Roy Chaney: So, I see it's the top of the hour. For those of you just joining, welcome to
today's webinar: Streamlined Domestic Offshore Procedure, FBAR and Form 8938. We are glad you're
joining us today. My name is Roy Chaney, and I may Senior Stakeholder Liaison with the Internal
Revenue Service. I will be your moderator for today's webinar, which is slated for 120 minutes.
Please note that this webinar will also be translated in Korean once the topic content starts.
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feature. Here is your opportunity to ensure your pop-up blocker is not on so you can receive the
polling questions throughout the presentation. So let's try it. How many times have you attended
an IRS national webinar? Is it A first time, B, one through five times, C, six through 10 times, D
11 through 15 times or E 16 or more. Please take a moment and click the radio button that
corresponds to your answer. Let me reread the question. How many times have you attended an IRS
national webinar. A, this is your first time B1 through 5C6 through 10 D 11 through 15 or E 16 or
more. I will give you a few more seconds so you guys can make your selection. Okay we are going to
stop the polling now. Let's see how often you have attended a national webinar. The first time
attendees are 21%. Welcome. We are glad you're joining us today. For those of you who have joined
us for multiple webinars please welcome back. So let's take a look. I see now let me take a look
at the percentages. They are coming up. We are still getting the data as we speak. I see now that
13% of you have attended one through five webinars. 44% of you have attended 11 through 15
webinars. And while another 44% of you have attended 16 or more webinars. We hope you have received
the polling question and was able to submit your answer. If not, now is the time to check your
pop-up blocker to make sure you have it turned on. Again, welcome and thank you for joining us for
today's webinar. Before we move along with our session, let me make sure you are in the right
place. Today's webinar, Streamlined domestic offshore procedures FBAR and form 8938. This webinar
is scheduled for approximately 120 minutes. Let me introduce today's speakers. We have Christine
Stone and Minh Tran who are both technical specialist for the offshore arrangements network inside
the IRS's large business and international division going to turn it over to Christine to begin
the presentation. Christine, the floor is yours. Christine: thank you, Roy. Welcome everyone.
Today we are going to be covering three topics. First we will talk about the Streamlined domestic
offshore procedures focusing on a taxpayer with the US presence. Next we will provide an overview
of the report of foreign bank and financial accounts commonly referred to as the FBAR. We will
concentrate on who must file and the potential penalties for failure to file and lastly we will
engage in a high-level discussion of the form 8938 statement of specifying foreign financial
assets filing requirements and the penalties for failure to file. [Korean transcript not available] please advance slide.
Christine: the Streamlined advanced filing procedures which we call Streamlined for short, is
one of several offshore compliance options. And when we say offshore compliant, weaning both
income tax compliance and other reporting requirements of US taxpayers with foreign financial
assets, such as foreign bank accounts, or foreign entities. The purpose of Streamlined is to
provide an avenue for taxpayers to voluntarily come into compliance, resolve their tax and penalty
obligations, when there is no potential [disclosure]. These procedures are for taxpayers who can
certify their actions were non-willful. In return, the service offers a limited disclosure period
and a set penalty structure. [Korean transcript not available] Please advance slide.
Christine: The original Streamlined procedures announced in 2012 were very restrictive. They were
significantly modified and expanded in 2014. The 2014 Streamlined procedures are open-ended.
However, the service may close the procedures at any time. Streamlined is divided into two broad
categories of taxpayers, domestic and foreign, determined by a non-residency test that is unique
to Streamlined. Domestic or FBO taxpayers failed to meet these nonresidency requirement. We will
discuss the Streamlined nonresidency requirement later. [Korean transcript not available] Please advanced slide.
Christine: Streamlined taxpayers are required to certify under the penalties of perjury that their
actions were nonwillful. They must provide a detailed narrative of the facts with their submission
forms explaining why their noncompliance was due to nonwillful conduct. After making a Streamlined
submission taxpayers could be subject to an examination under regular examination selection
procedures. And taxpayers must maintain compliance for all future years. [Korean transcript not available] please
advance slide. Christine: The benefit of entering Streamlined procedures include a limited
disclosure period. This means the service will only look at the last three years of income tax
returns and the last six years of FBARs. The service will not look at compliance for taxpayers
deemed eligible to participate. Penalties are limited and determined by which category of filer
that you fall under. Streamlined foreign or Streamlined domestic. There are no accuracy,
delinquency, FBAR or failure to file international information return penalties for both domestic
and foreign taxpayers. But, Streamlined domestic taxpayers will be subject to a 5% miscellaneous
offshore penalty, referred to as the FDO MOP that we will discuss in a few slides. Streamlined is a
submission processing procedure. Upon receipt, the returns are processed like every other return
processed by the service except they are afforded the special penalty of suppression. Again,
taxpayers could be subject to an examination under regular examination selection procedures.
