Do I need to file FBAR if I didn't earn any interest ?

Do I need to file FBAR if I didn't earn any interest ?

Recently a gentleman asked a simple question,”Do i need to file FBAR ?”.

And we asked him few other questions:

  • Do you live in United States (Citizen, Green Card Holder, H1 or any other kind of visa) ?
  • Do you have an kind of foreign account ?
  • At any given time, did you have more than $10K in your foreign account ?

If the answer is YES to these questions than you must file FBAR.  But this was very hard for client to understand and he gave us many reasons why he should not be required to file FBAR .  Let me share those reasons with you.

  1. I am not a US Citizen or Green Card Holder.  I am on H1B Visa.
  2. United States do not have any right to know my investment in foreign country.
  3. I declared the money when I sent to India via Bank and therefore US already knows about this.
  4. IRS is confused about the FBAR and have no clue about the requirements.
  5. I didn’t make any kind of money in foreign country.

Some of you may or may not agree with these reasons but all of you will love this reason.

“I read online that I don’t need to file FBAR.”  This statement made me curious to find some information about FBAR online to see what others are saying and here is what I found:

Comments Posted on immigrationvoice.com

I think 2011 FBAR is only for the previous calendar year (2010). I doubt that IRS would go back to 2008 and check. Also you have hardly accumulated any interest for that $25K. But if you still want to be 100% compliant do it. Its just paperwork and hassle.

I know another friend who has a similar situation where he deposited some funds in 2009 to pay off a loan but it sat in his account for just a week or so before it was removed. There is no intention of gaining interest…only signature authority and such cases are exempt. $25 K for a week or so won’t gain more than Rs 500 (maybe less) or so interest. If IRS wants they can have his $10 in interest.

My CPA told me that having amounts like $25K or so previous to the current calendar year is irrelevant and just additional paperwork. The IRS is looking for people who have huge amounts of money sitting and accumulating interest. They are not going to chase and trouble individuals who have no intent to do money laundering or not gaining any significant interest.

This is an imaginative post by some user.   I am sure his CPA won’t stand behind this statement and will never give this statement on paper.   FBAR may sound like a complex legal requirement but basics are fairly simple.   If you are a US person (regardless of your visa status), you have a foreign account with balance of $10K or more at any given time during last year than you need to file FBAR.   If your CPA or financial advisor is telling your otherwise than you should get it in writing or email.   Even if you have this kind of advise in writing it may not protect you from penalties but it may help in avoiding the criminal penalties.

 

I found another post that says that IRS had suspended FBAR during the year 2010. You can read it online at trackitt.com

The Internal Revenue Service has temporarily suspended the requirement to file a Report of Foreign Bank and Financial Accounts for the 2009 and earlier calendar years, for people who are not U.S. citizens, residents or domestic entities.

Announcement 2010-16 temporarily suspends the requirement to file Form TD F 90-22.1, also known as the FBAR, as the IRS tries to clear up the definition of “United States person.” In addition, the IRS issued Notice 2010-23, which provides FBAR filing relief for some persons with signature authority and who own commingled funds.

In October 2008, the IRS published a revised FBAR form, together with accompanying instructions, changing the definition of “United States person.” The IRS received numerous questions and comments from the public concerning the changed definition. In response, and to reduce the burden on the public, the IRS issued Announcement 2009-51, 2009-25 I.R.B. 1105, which directed people to refer to the definition of “United States person” in the July 2000 version of the FBAR instructions to determine if they had a filing obligation.

Once again, this is an online post.  Do not relay on such communications unless you have personally written to IRS and got similar advise in mail by the IRS.  Even if you receive such communication in mail by IRS, you will still be required to file FBAR but you may not have to penalty for that specific period of time.

FBAR law is much simpler than most people think.  Issue is that many US person with accounts in foreign countries have not filed FBAR for years and now they are willing to file the FBAR but do not want to file because penalties for previous years are huge.  There is an amnesty program that can help in cleaning up the mess but you are still required to pay some penalties.

We strongly recommend our readers “NOT TO DEPEND” upon online blogs and other media.   Please speak with your CPA or get a written advise from IRS.   Our bias allows us to find blog post in our favor but we may ignore the official blogs of CPA and IRS website for real advise.  Don’t be a victim of mis-information. This won’t protect you from penalties.

Want more on FBAR ? Stay tuned for TV interview with Sanjiv Gupta on FBAR ?

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  • Kishore

    I have a question regarding FBAR reporting. I
    have a joint NRO account with my mother at ICICI bank. I have sent over $10k
    (but within th gift limit) into that account over several payments. The money
    is being used for medical and other expenses. Because the money is being used
    the account balance has not crossed $10K at any time. Do I still need to report
    per FBAR? Since it is a rupee a/c what exchange rate do I use to determine the
    $10k test?

  • Amir

    I have a question regarding TDF 90-22.1 filing .

    All of my foreign account aggregate in less than $10,000
    so in my taxes I put not require to file TDF 90-22.1 . Now in the form I see
    “max value of account that calender year at any time” & IRS says
    the max value of account any day in that year .I do transfer money between my
    india account quite often so though total money remain the same but if we consider
    max value at any day this increases foreign account aggregate .

    like example I have 4 accounts

    1) A — Rs 2,00,000

    2) B — Rs 50,000

    3) C — Rs 1,00,000

    4) D — Rs 1,00,000

     

    Though all the account total is Rs 4.5 laks(less than
    $10,000) . But if I transfer money A>>B or C >> D or any way my max
    value for total account increases suppose I transfer 1 lakh from A >> B
    then account balance & total remain the same but max value for that year
    increases to substantially

    1) A — Rs 1,00,000 ( but max value is Rs 2,00,000)

    2) B — Rs 2,50,000(max value) — this is due to transfer
    from A.

    3) C —- Rs 1,00,000 ( max value)

    4) D — Rs 1,00,000 ( max value)

     

    Now total ( if max value is consider ) becomes higher
    more than $10,000

     

    What should I do in this scenario . Shall I file TDF
    90-22.1 ? If I file it will collide with my answer in my taxes .

     

    You reply is appreciated .

  • Dhaval

    what if i have transferred money from usa to india more than $10k but not in my account, but my parents account to whom i am supporting financially for living. Then do i have to file FBAR?

  • Pradeep Kulkarni

    Hello Sir,
    I have Home loan in India in SBI account (Max Gain- OverDraft OD Account) , I have

    • Premsingh Rathod

      Hi Pradeep..My situation is exactly same..wondering if you got your query answered. If so can you please advise if we need to fill FBAR ?

      • Pradeep Kulkarni

        Hi Premsign…
        No as of now i have not recieved any response… I don’t this these guys are active..Since i am seeing questions are not answered from 5 Years…, if you look at the question below mine.. 🙂

        • Premsingh Rathod

          🙂

          • Premsingh Rathod

            You can send this query to below email id : FBARQUESTIONS@irs.gov
            I did check with them, per them Loan is not reportable on FBAR.

          • Ravi Gidwani

            @Premsingh/Pradeep:

            Can you please confirm if IRS responded to your question regarding reporting of loan accounts? How many days did the FBARQUESTIONS@irs.gov take to respond to your email? Can you please post their email response (excluding any personal/sensitive info) online for others?