8891 /TDF 90-22.1 - Expert Income Tax help on cross Border tax and immigration and divorce and RRSP and IRA and other matters with david Ingram, Tax Consultant and Preparer

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My_question_is: Both

question: hello, my accountant did not mention form td 9022 in 2007 but filed it for me in 2008, why wouldnt they mention it, are they liable in anyway? should i send it in for 2007 even though it is late? also i got h&r block to do my taxes in florida for 2009, and they say i donot need form 8891, even though the last two years i had it for rrsps in canada,i have not added to these or taking them out or transferred them, do i still need form 8891, they say i dont have canadian income or canadian tax obligation, so i dont but i am trying to tell them i need to report my rrsps every year, i dont understand how no one here in florida seems to know how to do us/canadian taxes, do you know anyone here in miami that can help me or do you prepare taxes, can i get an extension or amend these if they are wrong?
thanks

david ingram replies:

If a tax consultant reads the directions for Schedule B carefully, they will see that they have to fill in Schedule B  if the taxpayer has  "any" foreign financial accounts.  Question 7 at the bottom then asks specifics.  If the total of all  the  foreign accounts, the taxpayer has signing authority over is $10,000 US or over, you must answer YES to question 7.  If the total is less than $10,000, the answer is no.

However, Question 8 asks about foreign trusts.  A Canadian RRSP, A Canadian RRIF, A Canadian RESP or a Canadian TFSA are Canadian Trust Accounts and therefore they are FOREIGN Trusts for US / IRS purposes. 

The failure to fill in Schedule B and answer yes or no when you have a foreign account of any kind is eligible for a $10,000 penalty. If you have more than $10,000, failure to fill out Form TDF 90-22.1 is a minimum penalty of $10,000 and a maximum of up to $500,000 PLUS up to Five years in Jail.

I saw my first $10,000 penalty in 1995 and it was levied against a 105 year old woman with $38,000 in the Royal Bank of Canada in Edgemont Village in North Vancouver. I have met and knew 60 year old Jerome Schneider who plea bargained for a $100,000 penalty and 6 months in Jail and he served every second plus some more.  The last person I saw was a 70+ woman with a $50,000 fine and that was last week.  Over 1070 clients of Jerome Schneider were then fined $10,000 to $100,000 (with most of them $100,000) because Jerome was also a tax accountant who helped his clients hide money offshore.

Of course you also need to fill in form 8891 for each one of your RRSP accounts (as well as A TDF 90-22.1 IF OVER $10,000).

The penalty for failure to fill in the 8891 which is a substitute for the 3520 is 35% of the amount of money in the account plus 5% for each month you did not file it up to a max of 5 months and a maximum 60% penalty.  Of course, if you had a $100,000, the penalty of $60,000 plus the tax would not leave you with much left.

And to be honest, as of this date, april 14, 2010, I have never personally met or talked to anyone penalized the 60% or 45%.  Of course, a very few years ago, I had never met anyone fined $10,000 or $100,000 and sent to jail for failing to file the TDF 90-22.1 and now I know several and know of hundreds and just two years ago, I had never had anyone fined 42,500 for filing forms T1161 or T1135 or T2062 late in Canada and now I know a dozen.

See the manager of the H & R Block office and complain loudly.  It will do them good.

You should file the TDF 90-22.1 forms for 2007 and  2009.

Now,  The 8891 is clearly part of the return and the failure to file the 8891 forms is serious. 

There is no actual relation between the TDF 90-22.1 forms and the filing of the income tax return.  they do NOT go with the return.  they do not have the same filing deadline.  They do not even go to the IRS, they are sent to the Department of the  Treasury  in Detroit and have to be there by June 20th.

A lot of our clients prepare their own TDF 90-22.1 forms rather than pay us to do them because they are basically a very simple form to fill out.

We do provide them with a batch of preprinted forms with their name on them and they can fill out the details.

And we DO make sure that they are told in no uncertain terms that they (the TDF 90-22.forms) need to be filed.

Following is an example of some of the people who have been fined and jailed and put on probation publicly.  Most people do NOT make the courts because they do not fight what is in essence a very expensive parking ticket.

i.e.  If you have the account or accounts and did not report them, YOU can be fined.  And remember, most RRSP accounts require BOTH an 8891 AND a TDF 90-22.1.

And, if you have a TFSA or RESP, you need to file the dreaded 3520.

And, of course, if you want to send things here, we do provide a mail in service.  I will also take this moment to tell about 40 of our mail in returns and  even a couple that came to the door that we will NOT get them out by April 15th and are filing 4868 US extension forms which means that the returns are not due until Oct 15th but any monies owing are due on April 15th so we want to get them out as soon as possible.  since the Canadian Employee deadline is then April 30th, our resources switch to Canada for two weeks and then back to US returns for the April 15th returns with tax owing and then to the the June 15th deadline for Americans living out of the country and then to the June 15th deadline fro self-employed Canadians and then the June 30th Deadline for NON-Residents with Canadian rental property and then possibly helping people with their June 30th

The following cases involve the rather public UBS situation and most were over $2,000,000.  However, I personally know of hundreds that were fined over failure to report accounts as small as $38,000 and the accounts were in the Bahamas, Canada, Grand Caymans and another dozen countries.

If you are not comfortable, file the 4868 extension form and send it here.

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