[Korean transcript not available]
Please advance slide. Christine: The Streamlined procedures are only available for US
individuals estates, non-US persons and domestic or offshore business user not eligible. A
Streamlined taxpayer must have failed to report income related to foreign financial assets and
pale tax due with respect to those assets. The failure to report income means gross income
amounts, not the net tax effect. Serve for example when a US taxpayer earns foreign wages and
claims of foreign income exclusion effectively reducing taxable income to zero, they still have a
filing requirement. Or when a taxpayer claims a foreign tax credit to offset tax due, they still
have a filing requirement. The foreign earned income exclusion and the foreign tax credit are
elections that the taxpayer must voluntarily request on a filed income tax return to offset their
income or tax due. This is not to be confused with a taxpayer who does not meet the dollar
threshold required to file an income tax return. A taxpayer who does not meet the income threshold
to file a tax return may choose to apply to the Streamlined procedures and file returns if they
have other delinquent international information returned. But remember, for Streamlined, there must
be unreported offshore income. Taxpayers must be able to certify that their failure to report the
income and assets was due to nonwillful conduct. Nonwillful conduct is conduct that is due to
negligence. Inadvertent or mistake or conduct that is the result of a good faith misunderstanding
of the requirements of the law. Other eligibility requirements state the service cannot have
initiated a civil examination regardless of whether the exam relates to the offshore noncompliance
and taxpayers must have a valid taxpayer identification number. [Korean transcript not available]
please advance slide Christine: It is advantageous to be classified as a Streamlined foreign
taxpayer because there are zero penalties. And you can be either a filer or unknown filer. SFO
taxpayers must meet the nonresidency test. All taxpayers who fail the Streamlined nonresidency
requirement default to Streamlined domestic. Domestic Streamlined taxpayers cannot been
non-filers. They will have to provide amended returns as part of their submissions. They cannot
file delinquent form 1040s. [Korean transcript not available] Please advance slide.
Christine: Domestic Streamlined taxpayers are subject to a 5% title 26 miscellaneous offshore
penalty, the SDO MOP. The penalty is equal to 5% of the highest aggregate balance or value of the
taxpayers foreign financial assets during the years in the covered tax return and the covered FBAR
period. For this purpose, the highest aggregate balance or value is determined by aggregating the
year-end account balances and year end asset values for each foreign financial asset subject to
the penalty. Taxpayers need to sum the balance for each year of the disclosure period. The one
year with the highest aggregate balance or value from among all the years will be multiplied by 5%
to determine the MOP. There are three categories of assets that are included in the highest
aggregate balance penalty base. They include a foreign financial account that was required to be
reported on an FBAR but was not. A specified foreign financial asset that should have been but was
not reported on a form 8938, and for each of the three years in the covered tax return period, all
foreign financial accounts and assets for which gross income was not reported for that year. We
will cover what a foreign financial account is for FBAR purposes and what a specified foreign
financial asset is for form 8938 later in the presentation. [Korean transcript not available]
Please advance slide. Christine: In order to pass the nonresidency test in any one of the
most recent three years you cannot have had a US abode and you must be physically outside the US
for 330 days. In other words, you can only be in the US for no more than 35 days. This is a bright
line test and is not negotiable. You only have to meet this test for one of the most recent three
years. If you do not meet the nonresidency test, you will automatically default to the Streamlined
domestic. Which means you cannot be a non-filer and you will be subject to the 5% penalty. If you
filed a joint return, both taxpayers must meet to the nonresidency test. If one meets it and the
other does not, both will be classified as Streamlined domestic. [Korean transcript not available]
Please advance slide. Christine Why don't we have a pause here and take on our first polling
question. Roy? Roy: sounds like a great idea. Okay, audience it's time it looks like for our
first polling question. Please take a moment and answer the following question. For a taxpayer to
be eligible for Streamlined domestic offshore procedures, they must A, B an individual or an
estate with a valid taxpayer identification number,, B, have failed to report income related to
foreign financial assets, C, be able to certify they were nonwillful,, D, not be currently under
examination, E, have failed to meet the Streamlined nonresidency requirements or F, all of the
above. Click the radio button that best answers the question. I will give you a few more seconds
to make your selection. [Korean transcript not available]
please answer the question. Roy: All right. We are going to give you guys another five to
seven seconds to go ahead and make your selection. [Korean transcript not available] Roy: All right. We are going to
stop the polling now and let's share the correct answer on the next slide. [Korean transcript not available] Please
advance slide. Roy: All right. And the correct responses F, all of the above so let's see how
well you did with this question. Oh, I see that 92% of you responded correctly. My goodness.
