Retired Expat Facing $437,000 in FBAR Penalties - Here's What Went Wrong

An 88-year-old former expat currently An 88-year-old former expat currently stands on the verge of losing his entire stands on the verge of losing his entire stands on the verge of losing his entire life savings to the IRS. Not for tax life savings to the IRS. Not for tax life savings to the IRS. Not for tax evasion, but because he never filled out evasion, but because he never filled out evasion, but because he never filled out the annual one-page FBAR form. This the annual one-page FBAR form. This the annual one-page FBAR form. This gentleman is named Tunkay Saidan. Pardon gentleman is named Tunkay Saidan. Pardon gentleman is named Tunkay Saidan. Pardon me if I pronounce that wrong. He's a me if I pronounce that wrong. He's a me if I pronounce that wrong. He's a Turkish-American professor who moved to Turkish-American professor who moved to Turkish-American professor who moved to the US in 1980 and became a citizen. the US in 1980 and became a citizen. the US in 1980 and became a citizen. Later, he spends a large portion of his Later, he spends a large portion of his Later, he spends a large portion of his life living as an expat in Switzerland. life living as an expat in Switzerland. life living as an expat in Switzerland. Over the years, I guess he accumulated a Over the years, I guess he accumulated a Over the years, I guess he accumulated a pretty decent-sized nest egg, which he pretty decent-sized nest egg, which he pretty decent-sized nest egg, which he kept in Swiss and Turkish banks. More kept in Swiss and Turkish banks. More kept in Swiss and Turkish banks. More recently, he transferred the money back recently, he transferred the money back recently, he transferred the money back to a US-based bank. Sounds pretty to a US-based bank. Sounds pretty to a US-based bank. Sounds pretty straightforward, right? Well, what straightforward, right? Well, what straightforward, right? Well, what Saidan didn't realize was that he was Saidan didn't realize was that he was Saidan didn't realize was that he was actually breaking US law. After an IRS actually breaking US law. After an IRS actually breaking US law. After an IRS audit, the agency assessed a $437,000 audit, the agency assessed a $437,000 audit, the agency assessed a $437,000 fine for missing years of FBAR filings, fine for missing years of FBAR filings, fine for missing years of FBAR filings, plus another $40,000 in penalties and plus another $40,000 in penalties and plus another $40,000 in penalties and interest. Apparently, Saidan is fighting interest. Apparently, Saidan is fighting interest. Apparently, Saidan is fighting the fines, but his chances aren't the fines, but his chances aren't the fines, but his chances aren't looking so good because US courts have looking so good because US courts have looking so good because US courts have repeatedly upheld the IRS's ability to repeatedly upheld the IRS's ability to repeatedly upheld the IRS's ability to impose these monster penalties. So, what impose these monster penalties. So, what impose these monster penalties. So, what did he do wrong? Well, quite simply, he did he do wrong? Well, quite simply, he did he do wrong? Well, quite simply, he never filed his FBAR form. FBAR refers never filed his FBAR form. FBAR refers never filed his FBAR form. FBAR refers to the Report of Foreign Bank and to the Report of Foreign Bank and to the Report of Foreign Bank and Financial Accounts, otherwise known as Financial Accounts, otherwise known as Financial Accounts, otherwise known as FinCEN Form 114. If the combined total

