28 thoughts on “The @USTreasury has the power to relax #FBAR requirements on #Americansabroad, but it will NOT”

1. “FinCEN does not believe that an exemption is appropriate simply because a United States person chooses to live outside of the United States.”

   A so-called “United States person” who was raised in another country since infancy did not “choose” to live outside of the United States. What exactly do the Feds not understand? They abhor the logical concept of residence so much.

2. I should not report these accounts because they are not foreign, relative to where I live. I should not have to report them for the same reason that US residents do not have to report US accounts to the IRS.

   Citizenship – based taxation is clear over-reach on the part of the only country that can wield enough power to attempt to enforce it. But it’s all quite hypocritical because the US would not accept taxation of US citizens in the US by other countries. And the US is becoming the world’s tax haven.

   Many countries now require a measure of disclosure of foreign accounts. But in all cases this concerns local résidents. In this case, they really are foreign accounts, i.e. outside of one’s tax domicile. In this line of thought, FATCA is just an invasive way a country has to control its resident taxpayers (so they cannot escape taxation). This is a country’s choice.

   But the US, as is usual, has taken extreme measures, bullied them upon foreign countries and institutions. But it also has that little quirk that is CBT so that FATCA has exploded in the face of US persons residing abroad.

   So why do I not support Democrats Abroad fight for “same-country exemption”? Because if you live in the EU, for instance, you often have accounts in 2 different EU countries for various reasons (like having accounts in New York and New Jersey). “Same-country” or “Safe-Harbor” should in fact include ALL people who RESIDE abroad (the US could set rules, such as residing abroad for at least x months).

3. Yes, Fred, I agree. My only “foreign” account is the one I have in the US. The rest are just down the street.

   US expats should not have to pay US tax. The root problem for all of this is CBT. Move to RBT and the problem will be solved. Without CBT, there is no need for FBARs.

   Given that we live in a CBT world, though, FBARs for bona fide non-US residents are a major problem and should not be required. The US taxes INCOME not ASSETS — as long as one reports the income, what good does reporting the asset do? Plus, what’s reported (maximum balance) makes absolutely no sense. If money moves from one account to another, then it shows up twice. There’s not enough information for the IRS to tell whether the income reported on the return is actually reasonable for the amount in the account. If the balance was $100,000 for a day (say because I was transferring money to buy a house), it would be on the FBAR at $100,000 but there would be almost no income. So, IMO, there’s no justification for the outrageous violation of privacy. Given the level of (in)security at the IRS’s data centres, I am very nervous about the amount of information they collect about individuals’ financial accounts.

4. For resident EU citizens it’s quite frankly none of the US’ business what I do in the EU or with whom. I certainly won’t be filing any of these forms.

   Once the IBS Canada lawsuit is fully funded, the focus needs to move over to the EU to start funding to get FATCA/IGAs in front of the EoJ.

5. “Comment on specifically why you believe (if you do) that Americans abroad should NOT have to disclose their “foreign bank accounts” to the IRS.”

   What is an “American abroad”?

6. @kitty. You have shed light on this.

   I do believe that Americans abroad should have to follow these absurd rules from their government. But now we must define Americans abroad.

   Ginny and Gwen are not Americans abroad.

   I would define american abroad as any us passport holder overseas who is living overseas based on the visa affixed to a us passport.

7. Another point is that when the law was passed the secretary had the authority to index the ten thousand and exempt countries with robust aml and kyc

8. FinCEN does not believe that an exemption is appropriate simply because a United States person chooses to live outside of the United States.

   Of course not. Slavery and oppression seems forever in the USA’s DNA (FINCEN one of the strong arms) and the country is anything but the land of the free.

9. Accidental Americans – You Have Not Been Forgotten! March 1, 2016 in Virginia La Torre Jeker J.D.’s “Let’s Talk About: US Tax”

   Details of the Proposal

   The 2016 Budget Proposal exempted certain individuals from both (i) annual US worldwide income taxation and (ii) taxation as a “covered expatriate” under the Exit Tax regime of Code Section 877A.  (Note – No mention was made of exemption from the punishing taxes imposed on US recipients of gifts or bequests from “covered expatriates” under Code Section 2801).

    The Administration’s proposal  provided as follows:

   “[A]n individual will not be subject to tax as a U.S. citizen and will not be a covered expatriate subject to the mark-to-market exit tax under section 877A if the individual:

   1. became at birth a citizen of the United States and a citizen of another country,

   2. at all times, up to and including the individual’s expatriation date, has been a citizen of a country other than the United States,

   3. has not been a resident of the United States (as defined in section 7701(b)) since attaining age 18½,

   4. has never held a U.S. passport or has held a U.S. passport for the sole purpose of departing from the United States in compliance with 22 CFR §53.1,

   5. relinquishes his or her U.S. citizenship within two years after the later of January 1, 2016, or the date on which the individual learns that he or she is a U.S. citizen, and

   6. certifies under penalty of perjury his or her compliance with all U.S. Federal tax obligations that would have applied during the five years preceding the year of expatriation if the individual had been a nonresident alien during that period.”