That's a wonderful response rate. Christine I will go ahead and turn it back over to you.
Christine: Thank you, Roy. Here is a simple example to compute the SDO MOP. Assume the taxpayer has
three foreign after assets, to make accounts that was open 10 years ago and a rental home that was
purchased in year three of the disclosure period the taxpayer did is not file a FBAR or form 8938
for any year in the file the original form 1040. The taxpayer did not report the interest and
dividends earned for bank account X, and no income was earned related to bank account Y. taxpayer
also did not report rents received from the rental property. We said earlier, the penalty applies
to assets that were required to be reported on an FBAR and on form 8938 but were not. Or if the
assets were reported on an FBAR and form 8938, were tax noncompliant. Rental real estate is not an
asset is required to be reported on an FBAR or form 8938, thus it is not included in the SDO MOP
penalty base. It does not matter that it was tax noncompliant, both tax noncompliant and it was not
reported on FBAR or form 8938 so it must be included in the computation. Even though bank account
Y was tax compliance, the taxpayer failed to report bank account Y on a timely filed FBAR and form
8938 for all years, thus bank account Y's year-end value is included. As you can see on the slide,
we entered the year end value for each asset separately, then we totaled all asset values for each
year and selected the year with the highest aggregate balance, which in this case is year five,
with $1 million, and multiply that by 5% penalty rate. In this example, the 5% SDO miscellaneous
offshore penalty would be $50,000. [Korean transcript not available]
Please advance slide. Christine: Just like filing for any other return, the service will not
send you a confirmation or receipt of your filing. Streamlined procedures follow the same routine
for processing returns, except they receive a favorable penalty suppression. If you would like
confirmation of receipt, use certified or registered mail with return receipt requested. You will
only hear from the IRS if your submission was incomplete and needs perfection, or if your returns
were later selected for examination. Streamlined procedures are a federal program. Adjustments
made it to your federal returns could impact your state return, requiring you to file separate
amended state tax returns. [Korean transcript not available]
please advance slide. Christine: Roy, let's do that second polling question now. Roy: all
right thank you. Audience I hope you're ready is time for a second polling question, and it
states, the 5% SDO miscellaneous offshore penalty is applied to the year with the highest balance,
comprised of A, foreign financial accounts required to be reported on FBAR that were not reported,
B, specified foreign financial assets required to be reported on form 89 38, that were not
reported, C, specified foreign financial assets that were tax noncompliant or D, all of the above.
Please take a moment and click the radio button that best answers the question. I will give you a
few more seconds to make your selection. [Korean transcript not available]
Please answer the question. Roy: All right. We are going to go ahead and give you a few more
seconds and stop the polling and we will share the correct answer on the next slide. [Korean transcript not available]
Please advance slide. Roy: And the correct answer is D, all of the above. So let's take a look
at the results. Let's see how well you all did with this question. I see that 85% of you responded
correctly. Minh, I will go ahead and turn it over to you now. [Korean transcript not available] Please advance slide.
