Fifth Amendment: Belated FBAR filings are a substantial hazard

21 thoughts on “Fifth Amendment: Belated FBAR filings are a substantial hazard”

1. Do Canadian privacy laws constitute a privelige?

   Would refusing to identify an employer without his/her permission on Form 2555 be defenceable
   in dealing with the IRS

2. Also, it occurs to me that requires that police inform a person that they are arresting of the Miranda right to remain silent. The FBAR form should have a similar warning: “You have the right to remain silent. Anything you write on this form can and will be used against you in a court of law.”

3. Petros,

   Your readers need to be aware that they must exercise EXTREME caution before invoking the 5th Amendment protection against self-incrimination. The argument in the article you cite is quite nuanced and can easily be misconstrued.

   The US Supreme Court has said that the 5th Amendment extends only to a taxpayer’s refusal to answer questions in the return, and does NOT constitute reasonable cause sufficient to justify a taxpayer’s refusal to file any return at all. The appropriate case is Garner v. U.S., 424 U.S. 648 (1976).

   Roy

4. @Roy Thanks for this excellent response.

   Let me understand: By what you are saying, you would prefer that readers of the Isaac Brock Society tacitly waive their constitutional rights by complying with unconstitutional demands of FBAR?

   The first thing I would respond is that you refer to Garner. But that of course applies to the tax code. A person cannot refuse to file a tax return on Fifth Amendment grounds. But in what sense is FBAR analogous to a tax return? As you know, the Bank Secrecy Act is not part of the Internal Revenue code and it is aimed at detecting money laundering, criminal tax evasion, and terrorism. If that is the case, every person required to fill out an FBAR has a prima facie Fifth Amendment argument against filling out: If the only reason the government needs the information is to detect a crime, not to collect taxes, then the government is only collecting the information in order to incriminate us. That is the information’s only useful purpose. Thus, we are essentially waiving both our 4th and the 5th amendment rights when filling out the FBAR. Furthermore, since our accounts are in a foreign jurisdiction, we are the most likely ones to incriminate ourselves by filling them out. But now the only crime that we’ve committed is the failure to file, so that the inherent flaw in the FBAR law is the potential criminal penalty itself. It is thus inherently unconstitutional in its demands.

   Yeah, sure everyone should be extremely cautious. Perhaps in your view, we should enter the OVDI and just hand over a part of our wealth to government. Or we should fill out the FBARs on a go forward or quiet disclosure basis and thus give the government the ability to assess up to 50% fines and potentially charge us with criminal penalties. I think under these circumstances, my decision to not file FBAR is actually the more cautious route. I rely not only on my Constitutional rights, but upon the protection of the Canadian government in its decision not to collect FBAR fines. Furthermore, now that I am no longer US person, I cannot be expected to file these illegal forms going forward.

5. @Petros

   I am beginning to think there are an incredible number of people who have FBAR issues both in and outside the US especially when take into account things such as RRSP’s. I think everyone is still thinking in terms of Bank Accounts not RRSP’s on this issue.

6. No one as advocated not filing a return for fifth amendment reasons.

   non resident US citizens are subject to the national laws where they live

   If the US imposes tax law etraterritorialy, constitutional protectections should apply in the same manner

7. Rivka, to make matters worse, where I live, if a foreigner breaks a law, they will be singled out and punished MUCH more severely than a native Brazilian. I read about a case recently where a highly educated foreigner was not segregated from the low-life general population as the Brazilian law says must happen.

   Thank GOD!! I don’t have any FBAR issues where I would have to compromise other peoples’ financial details which could land me in prison here. This US policy is reckless and dangerous to any American living abroad. The last thing I want to do is rot in some 3rd world jail because I was trying to appease the US Treasury.

8. @geeeez This is where the 9th amendment comes in. You have the right to move to another country, marry a woman, have children, and obey the laws of your new country. Why? Because when our ancestors signed the US Constitution we reserved all such rights for the people.

9. @Petros, sadly, I can’t care about what’s in the Constitution because there’s a ways around every one of those clauses. That document only has “symbolic” value nowadays. If not, we wouldn’t be treated as we are.

