Please help! Is this the basis of the FBAR law? The Secretary of the Treasury shall require reports? Please read and comment (USC 31, IV, 53, ii, § 5314):
Please note below, renounceuscitizenship has found the FBAR law.
§ 5314. RECORDS AND REPORTS ON FOREIGN FINANCIAL AGENCY TRANSACTIONS
(a) Considering the need to avoid impeding or controlling the export or import of monetary instruments and the need to avoid burdening unreasonably a person making a transaction with a foreign financial agency, the Secretary of the Treasury shall require a resident or citizen of the United States or a person in, and doing business in, the United States, to keep records, file reports, or keep records and file reports, when the resident, citizen, or person makes a transaction or maintains a relation for any person with a foreign financial agency. The records and reports shall contain the following information in the way and to the extent the Secretary prescribes:
(1) the identity and address of participants in a transaction or relationship.
(2) the legal capacity in which a participant is acting.
(3) the identity of real parties in interest.
(4) a description of the transaction.
(b) The Secretary may prescribe—
(1) a reasonable classification of persons subject to or exempt from a requirement under this section or a regulation under this section;
(2) a foreign country to which a requirement or a regulation under this section applies if the Secretary decides applying the requirement or regulation to all foreign countries is unnecessary or undesirable;
(3) the magnitude of transactions subject to a requirement or a regulation under this section;
(4) the kind of transaction subject to or exempt from a requirement or a regulation under this section; and
(5) other matters the Secretary considers necessary to carry out this section or a regulation under this section.
(c) A person shall be required to disclose a record required to be kept under this section or under a regulation under this section only as required by law.
Here is what a search reveals (I think) – should you really have to pay a lawyer to find all of this out? I think I got as far as the penalties, but here is what is happening:
1. FBAR is found in Title 31 of the United States Code and it is a very small part of that Title. Here is what Title 31 looks like: http://www.law.cornell.edu/cfr/text/31
Note that there is a subtitle A and a subtitle B.
2. It looks like we go to Subtitle B – Regulations relating to money and finance –
http://www.law.cornell.edu/cfr/text/31/subtitle-B
3. This might have something to do with this: – Financial Record Keeping and Reporting of Certain Transactions http://www.law.cornell.edu/cfr/text/31/103
4. Once again there are lots of subparts (The U.S. is a nation of laws). It looks like Subpart B – Reports Required To Be Made may be it –
http://www.law.cornell.edu/cfr/text/31/103/subpart-B
5. From there we to S. 24 which says – Report of Foreign Financial Accounts (note the importance of the word “foreign”) – http://www.law.cornell.edu/cfr/text/31/103/24
6. S. 24 reads as follows – Yes, I think we may have it:
(a) Each person subject to the jurisdiction of the United States (except a foreign subsidiary of a U.S. person) having a financial interest in, or signature or other authority over, a bank, securities or other financial account in a foreign country shall report such relationship to the Commissioner of the Internal Revenue for each year in which such relationship exists, and shall provide such information as shall be specified in a reporting form prescribed by the Secretary to be filed by such persons. Persons having a financial interest in 25 or more foreign financial accounts need only note that fact on the form. Such persons will be required to provide detailed information concerning each account when so requested by the Secretary or his delegate.
[42 FR 63774, Dec. 20, 1977, as amended at 52 FR 11443, Apr. 8, 1987; 52 FR 12641, Apr. 17, 1987]
Observation: It’s interesting to note that the required information is specified in a “reporting form prescribed by the Secretary”. This allows for the required information to be changed without actually changing the law. Okay, I think we are on the right track.
7. All the general public hears about are the penalties. They don’t seem to be there. But wait, let’s backtrack and go to the “general provisions” – enforcement – which are in Subpart E-
http://www.law.cornell.edu/cfr/text/31/103/subpart-E
8. Yes, we are getting closer. Section g says that the IRS has jurisdiction over the enforcement of failures to report Foreign Bank Accounts (as if they don’t have enough to do already). But where are the penalties? What if somebody doesn’t file the FBAR they didn’t know about?
Well, at least we are on the right track. Question: how could the average person, without paying a lawyer, possibly be able to find all of this stuff out?
Thanks. This is useful. I’ll have a look.
“Each person subject to the jurisdiction of the United States”; this text does not say US person as defined under the tax code. This is an interesting point because the IRS says that all US persons must do FBARs. But that doesn’t seem to be the same thing as “subject to the jurisdiction of the United States”. If that means citizens, then immigrants in the United States would be exempt until they become citizens. Furthermore, how does this oblige Green Card holders, particularly those who have gone into another jurisdiction such as Canada?
Furthermore, it would also seem to not include dual citizens, those living in Canada and having citizenship in Canada who are under the jurisdiction of Canada.
Note: Phil Hodgen wrote a long blog discussing whether a visa student in the United States is required to file FBARs, and concluded at the end, probably not.
The important thing for my question of who is a person “subject to the jurisdication of the United States”, is, according to Hodgen, up to the Secretary of the Treasury to decide:
This is the section (5314) that I cite above in the main post. And it would mean that the Secretary of the Treasury could end this nonsense with a stroke of his pen by saying that people resident in Canada or any other country in world, are exempt from this reporting requirement. And this is what should get us as angry as hell, when you see that he’s got women with disabled children and grandmas staying up at night worrying. Geithner, the tax cheat made Treasurer, could just say, hey we “need to avoid burdening unreasonably a person” with our reporting requirements and wave his magic wand and say, “FBARs be gone!” and this nightmare would be over. There is a special hell …
Thanks. That’s brilliant response to my last comment; I laughed my head off. But I’m weeping on the inside.
Congressman Carter is my new favourite hero. I’ll add him to my list of allies who need to hear about our plight. Bravo and good work.
When ever I hear Senator Carl Levin’s name and Bank Secrecy Act in the same story, I pay attention. I have seen their work before and the serious collateral damage they do, with what seems to be one good intention, but due to the DOJ, IRS and Treasury bureaucracy always gets misdirected to many unintended targets.
Here is a link to the recent story on NPR, Morning Edition. DOJ wants Banks to be Quasi Cops.
Take the FBAR report, that they took of the shelf of the Bank Secrecy Act, where it was molding and dusty from disuse, and then suddenly applied it with draconian penalties against Americans long time resident abroad, or new immigrant to America who were not informed that they had to report their accounts back in their homeland. This was always represented as going after Rich Tax cheats, but the impacts were more on average middle class Americans and benignly innocent immigrants.
Look at FATCA, the Worst Law ever passed that Most Americans have never heard of, that is causling all kinds of collateral damage around the globe, where they are unilaterally requiring banks (actually ALL financial institutions) to act as Quasi Tax Spys for the IRS and collect a broad range of data on “US persons” living around the globe and turn it over to the IRS. Americans have become pariahs, and financial institutions are looking for ways to avoid investing in America as a result. Those renouncing their citizenship as a result of this act alone, should surprise no one.
I am sure, there is way more to this story than superficially told here. I say that, as much as I love NPR, I have learned how poorly they covered the IRS offshore Jihad that started in 2009 (totally got the story wrong), and how they have ignored the FATCA story which was passed in 2010 buried in the HIRE Act. If you want to know what FATCA is, you will have to start googling, but you won’t find it on a search term on NPR or PBS. Sad.
One benefit of this story, at least it will make me investigate more to learn the Real Story of what they are doing, and discover what the collateral damage will be. Given the history of FBAR and FATCA, it will not be insignificant. So it goes.