I moved to US in October 2010 as GC holder (won DV lottery, GC date is Oct 15th). I had a few active and closed accounts in the country of origin in 2010. Those accounts generated the following interest in 2010:

acc1 closed in July 2010: $20;
acc2 closed in December 2010: $800;
acc3 active today: $0.10

I never filed FBAR here in US and didn't pay taxes for these 3 accounts. 'Reasonable cause' is not applicable to my case. Now I'm going to participate in OVDP.
1) Do I include acc1 into penalty calculation for 2010?
2) acc3 is checking account with 0.01% interest, max.balance was high in 2010 but interest earned (before and after October 2010) is very tiny - a few cents. Do I pay a huge penalty over this account even if I underpaid a few cents of taxes?

Thank you.

  • 2
    OVDP? DV? GC? TMA. – Chris W. Rea Apr 23 '14 at 22:38
  • Sorry. Ovdp Offshore Voluntary Disclosure Program, gc green card, dv diversity lottery. – user14708 Apr 23 '14 at 23:00
  • 1
    @niqniq BTW - have you been filing FBAR after 2010? Have you been filing on your own? Depending on your situation, I'd argue not knowing is a reasonable cause since now you're trying to fix it. But - you cannot argue that yourself, at least not without an attorney holding your hand through the process. The penalties on not filing are so steep you'll throw your green card at them and run back home very quickly if you try to go through it alone. – littleadv Apr 24 '14 at 5:17
  • I have no reasonable cause. I learnt that I have to file FBAR and pay offshore taxes in 2011. I never filed FBAR/f8938. I'm aware of the penalties up to 27.5% My total assets do not exceed 75K so I hope to have 12.5% penalty. Anyways I have a few questions about how to calculate penalty, eliminate duplicates i.e assets were moved from one account to another multiplying annual max balance etc. I don't understand why I should have attorney to represent me. OVDP seems very straight forward, but penalty calculation framework is not accurately defined in OVDP FAQs. – user14708 Apr 25 '14 at 1:56
  • @niqniq that doesn't matter. The fact that it was the same money on both the accounts is irrelevant. Penalties are assessed on the highest balance. – littleadv Apr 25 '14 at 2:30

If you're participating in OVDP, you surely have a tax attorney who's representing you. Why don't you ask your attorney?

If you're participating in OVDP without any legal counsel, then your problem is really much bigger than what you ask about.

OVDP is not something to do on your own. Get a proper legal advice from an attorney/EA/CPA who's specializing on OVDP clients. Before you submit or say anything to the IRS.

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  • Price ticket is around 15K. This is more than expecting penalty. What I need just to have someone to validate my paperwork. I'd hire him/her. but not for such paycheck.. – user14708 Apr 25 '14 at 2:01
  • @niqniq expected penalty, if I remember correctly, is between $10K to $100K per account per year. – littleadv Apr 25 '14 at 2:29
  • It's true if someone out of OVDP see OVDP FAQ 5. My case qualifies for lower penalty see OVDP FAQ 53. – user14708 Apr 25 '14 at 14:12

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