Minh: thanks, Roy. Our next topic is a report of foreign bank and financial accounts commonly
called FBAR. let's look at who is required to file. There are several key elements to consider in
all of these criteria must be met. All US persons are required to file if they meet the other
filing requirements. US persons are citizens or residents of the United States determined by green
card status, or the substantial presence test. US persons are also domestic entities which include
corporations, partnerships and trusts. US persons status is determined on a yearly basis, so a
taxpayer could be a US person one year but not another. A US person must have a financial interest
in, or signature authority over a foreign financial account. Financial interests can be direct or
indirect. A direct interest refers to the owner of record or holder of legal title. This is
usually the name listed on the account as owner or beneficial owner. If more than one name is
listed as a holder of record then each account holder who is a US person holds a financial
interest in the account. Other financial interests or indirect interests happens when the holder
of record is acting on behalf of the US person as an agent, nominee, attorney or in some other
capacity. An indirect interest could also be present when a US person has interest in the stock or
profits of a foreign corporation, or a shell corporation, which has no business activities that
merely holds investment assets. Or when the US person is the grantor of a foreign trust. Signature
authority over for an account occurs when a person can control the disposition of assets by direct
communication to the bank that maintains the account. It also refers to persons with authority
under general powers of attorney, or powers of authority. For FBAR purposes, if the taxpayer can
withdraw money from the account in which he or she is not the account holder and he or she has
authority and would be required to include that account on an FBAR. The authority can be written
or otherwise including withdrawal and other account maintenance instructions by letter, fax,
telephone or in person. The next criteria is that it must be a financial account in a foreign
country. Financial accounts include bank accounts such as savings accounts, checking accounts and
time deposits, securities accounts, such as brokerage accounts and securities derivatives or other
financial instruments accounts commodity futures or options accounts, insurance policies with a
cash value such as a whole life insurance policy, mutual funds or other pool funds also foreign
retirement plans, which are reportable on FBAR unless they meet strict exceptions. The account
must be capped in a foreign financial institution where foreign means outside of the US. The
United States includes the states of the United States and the District of Columbia, the
territories of the United States and the Indian lands as defined in the Indian gaming regulatory
act. The actual location of an account, not the nationality of the financial institution which the
account is held determines whether the account is in a foreign country. Any financial account
except accounts maintained with the US military banking facility that is located in a foreign
country should be reported. Even if the account is held with the branch of US financial
institution located abroad. Accounts of foreign financial institutions located in the United
States are not considered foreign accounts for FBAR. Lastly the aggregate balance in these
accounts maintains a $10,000 at any time during that year. So, to summarize, the taxpayer must be
a US person who has a financial interest in, or signature authority over a foreign financial
account or accounts where the combined balances exceed $10,000 on any day on the calendar year.
[Korean transcript not available]
Please advance slide Minh: Let's discuss the FBAR filing threshold in more detail and then
we walk through a simple example. A single account with a balance exceeds $10,000 on any given day
of the calendar year will trigger an FBAR filing requirement. An FBAR filing requirement may also
be triggered if the taxpayer has multiple accounts with balances below $10,000 but together they
add up to more than $10,000 on any given day of the calendar year. The high balance date might not
be the same for each account and transfers between accounts should also be taken into
consideration. For the amount you report on the FBAR, you will need to value each account to
determine its highest valuation during the year in the foreign denominated currency. After the
maximum value of the account is determined, convert the maximum account value for each account into US dollars using the exchange rate on the last day of the calendar year.
on any day of the year. It does not need to be the year-end balance. You will need to determine
whether you meet the filing requirement annually. [Korean transcript not available]
Please advance slide. Minh: In this example on October 31, US person owns three foreign
financial accounts. Number one, two and three, with account balances of 8000, 1000 and $3000
respectively. Does the US person have an FBAR filing requirement? Yes the US person is required to
file an FBAR because the aggregate value on the accounts is over $10,000 on October 31. It does
not matter in the single account where the balance at year-end exceeded the $10,000 threshold.
Once you have determined the $10,000 threshold has been met on any given day of the year, you must
separately report the highest balance for the year on each foreign account. This does not have to be the balance for the day you determine you met the filing threshold when there are multiple
accounts. Also, whether an account produces income does not affect the requirement to file an
FBAR. [Korean transcript not available]
Please advance slide. Minh: Roy, I think now would be a good time for our next polling
question. [Korean transcript not available] Roy: Thank you. That's a good idea. Let's take a look at our third polling
question. Audience the question states a taxpayer has an FBAR filing requirement when their
highest aggregate balance of all foreign financial accounts is, A, greater than $10,000 on the last
day of the year, B, greater than $10,000 on any day of the year, C, less than $10,000 in the last
day of the year and D, less than $10,000 on any day of the year. Take a moment and click the radio
button the best answers the question. I will give you a few more seconds to make your selection.
[Korean transcript not available] Please answer the question. Roy: All right.