   Many individuals will not qualify for the benefits of this proposal because the tests are very stringent.  For example, the individual must have attained his dual nationality at birth – he must have been born both a US citizen and citizen of another country.  Obtaining another country’s citizenship by naturalization will not count. In addition, the individual must never have held a US passport, or, if he did, it must have been for “the sole purpose of departing from the United States in compliance with 22 CFR §53.1” Generally, the referral to 22 CFR §53.1 deals with a US citizen’s entry or departure from the US.  Section 53 provides that it is unlawful for a US citizen to enter or depart, the United States, without a valid US passport, unless an appropriate exemption applies.   The Administration’s proposal limits eligibility for those who hold a US passport. The proposal permits obtaining a passport only for “departure from the US”.  Due to the passport limitations contained in the Administration’s proposal, it will be feasible for only a handful of persons.  Specifically, the proposal can benefit one who has never had a US passport (in my practice the dual nationals I have met have all held US passports at one time or another), or one who obtained a US passport as a child after being born in the US strictly so that he could leave the US with his parents in order to return to their homeland. 

   While the Proposal in its current form is untenable for many “Accidental” dual nationals, I believe it’s still a good sign.  Resurrecting the Proposal in the 2017 Budget gives us hope that future laws may indeed recognize there is a difference between a “technical” and “formal” definition of US citizenship and a substantive or meaningful definition, the latter of which is the only one that should attract “citizenship-based” worldwide US taxation.  

   Some *born dual* cannot meet qualifier #5.  Lop off #5 and #6 as a start to some fairness for Accidental Americans.

   Inch by bloody inch to getting to RBT as the rest of the world.  If CBT is to remain, something must change so a non-meaningful  for that person US citizenship is not automatically ACQUIRED — it should only by by informed CHOICE / CLAIM when an adult and that person *born dual* having *requsite mental capacity* to make such an informed CHOICE.

10. How can FinCen be allowed to “believe” anything? Whose beliefs do they reflect? Certainly not those of the people most adversely affected by FBAR, the very people they’re supposed to be working for.

    Besides that, FBAR exemptions for non-residents will only result in a nicer CBT.

    They may as well said:

    The US government doesn’t believe that an exemption to US taxes is appropriate simply because a United Stated person chooses to live outside the United States.

11. This shows that discussion about this was going on at the US Treasury since 2011 at least. Here we are, five years later, with no apparent change in their position at all, despite the outcry that surely must have reached their ears by now.

    Why should I have to tell the US government about everything I possess just because I live somewhere else? Why should I have to tell the US government about everything *my husband* possesses just because he shares his possessions with me? No other Americans are required to do this. Why should I be? That’s my simple reason “expats” should be exempt from filing FBARs.

12. Further to what Bubblebustin posted above, until US persons who live abroad are exempted from US taxation on their so called “foreign” income, they will most certainly not be exempted from FBAR.

13. Treasury’s prevailing attitude seems to be that by choosing to live outside the US, Americans are voluntarily subjecting themselves to FBAR requirements, just as leaving the US subjects us to double taxation – but only by the host country. It would seem that the only solutions offered by the US to the problem of double taxation is to either stop paying taxes where we live, to choose to live in the US, or to renounce US citizenship.

    With only those choices (with the possible exception of suicide) it’s becomes pretty clear what a human rights violation CBT is, when the choices are to either violate local law, displace yourself, your families and your livelihood, or to renounce the very thing you wish to preserve (the last choice the most Stalinesque of all – “no person, no problem”).

14. Karen – “US expats should not have to pay US tax.”

    And herein is also my argument. As a Canadian born citizen married to a US born spouse, I do not feel that she should have to pay taxes to a foreign government. She should not have to pay for benefits that she no longer has or uses. She should not have to pay taxes for roads that she does not drive on, for schools that our kids do not attend, or inferior (payer) healthcare that my family does not even use. We do not live in the United States; We live in Canada, we pay our taxes to Canada because that is where we reside, where we drive on roads, where our kids go to school, where we receive healthcare.

    My wife’s bank account is local to her, not foreign, because she lives in the same country. in the same province, in the same city as the bank that she utilizes. And it disgusts me that she has to “lie” to be able to utilize financial services in the country of her residence because the country of her birth has exacted a toll on her citizenship that tattoos an invisible tattoo stating “Property of the United States”.

    I will not concede to the United States, I will not allow my kids to go hungry because “Uncle Sam” wants his cut of what my wife makes. I will not allow Uncle Sam to grab money out of my wife’s pocket because he over-spends and looks to his citizens abroad to make up the money. I will clothe, feed and put a roof over my family first as a proper parent should and should he come knocking… My middle finger is raised:

    F*** YOU! UNCLE SAM!!

