Of course you filed the FBAR form for the past 7 years, right? And you declared Earned Israeli Interest on your bank account and keren hishtalmut, right? Or perhaps that savings plan where you squirreled away a few shekel a month hoping you'll have something to pay for your kids' weddings...you declared that as well, right? It may have been pennies worth of interest, but you had to declare it on your 1040.
For a scary article on the subject, the JPost calls in a US Tax Attorney, who paints a rather bleak (perhaps alarmist?) picture.
Applicants to the [voluntary disclosure] program need to hire a tax attorney, as they are in effect taking part in a criminal proceeding, admitting to breaking US law.Is this more than a Tax Attorney trying to drum up business?
Wolf said American-Israelis shouldn't think they're okay simply because they have filed their US tax returns."It's irrelevant," he told the Post. "You need to file the American tax return form and report the worldwide taxable income, in addition to filling out the FBAR form in which you declare your accounts around the world," he said, referring to the US Treasury Department's Form 90-22.1, "Report of Foreign Bank and Financial Accounts."
"You have to get your name into the program before the deadline," stressed Wolf. "It might be all legitimate - but you need a US tax attorney to register you and your activities for the past six years with the voluntary disclosure program. It's serious, and it's a criminal offense, period."
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I really try hard to stay out of my husband's business, but from my understanding, you only need to do this if your overseas accounts are over $10,000 at any point during the year. (Yes, if you transferred money to your account to buy a house, or a car, that would do it.)
ReplyDeleteI think the Tax Attorney is overstating the situation...
Anonymous: People with a Keren hishtalmut eventually have more than $10,000...savings plans add up eventually as well.
ReplyDeleteis it enough to just fill out the fbar or do you need to do something else as well? why lawyers?
ReplyDeleteFern: The lawyers will tell you that submitting late FBAR's via the "Voluntary Compliance" amnesty program implies you are admitting criminal liability -- therefore they advise that you consult with a lawyer.
ReplyDeleteone more reason not to bring your money to Israel.
ReplyDeleteAnon 3:31 PM
ReplyDeleteThis has nothing to do with bringing money to Israel -- if anything, the Israeli economy is outperforming the US (and most of the rest of the world) by far. The issue is the USA/IRS being unreasonable with their FBAR amnesty policy.
I emailed the IRS a simple question and got back a canned answer that didn't answer my question at all.
Who would want to be an American citizen in these circumstances? What advantage does American citizenship give US-born Israeli citizens? Can you not just give up your American citizenship, have solely Israeli citizenship, and be done with this whole lark?
ReplyDeleteAnnie, I'm an naturalized US citizen, and not an Israeli. However, your question seems unreasonable. What about entry to US for example? Or any other countries that would require Israeli apply for visa, but wouldn't require one for a US citizen? FBAR is just paperwork that should have been filed on an annual basis, as far as I understand. I'm puzzled by your question.
ReplyDeleteAnnie: Reasons to retain US citizenship:
ReplyDelete1. Simplified entry to US to visit relatives instead of complex VISA process.
2. Entry to US on MUCH shorter line/queue (which is extremely important when traveling with small children)
3. Possible qualifications for scholarships to study in the US (or even abroad).
Critically Observant Jew: The FBAR paperwork was a law on the books that was never enforced till now. Previously, filing an FBAR almost guaranteed an IRS audit as well, so all tax attorneys and CPS advised their clientele against it.
However, the IRS has now announced that not only is it mandatory to report this paperwork, but the statute of limitations is 7 years, so one must file retroactively from 2003 onwards. Additionally, the actual FBAR filing rules are draconian and it takes hours and hours to fill it out. PLUS, the Israeli banking system doesn't have a simple reporting form that matches the FBAR requirements, so it involves a tremendous amount of manual labor (and money -- to get records from the bank).
Jameel - sorry, my fault due to ignorance. I'd hope that AACI (and maybe NBN) would take it up to Knesset and the banks to simplify future FBAR process.
ReplyDeleteCOJ: No need to apologize. Its just the FBAR is making me lose sleep.
ReplyDeleteIve been in touch with the IRS directly, they admit the laws are unfair and illogical, but they state that non-compliance is a federal, criminal offense.
The email answers they have sent me are copy/pasted from their FAQs and unhelpful to say the least.
Well, I probably made a real boo boo by submitting this for 2008. I doubt I had a balance of 40K NIS on any given day that year, so I was actually patur. So now I'm going to the boydem and pulling out my statements from Jan 1 2003 till Dec 31 2007, to make sure I never had a 40K balance. But since I submitted once, I'm on their radar.
ReplyDeleteI doubt tho that they will really go after me. Or that they will be able to nail me.
ANYWAY READERS - if you haven't submitted your fubar yet, make sure you never had a balance of 40K NIS and fuggedaboudit.
And Jameel, while you may be actually probably are right about the need to throw keren hishtalmut, etc, in, I still think that by the time the fubar police comes to Maale Adumim, either the dog will die or the poritz will die. And I have plenty of richer neighbors than me that I can point them to...
HAH! my word verification is diecast... haPOOR nafal...
HCP: You can't retroactively "make sure" you never had a balance of 40K NIS if you really did!
ReplyDeleteFUBAR police also means...watch what happens next time you visit the land where the streets are paved with gold.
I hear they are short on gold, which is why the FBAR reporting was mandated!
Gmar Chatima Tova!
--J.
Jameel @ The Muqata said...
ReplyDeleteHCP: You can't retroactively "make sure" you never had a balance of 40K NIS if you really did!
Of course not:-)
If I find such a balance for one or more of the years, I'll file. ma laasot.
I astounded myself and found such a balance for 2 of the 5 years in question.
ReplyDeleteCompleting the form was not such a hassle.
Here's hoping we won't be cellmates in Alcatraz,
Gidon