• Low balance in the account — high enough to trigger the reporting requirement but low enough so you wonder why the IRS would even care;
• It’s his mom’s money, not his; and
• He learned about the FBAR problem after the deadline of 15-Oct-09.

There are a lot of you out there — people who didn’t know about the FBAR problems — that you have to report the existence of foreign accounts over which you have ownership or control. Keep reading. I will be putting most of the new stuff on the firm’s main website but will put cross-links here so you can find your way.

Call us. We can help you with the “I’m late to the FBAR party, what do I do?” problem. My mobile phone is +1-626-437-2500.

• Go to the IRS website and find the address and phone number for the IRS Criminal Investigations office for where you live.
• Call them and get their fax number.
• Do the edits you need to do. Don’t worry about being Marcel F-ing Proust. Just hack it up and get the info in there.
• Fax that sumbitch to the IRS.
• Call them and ask them to confirm that they got your fax.
• Find someone to buy you a drink.
• Call me on my mobile at +1-626-437-2500 and hire us to take you from there. Or call someone else. ‘Cause you’re going to need it.

OK. Jay Johnson is going to hate me. But if you can’t figure out where to send your letter, fax it to him. Full info is below helpfully pre-built into this letter. I’m just sayin’ that you take the position that you got your letter into the IRS before the deadline. Yeah footfault on the PLACE for filing. But you’re in.

Remember, I’m not telling you to do this. I’m just giving you the ammo if you need to get it done.

Here you go. Vaya con Dios.

October 15, 2009

Jay N. Johnson
Supervisory Special Agent

IRS-Criminal Investigation
Los Angeles Field Office
801 Civic Center Drive West
Room 218, MS 8000
Santa Ana, CA 92701

Delivered via fax to 714-347-9561

Subject: Voluntary Disclosure Regarding Offshore Activities
Taxpayer: (Name)
Social Security Number:

Date of Birth:

Address on Return:

Dear Mr. Johnson:

This letter constitutes the above-identified taxpayers’ formal notice to the Internal Revenue Service of their desire to participate in the current program for voluntary disclosure of offshore activities by U.S. taxpayers. The taxpayers are fully willing to cooperate with the IRS
in determining the correct tax liability.

The voluntary disclosure made relates to Swiss accounts owned by them.

Please contact me for follow-up questions. My daytime telephone number is _____________ and my email address is ______________. I will be following up shortly with a second letter, following the guidelines of the “Offshore Voluntary Disclosures – Optional Format” letter published by the IRS on 7/28/2009.

I look forward to working with you or one of the Special Agents in your office in order to process this application and receive a determination letter from your office advising that the taxpayers are eligible for the voluntary disclosure program.

Very truly yours,

Philip D.W. Hodgen

Copy (with enclosures): (Client)

People are afraid. I can feel it through the phone. Immigrants. They don’t have that much money. Afraid of jail. No really it will be OK. No, really. EGBOK. Really.

I’m ashamed of the Feds. Let’s hope that what they DO in the amnesty process is reasonable; their rhetoric is anything but.

Meanwhile I have a scheduled outbound call at 16:00 CET which will get me up at an ungodly hour tomorrow.

If you want to go forward with the voluntary disclosure program, launch it yourself (look at FAQ #5 and FAQ #5 and call your local Criminal Investigations office to confirm what they want from you) then call us next week. We will be happy to talk about stepping in then.

And wouldn’t you know it? Today was the day that the main switch on our network decided to bork. Thanks www.technolene.com and Louis Katz for getting us up and going fast.

Incidentally and unrelated — the FedEx guy says that package volume is increasing. Leading economic indicator?

No deep comments at the moment. Too busy. Read it then go tell the IRS that they need a good 6th Grade English teacher to come in and straighten them out. In fact I know just the person. (Hi, Renee!)

Notice 2009-62
 
Release Date: AUGUST 07, 2009

Part III — Administrative, Procedural, and Miscellaneous

I. BACKGROUND AND PURPOSE

The Report of Foreign Bank and Financial Accounts, Form TD F 90-22.1 (hereinafter referred to as “FBAR”), provides necessary information for certain governmental agencies. Information on the FBAR may be used in criminal, tax, or regulatory investigations or proceedings, or in the conduct of intelligence or counterintelligence activities, including analysis, to protect against international terrorism. This governmental need for information is balanced with the administrative concerns presented by the filing of the information by U.S. persons.