15. Karen re: “Without CBT, there is no need for FBARs ”

    One might presume, but does anyone know this for sure?

16. Automatic exchange of account information takes place between RBT countries, but nothing equivalent to FBARs, as far as I’m aware.

    Banks in the UK at present have to think about FATCA, CDOT (Crown Dependencies and Overseas Territories Agreements), CRS (Common Reporting Standard), and the DAC (EU Directive on Administrative Cooperation – sort of a EU implementation envelope for CRS).

    Fortunately for the banks, who must be wishing they were dead, CDOT is due to disappear sometime soon, leaving only FATCA and DAC/CRS. Unless the UK votes to leave the EU, in which case I suppose a separate UK-EU CRS agreement will soon show up.

    No FBARs, though, for non-US jurisdictions.

17. ‘The 2016 Budget Proposal exempted certain individuals from both (i) annual US worldwide income taxation and (ii) taxation as a “covered expatriate” under the Exit Tax regime of Code Section 877A.’

    That is far from sufficient.

    A person who learns at age 16 that they’re a US citizen by infection from a parent’s birthplace has to renounce US citizenship between ages 18.0 and 18.5. They have to get an appointment during that 6-month period at a US consulate whose backlog might be measured in centuries.

    At age 16, they might already have been delinquent in FBARs for the past 15 years.

    They can’t visit the US because they’re not allowed to get a US passport for the purpose of entering the US, only for the purpose of exiting the US. Better take their spring break in Cuba not in the US. Better not visit their grandparents who still live in the country where their infection-passing parent came from.

18. Norman: Yesterday I calculated the approximate length of time it would take the US consulates in Canada (at the current snail’s pace) to deal with the backlog of my conservatively estimated number of would-be renouncers in Canada alone. The result was 157 years!

19. It would appear the US government has a double standard when it comes to the term “timely” which we know the IRS is so fond of. In the case of a tax filing, it means “on or before the due date”. In the case of processing would-be renouncers it means “we will take lots and lots of time”. (Not to mention lots and lots of money!) This may well be the only revenue that FATCA ever rakes in.

20. The reason the apparatus of government won’t relent is the following:
    1. They are all socialists who believe in world government and would like to impose the U.S. Government rules on the world.
    2. They apparatus of government revels in regulation of the world and moving paper around so that every job that exists keeps going.
    3. Every person in the U.S. Government belongs to a government loving Union. They pick whomever they want to be elected and donate large money to that person and then that person doesn’t have the power to resist them when they want more money.
    4. They all love the Marxist Income tax and wouldn’t change it if God almighty revealed to the world a better system–they resist because in a Christian country they are dominated by their Muslim bosses and if the boss are not Muslim they are atheists.

21. Headline: “The U.S. is making millions from Americans tossing their passports. Government makes $12.6 milion in fees from the 4,279 renunciations.”
    http://www.wcyb.com/news/money/the-us-is-making-millions-from-americans-tossing-their-passports/38075710

    Calgary, I agree that there is a possibility that the US will go to RBT — though the govt./Treasury are dragging their feet. I say this bc I heard it last November at a meeting of lawyers in Central America. I talked to someone from a US libertarian think thank that has the ear of people in Congress. (Sorry I can’t name names but I’m not authorized). When I asked what were the chances of repealing FATCA w/a Republican President and a Republican Congress (i.e., should this happen after the upcoming elections), he didn’t think that they were good, though he himself would like to see it repealed. What he did say, to my big surprise as I had not asked about this, was that there was a far greater chance –in fact, a good chance– of instating RBT, bc it is already being debated in some circles in Congress — all Republican. I don’t know if this an offshoot of the Republican lawsuit. Perhaps it is… Anyway, I think it’s noteworthy bc US should go to RBT ASAP… Now, how does that jibe with FinCen’s view, I don’t know. But if Republicans are in charge, this may yet happen. If Hillary wins, uh-oh, we have to brace ourselves…

22. Sally1,

    Thank you for passing that tidbit of possibility you’ve heard along to others of us here at Brock.

    We must keep the pressure on — fight the fight — stand up as witnesses to what is happening for ourselves and our families. Justice must prevail.

23. @Sally 1

    That’s a hat trick of good news in the last 24 hrs, thanks!

24. AICPA Recommends Changes in IRS Offshore Voluntary Disclosure Program

    http://www.accountingtoday.com/news/tax-practice/aicpa-recommends-changes-in-irs-offshore-voluntary-disclosure-program-77453-1.html?utm_medium=email&ET=webcpa:e6272644:2650127a:&utm_source=newsletter&utm_campaign=daily-mar%2011%202016&st=email

25. http://www.aicpa.org/Advocacy/Tax/DownloadableDocuments/2016-03-09_AICPA_Comment_Letter_Proposed_Revisions_to_OVDP_and_Streamlined_Programs.pdf