I have a Power of Attorney over an account in Canada that belong to my dad who resides in UK. With all the recent FBAR fiasco I am trying to amend the FBAR reports before the June 2010 deadline. Before I even proceed I am trying to determine if I owe any taxes on interest just to qualify. We are talking very small amount but with the IRS you never know.

This account had 3k that belongs to my dad and paid 1-2 dollars of interest every year.

In late 2008, I help him took out the bulk of the cash from the account as I was travelling to Canada. I did return the whole amount back to him later on when I was in UK (with proof of bank deposit of the same amount)

I have 2 questions
1. would this be considered as a gift the moment I withdraw the $$ from the said account but returned back to him on a later date (I was acting as an agent to get the money for him)

2.If it was a gift, what part of the interest in the bank account would I be liable for income tax purposes, was it the interest for the whole year of 2008 although I withdraw the $$ in late Oct?

Thanks
Rob

If you were acting on behalf of your father the whole time, there would be no gift. If the balance in the account did not exceed $10,000 at any point during the year, no FBAR is required.

Thanks IntlTax, I do have to report FBAR as I have other Canadian accounts with my dad that are in the low 6 figures, so the aggregate definitely exceeds $10k. Those accounts I have never touched, just signature authority. I am just concerned about the particular withdrawal that "disqualify" me from amending the FBAR.

I think you may be confusing the voluntary disclosure that ended October 15th with the extension to file the FBAR for commingled funds (mutual funds).

No I am not confused. See Rev 2009-62

To provide administrative relief for (I) persons with signature authority over, but no financial interest in, a foreign financial account, and (ii) persons with a financial interest in, or signature authority over, a foreign commingled fund, this notice provides that those persons have until June 30, 2010, to file an FBAR for the 2008 and earlier calendar years with respect to these foreign financial accounts. Thus, eligible persons that avail themselves of the administrative relief provided in this notice may need to file FBARs for the 2008, 2009 and earlier calendar years on or before June 30, 2010, to the extent provided in future guidance.

So the extension is for both condition (commingled fund and signature authority)

Sorry IntlTax I don't mean to be rude but to state the fact that Rev Proc 2009-62 applies to both situation. Correct me if I am wrong. I am very concerned about amending the FBAR reports although I have nothing to hide it's a very nerve wrecking process with all the publicity.

Hello max

Your quesiton:

I have 2 questions
1. would this be considered as a gift the moment I withdraw the $$ from the said account but returned back to him on a later date (I was acting as an agent to get the money for him)

The answer is NO because, per the IRS website a gift is defined as follows;

"You make a gift if you give property (including money), or the use of or income from property, without expecting to receive something of at least equal value in return."

Since you returned all the money you withdrew, you received no value, therefore there was no gift. No value transpired.

Had you retained any value in the account, you may have had a gift, if it wasn't considered compensation for services you
performed for your relative.

Also, remember the filing of the FBAR is independent of filing your tax return, which shows income you receive. The FBAR is for informational reporting. You don't need to do one, to do the other. They are not filed together normally, unless certain conditions apply that require you to send a copy of your return with your FBAR (TDF 90-22.1).

Max,

My mistake. You are correct that Notice 2009-62 applies to both commingled funds and to persons with signature authority over, but no financial interest in, a foreign financial account.

Hi Mack,

As I understand I need to amend the FBAR report to the regular Detroit address, with a copy and my tax forms (1040) to be sent to the Philadelphia offshore unit as well.

Ken

Hello Max

If you have to correct a previously filed TDF 90-22.1, you are correct.

The instructions state:

"An amendment of a previously filed FBAR is accomplished
by checking the “Amended” box in the upper right hand
corner of the first page of the form, making the needed
additions or corrections, and then stapling it to a copy of the
original form. Please also attach a statement explaining the
changes. See “When and where to file” (above) for filing
instructions."

The When and where states to file this in Detroit, the regular address only.

(Its not clear to me why you have to file and amended TDF 90-22.1, however.)

Question:

Did you report all the income on your tax returns when filed?

If you reported all relevant taxable income regarding the foreign accounts, but did not file the TDF 90-22.1 .

You should;

-File the delinquent FBAR reports according to, Detroit, attach a statement explaining why the reports are filed late.
-Send copies of the delinquent FBARs, together with copies of tax returns for all relevant years, to the Philadelphia Offshore unit.

The FBAR is the TDF 90-22.1 form, not your regular tax return e.g. F 1040.

If you have not reported all income from these accounts on you individual tax returns, you fall into the voluntary disclsure guidelines, which say:

Taxpayers who want to initiate a voluntary disclosure, should call their local CI office. Taxpayers with questions may call the IRS Voluntary Disclosure Hotline at (215)516-4777, visit Internal Revenue Service, or contact their nearest CI office.

These items were exerpted from the IRS website.

Until I have a better idea of why you're ameding the TDF 90-22.1, I'm not sure I've given you the correct answer.