In October 2008, the IRS revised the FBAR and the accompanying instructions. On June 5, 2009, the IRS issued Announcement 2009-51, 2009-25 I.R.B. 1105, which stated that the IRS is temporarily suspending the filing requirement of the FBAR for those persons who are not U.S. citizens, residents, or domestic entities. On May 6, 2009 and June 24, 2009, the IRS posted questions and answers (Q&As-9 and -43, respectively) on its public website (www.irs.gov) that provide relief to certain persons who only recently learned of their obligation to file an FBAR by setting forth conditions and procedures for filing Form TD F 90-22.1 by September 23, 2009. More information concerning this relief is available at http://www.irs.gov/newsroom/article/0,,id=210027,00.html. This Notice provides additional administrative relief for (i) persons with no financial interest in a foreign financial account but with signature or other authority over the foreign financial account (hereinafter referred to as “signature authority”), and (ii) persons with a financial interest in, or signature authority over, a foreign financial account in which the assets are held in a commingled fund (hereinafter referred to as “foreign commingled funds”). The Department of the Treasury intends to issue regulations clarifying the FBAR filing requirements pertaining to those persons with respect to these foreign financial accounts, and solicits comments related to these FBAR filing requirements in this Notice.

II. EXTENDED FILING DATE FOR SPECIFIED PERSONS

A. Current FBAR Instructions

The current instructions to the FBAR provide, with certain exceptions, that U.S. persons that have signature authority over, but no financial interest in, a foreign financial account are required to file an FBAR. These persons must report the account on an FBAR even if the foreign financial account is reported on an FBAR filed by the owner of the account (or other person that has a financial interest in the account).

The current instructions to the FBAR also provide that a foreign financial account that must be reported on an FBAR includes any bank, securities, securities derivatives, or other financial instruments account. The FBAR instructions further provide that those accounts “generally also encompass any accounts in which the assets are held in a commingled fund and the account owner holds an equity interest in the fund (including mutual funds).”

The current instructions to the FBAR also provide that Form TD F 90-22.1 with respect to a given calendar year must be filed with the Department of the Treasury on or before June 30 of the succeeding year. Thus, except as provided in the prior relief granted by the IRS on its public website and the relief granted in this Notice, FBARs with respect to the 2008 calendar year should have been filed on or before June 30, 2009.

B. Extended Date for Filing an FBAR

In light of the additional time needed for the Department of the Treasury to address issues pertaining to FBAR filing requirements and the need to provide administrative relief for (i) persons with signature authority over, but no financial interest in, a foreign financial account, and (ii) persons with a financial interest in, or signature authority over, a foreign commingled fund, this Notice provides that those persons have until June 30, 2010, to file an FBAR for the 2008 and earlier calendar years with respect to these foreign financial accounts. Thus, eligible persons that avail themselves of the administrative relief provided in this Notice may need to file FBARs for the 2008, 2009 and earlier calendar years on or before June 30, 2010, to the extent provided in future guidance.

The FBAR filing extension provided by this Notice applies to FBARs with respect to 2008 and earlier calendar years. For (i) persons with signature authority over, but no financial interest in, a foreign financial account, and (ii) persons with a financial interest in, or signature authority over, a foreign commingled fund, the FBAR filing extension provided in this Notice supplements the filing extension to September 23, 2009, previously provided by the IRS on its public website.

III. REQUEST FOR PUBLIC COMMENTS

The Department of the Treasury is interested in receiving comments on the following issues affecting a person’s FBAR filing obligation.

The Department of the Treasury requests comments regarding when a person with signature authority over, but no financial interest in, a foreign financial account should be relieved of filing an FBAR for the account. For example, comments are requested regarding whether relief from filing would be appropriate if a person with a financial interest in the account has filed an FBAR.

The Department of the Treasury requests comments discussing in what circumstances the exception from FBAR filing currently available for officers and employees of banks and certain publicly-traded domestic companies might be expanded to apply to all officers and employees with only signature authority over, and no financial interest in, an employer’s foreign financial account, including circumstances in which an individual has been advised that an FBAR has been filed with respect to a foreign financial account for which that person has signature authority. The Department of the Treasury also requests comments discussing how the bank and publicly-traded company exception (including the requirement of notification that an FBAR was filed by a U.S. person with a financial interest in the account) might apply to officers and employees with only signature authority over accounts owned by clients of their employer.

