (FBAR).

Example 3:  Same facts as Example 1, except that the highest balance in Taxpayer’s checking account exceeded $10,000 and, after reading recent press and thus learning of his FBAR filing obligations, Taxpayer filed an accurate, though late, FBAR.  The FBAR was accompanied by a written statement explaining why Taxpayer believed the failure to file the FBAR was due to reasonable cause.  The IRS will determine whether the violation was due to reasonable cause based on all the facts and circumstances.  Taxpayer’s explanation for why he failed to timely file an FBAR appears reasonable in view of the facts and circumstances of the case.  Since the IRS determined that the FBAR violation was due to reasonable cause, no FBAR penalty will be asserted.

Factors that might weigh in favor of a determination that an FBAR violation was due to reasonable cause include reliance upon the advice of a professional tax advisor who was informed of the existence of the foreign financial account, that the unreported account was established for a legitimate purpose and there were no indications of efforts taken to intentionally conceal the reporting of income or assets, and that there was no tax deficiency (or there was a tax deficiency but the amount was de minimis) related to the unreported foreign account.  There may be factors in addition to those listed that weigh in favor of a determination that a violation was due to reasonable cause.  No single factor is determinative.

Factors that might weigh against a determination that an FBAR violation was due to reasonable cause include whether the taxpayer’s background and education indicate that he should have known of the FBAR reporting requirements, whether there was a tax deficiency related to the unreported foreign account, and whether the taxpayer failed to disclose the existence of the account to the person preparing his tax return.  As with factors that might weigh in favor of a determination that an FBAR violation was due to reasonable cause, there may be other factors that weigh against a determination that a violation was due to reasonable cause.  No single factor is determinative.

Current IRS procedures state that an examiner may determine that the facts and circumstances of a particular case do not justify asserting a penalty and that instead an examiner should issue a warning letter.  See IRM 4.26.16, Report of Foreign Bank and Financial Accounts (FBAR).  The IRS has established penalty mitigation guidelines, but examiners may determine that a penalty is not appropriate or that a lesser (or greater) penalty amount than the guidelines would otherwise provide is appropriate.  Examiners are instructed to consider whether compliance objectives would be achieved by issuance of a warning letter; whether the person who committed the violation had been previously issued a warning letter or has been assessed the FBAR penalty; the nature of the violation and the amounts involved; and the cooperation of the taxpayer during the examination.

Example 4:  Taxpayer is a United States citizen who lives and works in Country B as a computer programmer.  Taxpayer has checking and savings accounts with a bank that is located in the city where he lives.  The aggregate balance of the checking and savings accounts is $50,000 during the tax year.  Taxpayer complied with Country B’s tax laws and properly reported all his income on Country B tax returns.  Taxpayer failed to file federal income tax returns and failed to file FBARs to report his financial interest in the checking and savings accounts.  After reading recent press and thus learning of his federal income tax return and FBAR reporting obligations, Taxpayer filed delinquent FBARs, reporting both foreign accounts, and attached statements to the FBARs explaining that he was previously unaware of his obligation to report the accounts on an FBAR.  Taxpayer also filed federal income tax returns properly reporting all income and no tax was due.  The IRS will determine whether the FBAR violation was due to reasonable cause based on all the facts and circumstances.  Taxpayer had a legitimate purpose for maintaining the foreign accounts, there were no indications of efforts taken to intentionally conceal the reporting of income or assets, and no tax was due.  Taxpayer’s explanation for why he failed to timely file an FBAR appears reasonable in view of the facts and circumstances of the case.  Since the IRS determined that the FBAR violation was due to reasonable cause, no FBAR penalty will be asserted.

 New reporting requirement for foreign financial assets

A new law requires U.S. taxpayers who have an interest in certain specified foreign financial assets with an aggregate value exceeding $50,000 to report those assets to the IRS.  This reporting will be required beginning in 2012.  Taxpayers who are required to report must submit Form 8938 with their tax return.  See Notice 2011-55  for additional information about this reporting requirement under IRC section 6038D.