We are going to go ahead and give you a little more time and then stop the polling and let's share
the correct answer on the next screen. [Korean transcript not available] Please advance slide. Roy: All right, the
correct answer is B greater than $10,000 on any day of the year. So let's see how well you all did
with this question. I see that 1% of you responded correctly. Looks like we need some help with
this one. Minh, can you provide a little bit more detail? Minh: Sure, Roy... Go ahead, Minh.
Minh: sure Roy, so the FBAR threshold is met when the balance exceeds $10,000 on any day of the
year. So the correct answer is B greater than $10,000 on any day of the year is the correct
response. Roy: all right thank you for the explanation. That helped a lot. I will turn it back
over to you. [Korean transcript not available] Please advance slide. Minh: So, the due date of the FBAR
is April 15 at the following calendar year. There is an automatic extension until October 15. These
dates align with the form 1040 income tax return due dates. For calendar year 2022, the FBAR is
due on April 13, 2023 with an automatic extension until October 15th 2023. If you fail to timely
or correctly file, you may be subject to penalties. A violation is deemed to have occurred on the
due date of the return. If the FBAR is not filed by the automatic extension date of October 15 the
violation date reverts back to April 15 if original due date. The service has six year to assess
an FBAR penalty from the due date of the return for the statute starts to run even if the FBAR was
not filed. However taxpayers may agree to extend the statute by signing a consent under a
common-law agreement. [Korean transcript not available]
please advance slide. Minh: when the service examines and determines there is an FBAR
violation there are four civil penalties available. Negligence, pattern of negligent activity,
pattern for non-willful violation and penalty for willful violation. We will focus on the most
common FBAR penalty for nonwillful violations and willful violations. An IRS examiner will
evaluate the facts and circumstances of the case and determine whether penalties are appropriate.
An examiner has discretion in determining the amount of the civil penalties and uses IRS developed
mitigation and other guidelines in making this determination. Generally, the maximum nonwillful
penalty that can be applied to each violation is $10,000. This $10,000 amount is adjusted for
inflation periodically. Reasonable cause exception may apply to nonwillful violations only.
[Korean transcript not available]
Please advance slide. Minh: There is no reasonable cause exception for the FBAR penalty the
maximum willful penalty can be computed by comparing the greater of $100,000 to 50% of the account
balance at the time of violation. This comparison is made for each violation. The $100,000 is
indexed for inflation currently indexed to $144,886. There are mitigation guidelines in
determining both of the willful and nonwillful penalties that can be considered if certain
criteria are met. [Korean transcript not available] Please continue. Minh: Roy can we do another polling question?
[Korean transcript not available] Please advance slide. Roy: Yes, we sure can. Audience, here is our full polling
question. The question states the willful FBAR penalty computation is A, greater of 100,000
adjusted for inflation or 50% of the account balance, B, 50% of the account balance, C, 10,000 per
violation or D, none of the above. Again, take a moment, click the radio button the best answers
the question. I will give you a few more seconds to make your selection. [Korean transcript not available] Please
answer the question. Roy: All right. I will give you a little bit more time. We are going to
stop the polling now. And let's share the correct answer on the next slide. [Korean transcript not available] Please
advance slide. Roy: All right. Let's take a look the correct answer is A, the greater of
100,000 adjusted for inflation of the account balance. Again, let's see how well you all did with
this question. I see that 83% of you responded correctly. Great job. Nice job, audience.
Christine, I believe you will be covering the next topic. The floor is yours. [Korean transcript not available] Please
advance slide. Christine: Correct, Roy thank you. The last topic we will be discussing today is
form 8938 statement of specified foreign financial assets for this form can about under the higher
Ed act of March 2010. The first year it was required to be filed for individuals was 2011. And
2016 for domestic entities. Form 8938 is required under the Internal Revenue Code section 6038 D,
for US specified individuals and domestic entities if they hold an interest in certain specified
foreign financial assets that exceed a dollar threshold. The filing requirement is determined each
year. If required to file, the form 8938 should be attached to the related annual income tax
return. For example, form 1040 for individuals or form 1120 or 1120S for corporations and so on.
If there is no income tax return filing requirement, then the form 8938 is not required to be
filed. Even if all the other filing requirements of the form 8938 are met. [Korean transcript not available]
Please advance slide. Christine: This is a visual of a form 8938. Part one counts the number
of foreign deposit or custodial accounts and their total dollar value. So these are typically bank
accounts. Part two counts other specified foreign financial assets and their total dollar value.
