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.
Marco Marcus Arelius ;
There is nothing in the IRS’s powers under FBAR that gives the US the extraterritorial power to “…take control of your account and block your access to your savings….”… when those accounts are not US sited accounts, i.e. they are held outside the US and the owner of the accounts is also not a US resident.
Right, it’s in the bank’s power under QI and IGAs, not in the IRS’s power.
But so what. The IRS has never been limited by statutory, constitutional, or court-ordered limits on the IRS’s power.
@Norman, he cited FBAR powers. There are no FBAR powers to confiscate non-US sited account held outside the US.
Wake up…it is happening…US citizens abroad have had their accounts put in escrow…until things are sorted out, (you pay the penalties), with the IRS.
Forget the constitutional manner…Foreign Financial Institutes worldwide have signed up enmass, or suffer 30% penalties on US Source income and face bankruptcy. Here in the UK, to circumvent the Data Protection Act, HMRC, (Her Majesties Revenue & Customs), received from UK FIs lists of American citizens living in the UK along with their bank account numbers and balances. HMRC passed this info onto the IRS at the ‘annual’ US/UK Inter Government Agreement meeting. This will be done automatically in future.
Should the IRS not receive your FBAR, they now have your banking information and the infrastructure to take control of your overseas, (high street bank), account and block you having access to your savings.
MMA – you’re a little late with that news flash. HMRC has been reporting USC accounts to the IRS for several years now.
Don’t worry – the IRS can’t touch your UK account. USCs in some IGA Model 2 countries can find themselves in a very difficult situation, but the UK’s IGA is Model 1 which gives no FI or taxing agency any power to touch your savings.
It’s not because the UK loves you and wants you to keep your money, it’s because the UK wants account info from the US. Some of which it’s getting. If you have any US accounts, that’s what you may need to be worrying about – not your UK accounts.
“he cited FBAR powers. There are no FBAR powers to confiscate non-US sited account held outside the US”
We agreed that it’s not in the IRS’s powers, but there are at least 3 reasons why that doesn’t stop the US.
@Norman. The US can impose FBAR penalties on the non-US accounts of a non-resident deemed UStaxableperson, but it cannot actually freeze or confiscate their UK bank account in order to force payment.
@MMA, the US IRS cannot put the UK accounts in escrow. Only US sited accounts or property would be at risk.
Further to the question of whether the IRS can freeze non-US sited accounts in collection, and specifically in the case of FBAR penalties;
https://www.bragertaxlaw.com/docs/foia_-_cpe_topics_binder.pdf
Look up MCAR. Says nothing about UK accounts. Says nothing about an ability to freeze or put into escrow non-US accounts sited outside the US.
https://www.bragertaxlaw.com/docs/foia_-_cpe_topics_binder.pdf
Look at comments about assistance in collection restrictions if the USP is also a citizen of the other country in which they are resident.
@badger,
Thank you for the links, they provide very interesting information.
It does state clearly that some countries, according to their tax treaty will not help collect from their own citizens.
Moreover, it examines the cases where IRS could retrieve their estimated tax debt from a foreign bank account : I understand this could happen if – for example – the european bank in which the account is open has a branch in the US (hence same legal entity), AND the account was initially opened in the US. Under different circumstance, IRS would have to act under local law, and not US law, to seize an account held by a double-national who opened its account locally.
BUT, the US could nevertheless send a notice to the bank (its US branch) stating that the considered person is non-compliant with the IRS, and that the commercial relationship is tainted with helping someone to evade taxes, and impose penalties to the bank. As a result, the bank would most probably close the accounts, and it may become difficult for the person to open an account anywhere if listed as non compliant tax evader (compliance officers in banks receive lists of persons they should not accept as customers).
So then the question is to what extent the local country would support the dual-citizen to get baking services while owing taxes to the US? even if they do not assist with the collection, this question remains, because it would probably be an embarrassment to the government.
“compliance officers in banks receive lists of persons they should not accept as customers”
Do they? Which banks? Who compiles the lists?
An interesting statement in the IRS MCAR information at https://www.irs.gov/irm/part5/irm_05-021-007r
And vice versa, presumably, since Mutual Collection Agreements are reciprocal.
Duals are thus safe from the IRS while resident in their other country; and safe from the tax agency of their other country while resident in the US.
Though it’s still true that having an assessed IRS debt hanging over one’s head could bring other uncomfortable risks, esp. to do with renewing a US passport.
Avoid assessment, is one solution (i.e. don’t file US tax returns).
@Juliette
“the european bank in which the account is open has a branch in the US (hence same legal entity)”
My admittedly limited understanding is that such banks are never the same legal entity. It is a separate company in each country. Certainly the Canadian banks operating in the US (BMO, TD, etc.) are quite independent of their parent companies. They market themselves to Canadians as one big bank, with “free” cross-border ATM withdrawals and transfers (don’t worry, they make it back on the exchange rate) and common logos, but they are not the same company. So the IRS cannot simply go to a TD branch in the US and say “send us all the money in this TD customer’s account in Canada.”
