Unfiled FBAR’s and SSI Eligibility

by Sanford Millar
Contact

Often individuals who have not filed Foreign Bank Account Reports (FBAR’s) express concern that filing the report will cause them to lose Supplemental Security Benefits, (SSI) and similar benefits from state agencies. It is for these reasons that some individuals refuse to move forward to compliance once they are advised by professional of their filing obligations. Such failure to comply may pose serious risks for the individuals who are often dual nationals or permanent residents (Green Card holders).

SSI rules, provide that  individuals receiving benefits may  have only limited resources, including $2,000 for single persons and $3,000 for couples. Other assets can be owned, like a home, but the purpose of this comment is not to discuss SSI, it is to discuss FBAR filing laws and penalties for not filing.

Some individuals receiving SSI benefits have foreign financial account which require FBAR reporting. The Bank Secrecy Act (BSA) provides that an FBAR is required to be filed and received by June 30 of the each subsequent year for U.S. persons who have foreign financial accounts which aggregate $10,000 or more in the calendar year. The Internal Revenue Code , as of 2011 tax returns, requires the filing of Form 8938 if a taxpayer has Specified Foreign Financial Assets in excess of $50,000 at year end (for individuals) $100,000 for couple, living in the U.S. SSI recipients may not be filing returns as they may not be required to file. Individuals are required to file income tax returns if their income is $9,350 or more and couples filing jointly have income of $18,700 or more. The limits are slightly higher for persons age 65 or over. By not reporting their foreign financial accounts and income from those accounts, SSI recipients may be obtaining SSI benefits when they otherwise would have been ineligible based upon the resource limit and income limits. Such conduct may be grounds for assertion of “willfulness” penalties under the BSA and false statement crime  assertions in SSI eligibility claims, in addition to potential willful failure to file and willful failure to pay income tax penalties.

The combination of potential civil and criminal penalties can be mitigated by a variety of measures including the Offshore Voluntary Disclosure Initiative of 2012 (OVDI). By entering the OVDI program the SSI recipient with unreported foreign financial assets, can limit penalties and “come clean” on unreported income. Further, under recent case law permanent residents convicted of tax evasion,(false statement crimes) can be deported. This strategy needs to be coupled with SSI disclosure to avoid continuing SSI false claims.

While other strategies may be open to discussion, the risk/benefit of taking action needs to be carefully weighed. Foreign financial institutions are reviewing their account databases to find all U.S. persons in order to comply with provisions of the Foreign Account Tax Compliance Act (FATCA). The result is many U.S. dual nationals and permanent residents are receiving communications from their foreign banks requesting proof of U.S. FBAR compliance and advising those account holders that their account information will be disclosed to the IRS.
Hiding is no longer a option nor is continuing the misrepresentation of SSI eligibility or eligibility for state agency benefits.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Sanford Millar, Law Offices of Sanford I. Millar | Attorney Advertising

Written by:

Sanford Millar
Contact
more
less

Law Offices of Sanford I. Millar on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.