10. @ geeeez Your pessimism does not daunt me. I will continue to point out every contradiction with the Constitution.

11. @Petros, I’m very proud of your determination. 🙂

12. http://abcnews.go.com/Blotter/romney-failed-disclose-swiss-bank-account-income/story?id=15447680

    Mitt Romney’s campaign is amending the financial disclosure form he filed in 2011 to acknowledge that a Romney trust earned interest income from a Swiss bank account, a detail that had been missing from the report.

    “An amendment is being filed to address this minor discrepancy,” a campaign official told ABC News in an email Thursday in response to questions about the apparent omission.

    Gingrich

    At the same time, questions from ABC News about undisclosed income that appeared on Newt Gingrich’s tax return have led Gingrich to announce that he, too, will be amending his financial disclosure report. Gingrich’s returns showed he received $252,500 in wages from Gingrich Holdings Inc. in 2010, but those wages do not appear anywhere on his presidential disclosure report.

13. Now i see Romney has left about $1700 as income and his UBS holding has been $3million. In addition he has other holdings in Cayman and other places. Now does this mean
    he is doing a QD or shouldnt he enter OVDI and pay 25% of $3million. In the big picture, for him 750k is not that big a deal but i do not think he is in the OVDI.

14. Hello,
    I’m a minnow for sure and I’m trying to understand and read this wonderful blog but I don’t know whether to sit tight or go ahead and find a cpa in Toronto to file 3 years at least. I’m 66, I have a U.S. passport and have been a landed immigrant since 1974. I have only RRSPs and nothing in bank accounts in U.S. I also applied for social security benefits and started receiving monthly cheques this year. I had no idea about all this transpiring. And unfortunately, I never became a Canadian citizen. Just lazy really, but with learning about all this I’m going to start the paperwork, assuming the 2 year wait for citizenship will get done before I have to renew my U.S. passport in 2014! Which I don’t want to do. I do have relatives and friends in U.S. so want to be able to at least visit once a year. My question is should I file or continue to wait for more specific info from IRS? Was there a deadline this year for U.S. expats filing? Any help or advice would be appreciated.

15. Welcome to this site, retired and scared.

    You’re on the right track. Read and research all you can here to come to your decision. It is great that you have decided to start the process for your Canadian citizenship so you can check out of the US!

    Dual citizens can / should probably wait for further IRS direction. As a US citizen Canadian resident, if I were you I would get US tax legal advice before starting the filing of back US returns. Some here will advise differently. (My biggest mistake was not going to a cross-border tax firm too soon.)

    You can view an educational presentation that was given by Moodys Tax in Calgary, Red Deer and Edmonton. Directions to get to the free presentation are at http://isaacbrocksociety.com/2012/03/19/us-tax-and-filing-for-canadian-residents-a-presentation-by-roy-berg-moodys-tax-advisors/.

    Anyway, lots of information for you here — and also, likely even more important, the support you need as many you discuss this with won’t really understand. We do all understand what you will be going through.

16. Retired & Scared. Welcome. Firstly Don’t think of a so called voluntary disclosure. They are a trap meant for criminals residing in the US.

    Secondly google ‘How not to be seen’ -a Monty Python skit on youtube. The message is ‘don’t expose yourself’ You haven’t been filing. Why start now?

17. A class action should be filed against the Canadian banks asking that they be enjoined under the Canadian Privacy Act from asking their depositors for information about citizenship and assets which will then be shared with the IRS. This is the crucial aspect of enforcement which is ahead of everyone. Once the banks start requesting and sharing this information, which is part of the FBAR plan, the IRS will be in a position to intimidate and pressure anyone who falls within those targeted catagories (for example, “born in the US”). set out in the FBAR regulations.

    We need a strong ambitious law firm to take this on. Unless there is a court order prohibiting this invasion of privacy and violation of sovereign Canadian law, all will be lost.

