3.2 SUBSTANTIATION AND DISCLOSURE

Question 1

WHAT IS SUBSTANTIATION?

Answer 1

BEING ABLE TO PROVIDE THE IRS WITH DOCUMENTARY PROOF OF TAXABLE INCOME, DEDUCTIONS AND CREDITS, AND TAX POSITIONS TAKEN ON A RETURN.

DISCLOSURE USING 8275 & 8275-R

Question 2

WHAT ARE THE REQUIREMENTS TO REPORT FOREIGN BANK ACCOUNTS?

Answer 2

TO REPORT FOREIGN ACCOUNTS, TAXPAYERS MUST COMPLETE AND FILE A REPORT OF FOREIGN BANK AND FINANCIAL ACCOUNTS. USING FINCEN FORM 114 IF THE AGGREGATE VALUE OF ALL FOREIGN FINANCIAL ACCOUNTS EXCEEDS 10K.

EXCEPTIONS: IRA, TAX QUALIFIED RETIREMENT PLANS, GOVERNMENT ENTITY, MILITARY

FAILING TO FILE AN FBAR CAN CARRY PENALTIES,

NON-WILLFULL - VIOLATIONS CAN RESULT UP TO 10K PER VIOALTION.

WILLFULL VIOLATIONS CAN RESULT IN A PENALTY OF UP TO THE GREATER OF 100K OR 50% OF THE BALANCE IN THE ACCOUNT AT THE TIME OF THE VIOLATION