I assume it’s the same in Europe and elsewhere.
Banks in Europe can get in deep trouble over money-laundering misbehaviour by a branch located in another country – HSBC and the Mexican drug cartels being the prime example. Accounts could probably get frozen in the process. But a bank wouldn’t have the power to steal a customer’s money on behalf of the IRS.
No they wouldn’t.
But for those needing reassurance, dig a bit into what those global banks are. I’m fairly certain there are no “branches” operating in other countries, but rather smaller yet independent subsidiary companies operating under local banking laws.
That’s like going back for the third time to check you locked the door. European banks can’t give a customer’s money to the IRS. They can’t even give it to the local tax agency. Though the local tax agency can give the customer’s tax money to the bank, if told to do so by the local government.
I’m not worried about it, but some folks seem to need convincing, because the issue always comes up.
I don’t know – with kids and grandkids I always assumed it would be counter-productive to dwell on imaginary dangers. A glance at one’s bank’s t&c should be sufficient to check that one’s cash is legally protected and backed by an adequately regulated guarantee.
@Nonominous – indeed the case is completely theoretical –
Very few people are concerning by having opened an account in a US branch of a european bank which is afterwards transferred to Europe – could be the case for someone who made a temporary expatriation to the US and then came back to Europe, or for green card holders. And even then, I don’t see how thy would not be protected by local law.
So indeed the risk is not so much seeing the IRS seizing european bank account but what is somewhat happening now – tentative exclusion by banks of customers who have visible signs of US-citizenship. (In Switzerland, USC have to prove that they are compliant with IRS to get a bank account as I have heard from a relative who lives there.)
I renounced anyway. Had told my bank I had lost USC though naturalization when they asked a few years ago. little or no cash anyhow.
@plaxy, re MCAR, there was something similar in these IRS documents and correspondence obtained via FOIA, https://www.bragertaxlaw.com/previously-unreleased-irs-guidelines-for-fbar-audits.html but I can’t quite remember which one it was. Usual caveat – not an endorsement of the services or owner of the website they’re from.
“So indeed the risk is not so much seeing the IRS seizing european bank account but what is somewhat happening now – tentative exclusion by banks of customers who have visible signs of US-citizenship. (In Switzerland, USC have to prove that they are compliant with IRS to get a bank account as I have heard from a relative who lives there.)”
This is the difference between banking in a country which has signed a Model 1 IGA (includes all the EU Member States) and banking in a country which has signed a Model 2 IGA (includes Switzerland).
Under Model 1, the banks report to their local tax agency and are not at risk of the 30% withholding penalty. They’re not that worried about USC customers, as long as the customer signs a W-9 and provides SSN.
Under Model 2, the banks report direct to the IRS. They’re more worried about USC customers, from the reports I’ve seen.
badger – it was your link above that (indirectly) led me to the MCAR site. The first link I followed was broken, so I googled MCAR and found the one I’ve quoted above.
For which I should have added a caveat – the page was dated 2014. Things can change very suddenly in IRSland, as we’ve repeatedly seen. And not in a good way, that I’ve ever seen.
@plaxy this was the one that mentioned MCAR https://www.bragertaxlaw.com/files/sbse_global_collection_issues_2009.pdf pgs, 11-13
@plaxy, you’re right about the importance of keeping in mind that things change over time, as you said; “…Things can change very suddenly in IRSland, as we’ve repeatedly seen. And not in a good way, that I’ve ever seen….”. All we can do is always note the date of the info, and try to verify older information. And I remember a mention in one of the Taxpayer Advocate reports and on some compliance site (comments on a Jack Townsend blog post?) that the IRS kept changing the OVDI/P FAQs and only some screenshots helped establish that they had done so and what the changes were over time. This isn’t the source I was thinking of, but this is a prime example of how things changed (without warning) over time; http://www.assetlawyer.com/category/faq-35/ (again, caveat, this is not an endorsement of the services or source).
badger, that is interesting. I wouldn’t be surprised if that FAQ 35 switch was what happened to Dewees.
“A glance at one’s bank’s t&c should be sufficient to check that one’s cash is legally protected and backed by an adequately regulated guarantee.”
One can read US statutes and regulations (and constitution, not being deprived of property without due process of law, except for legal amounts of taxes). One might think one’s cash is legally protected and backed by an adequately regulated guarantee. The only thing the IRS has to do is tell Tax Court to dismiss a case. The only things the DOJ has to do is tell other courts to dismiss a case, and tell other courts to destroy a witness’s notarized declaration and destroy other briefs. In such cases, no court will uphold a law or regulation (or constitution). The guarantees aren’t worth the parchment they were inscribed on.