Video instructions and help with filling out and completing Why Form 5495 Penalties

Instructions and Help about Why Form 5495 Penalties

I'm here today with attorney Anthony parent and attorney Robert Henson to present to you the 2016 f bar penalty guide some topics that we're going to cover today are f bar penalty mitigation non-willful vs. willful filing vs. record-keeping penalties caps on willfulness audit years large business and international versus self-employed small business criminal charges f bar appeals f bar litigation and f bar penalty installment agreements so thanks for joining me let's jump right in and begin with f bar penalty mitigation what can you tell me about that well I would say apart panel mitigation is not hard for most people we need four things presence no illegal source income that means it cannot be a international drug lord okay so try to check that one off your most people most people not everybody in and I would say if you are going to be an international drug lord you would want to keep it in palates of scat cash then you'll have to worry about fr penalties then you also do need to cooperate that is something you don't want to be playing hide the ball with an auditor you do want to come forward get ahead of it do not try to pretend it's not a problem and I think also that's related to our fourth one if there's going to be an underpayment you want to get that under payment of tax paid so that you're not you don't get this fraud penalty for under payment of tax related to an unreported account and the other thing is you can't have a previous f bar penalty so that's makes a little bit of sense they're awesome right all right what about non-willful versus willful f bar penalties well you know the willful penalty is the one that we've been you know talking about for a long time the 5% on account value which is interesting means that 50% penalty is calculated on the account value of the account the date the f bar is due so right now you're 20 if you were going to be assessed a willful f bar penalty on your 2014 f bar it would be the account balance on June 30th 2015 which would be interesting because if you actually cleaned out the account on June 29th 2015 there really would be nothing to assess so there is some you know if you were looking to be lever may be clever by half there is a way to avoid the willful f bar penalties and the other one we talk about is to the NAM well that comes up a lot that's our 10,000 per occurrence and then we also can get that down a little bit now that's one of things that Robert and I see is that the willful f bar penalties really aren't going to hit that 50% it's really rare for it to ever hit 50% for various reasons for the willful battle right for the willful penalty well the way that it works out for the mitigation guidelines you have different tiers of penalty so if your accounts are under 50,000 if your accounts between 50,000 or 250,000 between 250 and 1 million and 1 million above the once you get to those levels that's when you start seeing the 50% numbers everything else is kind of done on a per count basis so your captive 50% but with the mitigation guidelines you may not actually be below it oh that's good to know it depends on the account you have the values you have number of accounts stuff like that it's a it's a fact sensitive type of determination got it and Robert how would the IRS go to prove you were willful what are some of the ways that the IRS does that there well okay so the in the Internal Revenue manual the IRS acknowledges that this is gonna be basically a circumstantial evidence type of determination they do have some guidelines for what counts as evidence towards willfulness but it's gonna basically be based on the letters that you the for the OBD P for example there's an opt out letter you have to put down in writing your basic background your argument why you should not be willful they go for that they go off the interview that they'll always do on this either in person or over the telephone depending on you know where you live where the IRS person is and then you know did you did you check off Schedule B you know that is not in any way the end-all be-all of it the part through your Schedule B where it says do you have a foreign account yes or no do you have a f bar requirement they look at that they look at a couple different factors but it's going to be largely determined from circumstantial evidence your state of mind and that's a hard thing to prove what someone's state of mind is this is this is gonna be a phone interview they're gonna be basically going off of the interview what you've written maybe a little follow up with them but that's there's not there's not like a thing out there that's gonna show willfulness anomalous in and of itself is going to be based off of this kind of investigation so another case-by-case basis case when I would say that the the work most damning pieces of information come from taxpayers themselves that they don't have good explanations and they go too far or they don't understand sort of what they're saying when they're saying that they're giving an answer the you know the answer that is really really bad that we've run into before is yeah I just couldn't be bothered yeah I knew about it I was gonna get to it I was busy at the time I was busy at the time couldn't be bothered is