This would be qualified assets not reported in part one. Part three reports income associated with
the assets reported in parts one and two. Part four counts the number of international information
returns that you filed that include other specified foreign financial assets not reported in parts
one and two, in order to eliminate duplicative reporting. Parts five and six are not shown but
require you to provide detailed information about specific assets. [Korean transcript not available]
Please advance slide. Christine: The form 8938 requires you to be a specified individual.
The definition of form 8938 specified individual is slightly different than an FBAR. Individual.
While they both include US citizens, green card holders and those who meet the substantial
presence test, the form 8938 also includes a taxpayer who made an IRC 6013 election. This election
allows non-US persons to file joint income tax returns with their US person spouse. Essentially
with 6103 you are electing to be treated as a US person for tax purposes. Form 8938 specified
individuals also include nonresident alien who is a bona fide resident of American Samoa or Puerto
Rico. [Korean transcript not available]
Please advance slide. Christine: The form 8938 is required for certain domestic entities
including corporations, partnerships and trusts. Specified domestic corporations and partnerships
are defined as being closely held or owned by a specified individual who is someone who had 80
percent of the voting power including spouses of individual family members and at least 50% of the
entity's gross income is passive income. Or at least 50% of its assets are assets that produce or
are held for the production of passive income, meaning it is not an operating entity. Specified
domestic trusts are defined under IRC 7701 A 30 E, which defines them as including any trust if a
US court can supervise the ministration of the trust and one or more US persons have authority to
control the trust. Also if the trust has one or more specified persons as the current beneficiary.
[Korean transcript not available]
Please advance slide. Christine: Okay, now that we know who must file, let's discuss what
must be reported. A specified foreign financial asset is defined as any financial account
maintained by a foreign financial institution and any of the following assets which are not held in
an account maintained by a foreign financial institution, including any stock or security issued
by a person other than the US person, any financial instrument or contract held for investment
that has an issuer or counterparty which is other than US person, and any interest in a foreign
entity. [Korean transcript not available] Please advance slide. Christine: This slide summarizes a list of common
specified foreign financial assets. We have deposit and custodial accounts, foreign mutual funds,
hedge funds or private equity funds. Foreign life insurance or annuity with a cash value, foreign
pension plans. Foreign stocks or securities not held in a financial account. And foreign
partnership interests. [Korean transcript not available] Please advance slide. Christine: This slide shows assets
that are not considered specified foreign financial assets. They are financial accounts maintained
by a US payor. That would mean any account at a foreign branch of the US financial institution or
any account held at a US branch of a foreign financial institution. This is different than FBAR,
which is based on the location of the account. Foreign real estate is not reportable on form 8938,
but it may be reported if it is held inside a foreign entity. Directly held foreign currency is not
a specified foreign financial asset and is not reportable on the form 8938. Directly held precious
metals, such as gold and silver, and tangible assets such as art, antiques, jewelry, cars, and
other collectibles are not specified foreign financial assets. The instructions to the form 8938
contain other special asset valuation rules and asset reporting exceptions that we do not cover
during this presentation. [Korean transcript not available]
Please continue. Christine: Roy, I believe we are ready for our final polling question.
[Korean transcript not available] Please advance slide. Roy: That is correct audience here is our fifth and final
polling question and you guys have been great tonight. The question states which of the following
is not a specified foreign financial assets reportable on form 8938? is the correct answer A,
deposit and custodial accounts, B, foreign mutual funds, C, foreign stocks not held in a financial
account and D, foreign real estate. Take a moment, click the radio button that best answers the
question. I will give you a few more seconds to make your selection for this final question.