FinCEN Form 114. If the combined total FinCEN Form 114. If the combined total of all your non-US financial accounts of all your non-US financial accounts of all your non-US financial accounts exceeds $10,000 at any point during the exceeds $10,000 at any point during the exceeds $10,000 at any point during the calendar year, you're required to calendar year, you're required to calendar year, you're required to document it and file that form with the document it and file that form with the document it and file that form with the US Treasury Department. That $10,000 US Treasury Department. That $10,000 US Treasury Department. That $10,000 threshold was originally implemented in threshold was originally implemented in threshold was originally implemented in 1970. It has not been raised for 1970. It has not been raised for 1970. It has not been raised for inflation. So, that means more and more inflation. So, that means more and more inflation. So, that means more and more expats are finding themselves exceeding expats are finding themselves exceeding expats are finding themselves exceeding that threshold and unknowingly exposing that threshold and unknowingly exposing that threshold and unknowingly exposing themselves to these huge liabilities. If themselves to these huge liabilities. If themselves to these huge liabilities. If it's a non-willful violation, which it's a non-willful violation, which it's a non-willful violation, which means you didn't realize you were means you didn't realize you were means you didn't realize you were breaking the law, you could still owe breaking the law, you could still owe breaking the law, you could still owe over $16,000 over $16,000 over $16,000 per missed year. A willful violation, on per missed year. A willful violation, on per missed year. A willful violation, on the other hand, can get up to $165,000 the other hand, can get up to $165,000 the other hand, can get up to $165,000 or 50% of the account balance per year. or 50% of the account balance per year. or 50% of the account balance per year. In either case, if you don't follow the In either case, if you don't follow the In either case, if you don't follow the rules, whether you intended to follow rules, whether you intended to follow rules, whether you intended to follow them or not, the government can them or not, the government can them or not, the government can essentially seize all of your life essentially seize all of your life essentially seize all of your life savings. Now, the good news is that if savings. Now, the good news is that if savings. Now, the good news is that if you are behind on FBAR filings, the IRS you are behind on FBAR filings, the IRS you are behind on FBAR filings, the IRS does offer some catch-up programs. The does offer some catch-up programs. The does offer some catch-up programs. The most important one is the streamlined most important one is the streamlined most important one is the streamlined filing procedures. Under this program, filing procedures. Under this program, filing procedures. Under this program, eligible non-willful filers, meaning eligible non-willful filers, meaning eligible non-willful filers, meaning again, you didn't realize you were again, you didn't realize you were again, you didn't realize you were breaking the law, they generally must breaking the law, they generally must breaking the law, they generally must submit the most recent 3 years of submit the most recent 3 years of submit the most recent 3 years of federal tax returns and the most recent federal tax returns and the most recent federal tax returns and the most recent 6 years of FBAR filings. When done 6 years of FBAR filings. When done 6 years of FBAR filings. When done correctly, the IRS generally does not

correctly, the IRS generally does not correctly, the IRS generally does not assess FBAR penalties or failure-to-file assess FBAR penalties or failure-to-file assess FBAR penalties or failure-to-file penalties. Of course, you still must pay penalties. Of course, you still must pay penalties. Of course, you still must pay any tax owed plus interest. There are any tax owed plus interest. There are any tax owed plus interest. There are also separate delinquent FBAR submission also separate delinquent FBAR submission also separate delinquent FBAR submission procedures for people who properly procedures for people who properly procedures for people who properly reported their income and paid any tax reported their income and paid any tax reported their income and paid any tax they owed, but they simply forgot to they owed, but they simply forgot to they owed, but they simply forgot to file the FBAR portion of the deal. In file the FBAR portion of the deal. In file the FBAR portion of the deal. In qualifying cases, the IRS does state qualifying cases, the IRS does state qualifying cases, the IRS does state that it will not impose FBAR penalties that it will not impose FBAR penalties that it will not impose FBAR penalties if specific conditions are met. Now, if specific conditions are met. Now, if specific conditions are met. Now, keep in mind that the standard filing keep in mind that the standard filing keep in mind that the standard filing deadline is April 15th with an automatic deadline is April 15th with an automatic deadline is April 15th with an automatic extension to October 15th. Again, those extension to October 15th. Again, those extension to October 15th. Again, those FBAR filings are made with FinCEN, not FBAR filings are made with FinCEN, not FBAR filings are made with FinCEN, not the IRS, so we'll drop a link in the the IRS, so we'll drop a link in the the IRS, so we'll drop a link in the video description to the official video description to the official video description to the official government website. And speaking of government website. And speaking of government website. And speaking of taxes, another big mistake that many taxes, another big mistake that many taxes, another big mistake that many expats make is overpaying on their state expats make is overpaying on their state expats make is overpaying on their state taxes. Here at Savvy Nomad, quick plug taxes. Here at Savvy Nomad, quick plug taxes. Here at Savvy Nomad, quick plug for ourselves, we can help expats obtain for ourselves, we can help expats obtain for ourselves, we can help expats obtain legal residency in Florida for tax legal residency in Florida for tax legal residency in Florida for tax purposes. So, if you're interested, make purposes. So, if you're interested, make purposes. So, if you're interested, make sure to check out the link in the video sure to check out the link in the video sure to check out the link in the video description and use the code YouTube for description and use the code YouTube for description and use the code YouTube for a discount. If you enjoyed this video, a discount. If you enjoyed this video, a discount. If you enjoyed this video, make sure to hit that like button and make sure to hit that like button and make sure to hit that like button and subscribe. We're always putting out new subscribe. We're always putting out new subscribe. We're always putting out new financial content for nomads and expats financial content for nomads and expats financial content for nomads and expats designed to help you streamline your designed to help you streamline your designed to help you streamline your life overseas. Don't forget to join our life overseas. Don't forget to join our life overseas. Don't forget to join our weekly email list Americans Abroad.

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