IRS INTERNATIONAL TAX EVASION STATUS

WASHINGTON — The Internal Revenue Service continues to make strong progress in combating international tax evasion, with new details announced today showing the recently completed offshore program pushed the total number of voluntary disclosures up to 30,000 since 2009. In all, 12,000 new applications came in from the 2011 offshore program that closed last week.

The IRS also announced today it has collected $2.2 billion so far from people who participated in the 2009 program, reflecting closures of about 80 percent of the cases from the initial offshore program. On top of that, the IRS has collected an additional $500 million in taxes and interest as down payments for the 2011 program — a figure that will increase because it doesn’t yet include penalties.
“By any measure, we are in the middle of an unprecedented period for our global international tax enforcement efforts,” said IRS Commissioner Doug Shulman. “We have pierced international bank secrecy laws, and we are making a serious dent in offshore tax evasion.”
Global tax enforcement is a top priority at the IRS, and Shulman noted progress on multiple fronts, including ground-breaking international tax agreements and increased cooperation with other governments. In addition, the IRS and Justice Department have increased efforts involving criminal investigation of international tax evasion.
The combination of efforts helped support the 2011 Offshore Voluntary Disclosure Initiative (OVDI), which ended on Sept. 9. The 2011 effort followed the strong response to the 2009 Offshore Voluntary Disclosure Program (OVDP) that ended on Oct. 15, 2009. The programs gave U.S.taxpayers with undisclosed assets or income offshore a second chance to get compliant with the U.S. tax system, pay their fair share and avoid potential criminal charges.
The 2009 program led to about 15,000 voluntary disclosures and another 3,000 applicants who came in after the deadline, but were allowed to participate in the 2011 initiative. Beyond that, the 2011 program has generated an additional 12,000 voluntary disclosures, with some additional applications still being counted. All together from these efforts, taxpayers came forward and made 30,000 voluntary disclosures.
“My goal all along was to get people back into the U.S. tax system,” Shulman said. “Not only are we bringing people back into the U.S. tax system, we are bringing revenue into the U.S. Treasury and turning the tide against offshore tax evasion.”
In new figures announced today from the 2009 offshore program, the IRS has $2.2 billion in hand from taxes, interest and penalties representing about 80 percent of the 2009 cases that have closed. These cases come from every corner of the world, with bank accounts covering 140 countries.
The IRS is starting to work through the 2011 applications. The $500 million in payments so far from the 2011 program brings the total collected through the offshore programs to $2.7 billion.
“This dollar figure will grow in the months ahead,” Shulman said. “But just as importantly, we have changed the risk calculus. Americans now understand that if they try to hide assets overseas, the chances of being caught continue to increase.”
The financial impact can be seen in a variety of other areas beyond the 2009 and 2011 programs.

• Criminal prosecutions. People hiding assets offshore have received jail sentences running for months or years, and they have been ordered to pay hundreds of thousands and even millions of dollars.
• UBS. UBS AG, Switzerland's largest bank, agreed in 2009 to pay $780 million in fines, penalties, interest and restitution as part of a deferred prosecution agreement with the U.S. government.

The two disclosure programs provided the IRS with a wealth of information on various banks and advisors assisting people with offshore tax evasion, and the IRS will use this information to continue its international enforcement efforts.

Everything You Want to Know About 2011 IRS Voluntary Disclosure Program

The deadline for entering the IRS 2011 Voluntary Offshore Disclosure Program has been extended until September 9, 2011.  The procedures for entering the program are complex and must be followed carefully. You can also prior to the previous mentioned date obtain an additional 90 day extension of time to file all of your past tax returns including the special foreign reporting forms such as 5471, 8865, 5472, 3520 and TDF 90-22.1 (FBAR).

You can read all of the details and latest developments concerning the Voluntary Offshore Disclosure Program at our sister blog:  www.usexpatriate.blogspot.com .  You can read more about the special forms required at our website at www.taxmeless.com.

Remember, if you have failed to file required forms 3520 and 3520A for your Mexican Fideicomiso that means you have until 9/9/11 to file all past forms (if the real property has not produced revenue) without penalty under FAQ 18 in the rule to the program.

You also have until that date to file all past forms for your Mexican Corporation (form 5471) if  you have reported all taxable income from that corporation on your personal tax return without risk of penalty.