    ZEB

18. Pingback: The Isaac Brock Society - Fifth Amendment II: Two court cases of offshore account subpoenas

19. Both the Ninth and Seven circus courts have denied Fifth Amendment defenses on the grounds of the Required Records Doctrine:  See the latest at Jack Townsend’s blog.  My comment there:

    As an expat, I find the horrible state of law in the United States quite appalling. The ignorance of judges regarding the Constitution is appalling. The Constitution meant to protect citizens from the encroachment of their privacy from the too interested grasp of the federal government, has been trampled upon by Congress, the President and the courts. The Fourth Amendment is supposed to protect us from laws like FBAR and FATCA (8938) in which the government requires private citizens to hand over their private and personal information without reasonable cause or the name of the person. Thus, the FBAR and 8938 circumvent the 4th amendment and are the equivalent of general warrants which were abhorrent to free people in the English legal tradition.

    Now the only protection that is left is to claim 5th amendment privilege. But the Federal circus courts have now made it clear that you cannot use the 5th amendment to protect yourself from the criminal charges inherent in the FBAR law. This is an abomination. I don’t see where in the Constitution that it says that the Required Records Doctrine can trump constitutional rights. These judges have no idea how to prioritize law. The People instituted the Constitution. The rights in the Constitution should remain a greater good than the judge-made laws like the Required Records.

    I renounced my US citizenship because of the travesty of justice called citizenship based taxation. I did this to protect my family here in Canada. I think that most sane thinking expats will have to do the same, since nothing protects us now, not the Constitution and certainly not the courts, from the capricious and arbitrary treatment of Congress and the Executive branches of government.

20. The FBAR civil penalty statute of limitations is six years for the assessment ….After assessment, Treasury has two enforced collection procedures. First, Treasury may sue for collection, provided it brings suit within two years of the later of date of assessment or the date the person was convicted of an FBAR violation. If Treasury obtains a judgment in that suit, Treasury will then have the judgment remedies applying to judgments generally. Second, under its general statutory authority to offset debts owed by a person to a Government agency against debts any Government agency owes that person, Treasury may offset against a person’s FBAR liability against payments the person is otherwise due from the federal government.
    FBAR penalties constitute debts owed to federal agency. 31 U.S.C. § 3701(b)(1)(F) (2001) (debts include “any fines or penalties assessed by an agency”)
    “Debts may be collected irrespective of the amount of time the debt has been outstanding.”). Prior to amendment (2008) there was a 10 year offset period. After the amendment there is no limitations period to offset payments due the person against payments the person owes the U.S. for nontax debts.
    ——————————————————————————–

    Caroline Ciraolo, her pdf of a powerpoint presentation titled “Collection of the FBAR Penalty,” which may be viewed or downloaded here.
    http://www.federaltaxcrimes.blogspot.ch/2013/04/fbar-penalty-collection-beyond.html#more

21. IRS Takes The Fifth, But You Can’t

    Yet consider a recent string of IRS cases in which taxpayers could not take the Fifth. In sniffing out foreign bank accounts, the IRS and Department of Justice issue John Doe summonses, indict foreign nationals, and more. The law requiring FBARs gives the government a hook to subpoena a taxpayer suspected of having an undisclosed offshore account.

    You can take the Fifth Amendment and refuse to testify, but can you take the Fifth on the bank records? You might think so. After all, the “act of production” privilege is part of the Fifth Amendment guarantee. That way the government can’t compel you to produce incriminating documents. Clearly, bank records or FBARs would incriminate you.

    Nevertheless, the Fifth, Seventh, Ninth, and Eleventh Circuits say the Fifth Amendment provides no protection. The government victory hinges on an old case, Shapiro v. United States, holding that you can be forced to produce “essentially regulatory” records if the conduct was not “inherently criminal” and the records are not purely personal. You might think foreign bank records are such hot buttons that The Fifth applies. Nope.

    You might think your foreign bank records are purely personal too, especially today. Nope, the government can make you incriminate yourself. Lawyers petitioned the U.S. Supreme Court for certiorari, but the Court just said no here. So, some people are being forced to produce bank records that will land them in jail. It’s a head-scratcher, since The Fifth that protects us from being compelled to testify against ourselves should arguably prevent compelled production of records that do the same thing.