[Korean transcript not available] Please answer the question. Roy: Okay we are going to stop the polling now and
let's share the correct answer on the next slide. [Korean transcript not available] Please advance slide. Roy: All
right. Let's take a look and see what the audience states. The correct answer is D, foreign real
estate. So let's take a look and see how well you all did with this question. I see that 86% of
you responded correctly. Again, fantastic job, audience, Christine I will pass the microphone back
to you to continue with the presentation. [Korean transcript not available] Please advance slide. Christine: Thanks,
Roy. The reporting thresholds vary depending on whether the individual files joint or individual US
income tax return, and whether the taxpayer resides inside or outside the United States. Each
married taxpayer who files a separate US income tax return computes their threshold amount
separately from their spouse. This slide shows a chart. Focusing on the married filing joint
taxpayer you see those residing in the US must file if the total value of their specified foreign
financial assets were more than $100,000 on the last day of the tax year or more than 150,000 at
any time during the tax year. If they were to reside outside the US, they must file if the total
value is more than 400,000 on the last day of the tax year, or 600,000 at any time during the tax
year. The thresholds are proportionate for married filing joint and unmarried individuals. As you
can see from the flight, the filing threshold is higher for taxpayers who reside outside the US.
[Korean transcript not available]
Please advance slide Christine: There is an initial financial penalty for failure to
complete form 8938. If the failure continues 90 days after the IRS notifies the taxpayer of their
filing requirement, a continuation penalty applies. It is $10,000 for each 30 day period that the
taxpayer remains noncompliant. The continuation penalty is capped at $50,000. The maximum total
penalty for each failure to file form 89 and 38 is $60,000. 10,000 initial penalty +50,000 in
continuation penalty. Reasonable cause can apply to the failure to file penalty, but does not
apply to the continuation penalty because after the IRS notifies the taxpayer of their filing
requirement, their failure to file cannot meet the reasonable cause standard. [Korean transcript not available]
Please advance slide. Christine: This is a snapshot of an IRS.gov resource comparing the
form 8938 and the FBAR. It is a tidy summary comparing the filing requirements, thresholds and
timelines for both the forms side-by-side. The chart provides a list of various financial assets
and which forms they should be reported on. [Korean transcript not available] Christine: Roy, that concludes our
presentations I will turn it back over to you to close us out. [Korean transcript not available] Please advance slide
Roy: All right, thanks to Christine and Minh for all the wonderful and needed information.
Audience, we are planning additional webinars throughout the year to register for all upcoming
webinars. Please visit IRS.gov keyword search Webinars and select the Webinars for Tax
Practitioners or Webinars for Small Businesses. When appropriate we will be offering credit and CE
credit for upcoming webinars, we invite you to visit our video portal at www.IRSvideos.gov. There
certificates of completion are not offered if you view any version of our webinars after the live you can view archived videos of the webinars. Please note continuing education credit or
broadcast. Again, a big thank you to Christine and Minh for providing a great webinar and sharing
their expertise. I also want to thank you, our attendees, for attending today's webinars
Streamlined domestic offshore procedures, FBAR and Form 8938. [Korean transcript not available]
Please advance slide. Roy: All right. If you attended today's webinar for at least 100
minutes after the official start time, you qualify for two possible CE credits. If you stayed on
for at least 50 minutes from the start time of the webinar you qualify for one possible CE credit.
Again the time we spent chatting before the webinar started does not count toward the 100 or 50
minutes. If you are eligible for continuing education from the IRS and registered with your valid
PTIN your credit will be posted in your PTIN. if you qualify and have not received your
certificate and/or credit by February 24th please email us at cl.sl.web.conference.team@IRS.gov.
The email address is shown on the slide as well. If you are interested in finding out who your
local Stakeholder Liaison is, you may send us an email using the address shown on this slide, and
we will send you that information. [Korean transcript not available]
Please advance slide. Roy: We would appreciate it, though, if you would take a few minutes
to complete a short evaluation before you exit. If you would like to have more sessions like this
one, let us know. If you have thoughts on how we can make them better, please let us know that as
well. If you have requests for future webinar topics or pertinent information you would like to
see in an IRS fact sheet, tax tip, or FAQ on IRS.gov, then please include your suggestions in the
comments section of the survey. Click the survey button on the screen to begin. If it does not
come up, check to make sure you disabled your pop-up blocker. [Korean transcript not available] please advance slide.
Roy: thank you audience, it has been a pleasure to be here with you and on behalf of the Internal
Revenue Service and our presenters we would like to thank you for attending today's webinar. It is
important for the IRS to stay connected with the tax professional community individual taxpayers,
industry associations along with federal, state and local government organizations. You make our
job a lot easier by sharing information that allows for proper tax reporting. Thanks again for
taking time out of your day to attend today's webinar. We hope you found the information helpful.
You may exit the webinar at this time. [Korean transcript not available]