For transporting us beyond Seas to be tried for pretended offences … Accusation against King George in the Declaration of Independence
The Trial of all Crimes, except in Cases of Impeachment, shall be by Jury; and such Trial shall be held in the State where the said Crimes shall have been committed; but when not committed within any State, the Trial shall be at such Place or Places as the Congress may by Law have directed. Article III, section 2, United States Constitution
In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the Assistance of Counsel for his defence. Sixth Amendment
In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law. Seventh Amendment
I returned to Canada in 1994, finished my PhD in 1996, and began to work a little. Eventually, my much more successful wife and I were able to come up with some savings: RRSP, TFSA, investment accounts, etc. It is a good life here in Canada, and that is nice, since I had a really late start.
Enter FBAR, a United States law that requires me to inform the Treasury of my bank accounts. I’ve never filled one out. What if the United States government wanted to fine me 50% per annum of the balances in my bank accounts? Do I not deserve a trial by jury of my peers in the district wherein the pretended crime was committed? I seriously doubt that an Ontario jury would find me guilty of failing to file FBARs nor would it find that I had done anything deserving of fines payable to the Treasury of the United States.
According to the United States, I don’t have a right to trial by jury in the district where the crime took place. The trial would have to take place in Washington D. C. in violation of my Sixth Amendment right. I maintain that the “crime” of not filling out FBAR occured here in Ontario, where I have lived since 1994. But the United States federal government has no courts here. Nor is the United States able to compel a jury to try me here. I guess that ends the story. To make me appear in Washington, would be the same as King George transporting colonists to Britain for pretended crimes.
In Washington, I would not get a fair trial. Let’s face it: what jury in the District of Colombia would ever take my side? Their jobs and livelihood depends on the success of taxation and the laws associated with it.
So I propose to you this: Against Americans living abroad, the FBAR law is not enforceable in a constitutional manner. To enforce it, the United States would have to commit the same kind of tyrannies that the King of England perpetrated against the thirteen colonies:
The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States.
I agree.
IRS learned tyranny well from King George.
I don’t understand. If the IRS wants Americans who live abroad, dual citizens and greencarders to join the FBAR program,why: 1 They did not advise them by every means and in advance about the program and 2. Why they are keeping them out by threatening such abusive penalties if they show up? It doesn’t make sense…
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A good article on FATCA at http://www.businessinsider.com/the-despicable-truth-emerges-about-fatca-2012-2. It articulates why US makes laws ambiguous. How can any business owned by an expat plan based on such unambiguous laws and threat of huge penalties
@Bharat: Thanks for the heads up.
Bharat
Are you an expat from India? I am sure there are a lot of expats in Bangalore/Bombay and Delhi. How are they handling this mess?
@Desi, I am expat. I was born in India worked for few years and moved back to India in 1995. I am in the process of filing back taxes and relinquishing US citizenship. It is a nightmare to collect data from banks due to poor computerization. Indian expats unlikely to owe any taxes, since US is tax heaven compared to India. Now little better, but just few years back one would be in 10% tax bracket over US$ 2.5k dollars and 30% tax bracket for making over US$6k. I could have got large tax refunds for child tax kids and tution fees. It is impossible to find a qualified adviser to file US taxes. Most people just ignoring or ignorant about FBAR. I myself came to know recently when I am in the process of regaining Indian citizenship to start a defense related business.
Bharat,
can you get the indian citizenship and then relinquish US citizenship or you need to first relinquish us citizenship to get the indian citizenship. you may be a OCI or a PIO now i think. As for qualified tax advisor’s in India i see kkassociates in pune. Have you interacted with these folks? Is there a way to reach you?
@desi: You must give an undertaking under oath that you will relinquish all other citizenships when Indian citizenship is granted. Now I am in the process of gathering bank information and then contact some tax experts. I feel my taxes are straight forward by using taxes I filed with Indian income tax department. But getting bank statements for FBAR is a nightmare. Banks provide 16A forms for interest income, but I and my wife have signatory authority over our aging parents and their small businesses. My kids also have accounts as they received property and money from grand parents. Indian taxes are so high that I read somewhere some Indian expats accumulated over US$100,000 foreign income tax credit on form 1116 over few years.
Bharat: There are so many who have inadvertently caught in this mess. I know almost all my friends have either invested in properties or had inherited some and most cases they cannot convert INR to USD due to the way the govt has currency controls. As for FBAR, since it is reporting, if you cannot get all the precise records but report a higher amount, you should be fine. Are there any CPA’s you suggest in India one could talk to?
@desi: I am living in a remote part of India and learned about FBAR recently. So I am also looking for a good CPA to do my taxes for six years.
@Petros pls search for and read any Canadian statutes or jurisprudence that have to do with Canadian recognition (and/or non-recognition) of foreign judicial judgements as well as those statutes or jurisprudence pertaining to interpretations of foreign judgements by Canadian courts.