The Department of the Treasury requests comments concerning when an interest in a foreign entity (e.g., a corporation, partnership, trust, or estate) should be subject to FBAR reporting. For example, comments are requested regarding the possibility of applying the principles of sections 1297 and 1298(b) of the Internal Revenue Code to determine when an interest in a foreign entity should be subject to FBAR reporting. Comments are also requested regarding whether the passive asset and passive income thresholds of 50 percent and 75 percent, respectively, are appropriate and whether the tests should apply conjunctively.

The Department of the Treasury also requests comments on whether a U.S. person should be relieved from an FBAR filing requirement with respect to a foreign commingled fund in other circumstances, such as when filing would be duplicative of other reporting.

Interested persons should submit comments and suggestions with respect to the guidance on FBAR reporting in this Notice by October 6, 2009, to:
 

Internal Revenue Service
Attn: CC:PA:LPD:PR (Notice 2009-62)
Room 5203
P.O. Box 7604
Ben Franklin Station
Washington, D.C. 20044

or hand deliver comments Monday through Friday between the hours of 8 a.m. and 4 p.m. to:
 

Courier’s Desk
Internal Revenue Service
Attn: CC:PA:LPD:PR (Notice 2009-62)
1111 Constitution Avenue, N.W.
Washington, D.C. 20224

A copy of those comments should also be sent to:
 

Financial Crimes Enforcement Network
Department of the Treasury
P.O. Box 39
Vienna, VA 22183

Alternatively, the public may submit comments electronically via e-mail to the following address: Notice.Comments@irscounsel.treas.gov with a copy to regcomments@fincen.gov. Respondents should include “Notice 2009-62″ in the subject line of any comment submitted.

All comments submitted by the public will be made available for public inspection and copying in their entirety.

IV. EFFECTIVE DATE

This Notice applies to FBARs (Form TD F 90-22.1) with respect to calendar year 2008 and prior calendar years.

V. CONTACT INFORMATION

For further information regarding the relief relating to signature authority, contact Terra-Lynn Zentara at (202) 283-7659 (not a toll-free call). For further information regarding foreign commingled funds, contact Joseph Henderson at (202) 622-3446 (not a toll-free call).

Most of you are lurkers. It’s understandable. Why post a comment when that might flag who you are? Even the IRS knows about the interwebs. But every once in a while a get an email. And last night I got a call on my cell phone (the number is +1-626-437-2500) from a guy, who just needed to vent. Glad I was there!

When I sit at the keyboard (shameless nerd confessions: iMac, using MarsEdit to power a WordPress blog) I imagine a reader in my head. That someone is you.

I imagine it is late at night, and you’re sitting at the computer and hammering Mr. Google for every ounce of information you can find, with a giant “WTF?” thought bubble over your head. Sweating bullets.

So even though we haven’t met, now you know what I think you look like.

And I’m glad you were there, even if you were there only in my imagination.

Stay in touch. Most of the fun from now on will occur over on my main site, at www.hodgen.com. There will be a new project launching soon, though. Watch for it. Hint: we’re using www.taxgeek.com.

It’s last call at the Amnesty Bar & Grill.

I am shocked – SHOCKED – that these dates are so close in time to the previously-scheduled expiration of the amnesty program. A coincidence, I’m sure. I am also shocked – SHOCKED, I tell you – that the letters are falling like autumn leaves just a few days before the amnesty program closes on October 15, 2009.

The UBS letter basically tells you to hire a Swiss lawyer and fight there, or roll over and play dead because they (UBS) will put your name on the list to be considered for disclosure to the IRS.

Fighting in Swiss courts is a “bet your life” move. Even if you win, it just postpones the day of reckoning.

UBS will hand you your money and chase you out of the bank if they haven’t done so yet. As you’re standing on Bahnhofstrasse with a bank check in hand, what do you do?

(Memo to all personnel: stuffing the check in your pocket and bringing it into the USA — undeclared — is not recommended. Frying pan, fire.)

(Memo to all personnel: don’t be surprised if tax evasion ceases to be the Blunt Instrument du Jour wielded by the IRS, to be replaced by the ever-handy money laundering rules.)

If you have received The Letter your options are limited:

• Fight disclosure in Switzerland (I have referred clients to Swiss lawyers for this);
• Apply for the amnesty program before the 15th; or
• Sit tight and hope.

You do not have the option of closing the account and moving it somewhere else.

FWIW I believe that 1,500 of these letters have been mailed so far.

Relatively small balance? Doesn’t seem to be a factor.