@markpinetree: It is more than clear why the law is made. The greatest threat to any Republic or democratic form of government is “new” wealth. Ross Perot and Donald Trump are perfect examples of how what is a VERY tiny amount of wealth, a few million dollars for Ross’ campaign, can shape US history. This is not acceptable to the powers that be. When 50-100 million dollars can buy you the top job of a government that has a budget of 2 trillion, it is beyond stupidity to assume that this government is not actively seeking out and eliminating threats to it’s power.
So to prevent the very real threat of an American going abroad, earning tons, then returning and running for President with millions of dollars behind him, they have created a system that ensures that first any Americans abroad will break dozens of laws in the process of earning wealth even if not intentionally, and second the inability for those who renunciation to regain citizenship makes them unable to come back and use millions to sway the system so then they are contented, although they still publicly shame those individuals who do renounce and I am sure those lists of names are handed on to certain departments for scrutiny.
*After spending several hours going over info about FATCA ect. I failed to find any info about a couple of questions.
1. Regarding normal bank savings accounts. Are those required to be reported, regardless of the amounts? Or is their some threshold amount?
2. How about property such as a condominium? Simple ownership and no corporate connections. Are these required reporting.
3. What would you do if the fines for joining OVDP program were excessive and beyond your ability to pay? Quite the conundrum that.
Thanks, Edy
@Eddie…
First, let me give you the best comprehensive comparison list related to what is required by both the FBAR and FATCA forms. It was done by Hale Shepard, and I would say he is one of the foremost experts in this area.
Here is the link.
FATCA Form 8938: Demystifying the Complex Rules and Severe Consequences for Noncompliance, by Hale Sheppard
Quick answers, but don’t take my word for it, or anyone’s word on a blog, without confirming for yourself.
1. Yes, if you exceed the highest aggregate amounts for the FBAR and/or FATCA form you are completing. The account type doesn’t matter, it is the total amount that does. $10K, is the amount for reporting on FBAR and $50K is for reporting on FATCA (when that threshold is hit is different for each form.)
See table at end of Hale’s missive. Page 31
2. No
3. Well, first of all, you should NOT rush to join the OVDP, without doing a lot of personal drudgery and know your various options. If you got so trapped into that program, that the penalty amounts were prohibitively high, and your sin was more benign “non willful failures”, rather than egregious willful evasion, then “Opting Out” at that stage, would probably be your best option for lower penalties under IRM discretion. However, if you were forced to pay the full OVDP penalty amount, heaven forbid, the IRS has payment options that can be worked out.
But, let’s back up and review what your options are, if you are just now making the discovery that you have a problem offshore account problem.
Below is just a quick option list, that I have borrowed from another source. It does condense down some of the key considerations you have to make. Each comes with its own risk, and I don’t have time to elaborate on each item tonight.
If you are an Americans Abroad you could consider one of these seven options at this stage.
1. Do nothing at all and hope never to found, (however, see this.)
2. File going forward and hope that the IRS, US Treasury and Department of Justice do not ask about the past, (if they do, you would go through a standard audit, with penalties applied as provided for in the Internal Revenue Manual, IRM Agent discretion applies.)
3. File the past returns and FBARs “quietly” by mail with the IRS without otherwise alerting the IRS, (see note below)
4. File the past returns and FBARs with the IRS and include a written explanation of reasonable cause for not filing earlier,
5. File under traditional “voluntary disclosure” and negotiate directly with the IRS,
6. File under the “OVDP” (the Offshore Voluntary Disclosure Program) and pay a substantial penalty based on the maximum value of financial accounts (typically 27.5% of the maximum value of financial accounts in any of the previous eight years), (You might want to read a case study of what it is like to go through this nightmare, before you consider it.)
or
7. File under the new “streamlined approach” for the overseas American.
Each of these seven options carries different levels of risk and/or penalties. They need to be carefully evaluated before rushing to chose any one. They are all individually fact driven, based upon your own unique circumstances. You may need help evaluating them by a professional practitioner, and they aren’t cheap.
Let me add a couple other considerations.
Of course, there are those practitioners who strongly feel that the quiet disclosure route is NOT an option since the IRS warns against it, so if you prescribe to that view, than that would negate number 2.
I would also add item 8, and consider renouncing your U.S. Citizenship and not returning to America. That might be an option for the long term American abroad rather than meet the onerous compliance requirements. The IRS does not make your choices easy..
Finally, when it comes to getting professional help, I would only say that a person needs to do as much personal Drudgery as possible first, so they know the subject and options well, before approaching a professional who might put their requirement to generate fees head of the your need for good risk assessment.
It is a buyer beware world out there when choosing a good practitioner. Knowing the subject and options even semi well, helps make a consult a collaborative effort, not just a fee generating, wealth creation program for the practitioner.
So, Eddie, sorry that I am not giving you easy answers. Lots for you to mull over, and best wishes. I was there once, and so probably have a pretty good idea of the dilemmas you face. It is a complex subject to get your mind around, but you can do it!