First: The good news.
Good news: Hard for #IRS to collect willful #FBAR penalties. http://t.co/ko6mNccP2F Bad news: That's what Form 8938 is for.
— U.S. Citizen Abroad (@USCitizenAbroad) August 13, 2013
Now: The bad news.
Bad News: #FATCA form 8938 to replace Mr. #FBAR and become #IRS Fundraiser of choice! http://t.co/821xvANDMi #americansabroad take note!
— U.S. Citizen Abroad (@USCitizenAbroad) August 13, 2013
and of course, we all expected that…
Additionally FBAR is now FinCen form 114, I think it is…
http://usexpatriate.blogspot.com/2013/08/fbar-form-tdf-90-221-replaced-by-fincen.html
The penalties of form 8938 are not nearly as bad as the FBAR penalties. Form 8938 has a standard penalty of $10,000, like the nonwillful FBAR penalty, but other than that, the penalty is 40% of the unpaid tax on unreported income associated with unreported accounts. Not a percentage of the unreported accounts like the FBAR. This is a huge difference.
The form whose penalty was ruled unconstitutional in United States v. Bajakajian is FinCEN 105. The FBAR is now FinCEN 114. Interesting.
what was in 105 that was found to be unconstituional?
FinCEN 105, also called the Report of International Transportation of Currency or Monetary Instruments (CMIR), must be filed with a customs officer when a person physically carries more than $10,000 in or out of the US. The penalty for not filing the form was forfeiture of the entire amount not reported. In United States v. Bajakajian, the Supreme Court considered that forfeiture was a fine, and in this case it was excessive because it was “grossly disproportional to the gravity of the offense” of simply not reporting an amount. As an excessive fine, it was ruled unconstitutional under the 8th amendment. The full court decision is available here.
Today the form still exists. However, whenever someone doesn’t file it, the money is only temporarily confiscated. Then, if there is no evidence of other illegal activity by the person, the money is returned.
I don’t do twitter. And I can see the “good news”, but I don’t get the “bad news” It’s just a link to an old IBS post, which as far as I can see is not related. Is there something new? Is it possible to post something that is friendly to non-twitterers?
They keep changing horses and this is just confusing things for me when I barely understood what they really wanted of me to begin with! As far as the penalty on anything being ten thousand dollars. I almost have to laugh…they can assess that type of fine on me if they like and they’ll never get it because I’ll never have that kind of money to give them all at once and I’m not taking that money away from my son. Good god, who thinks up these “penalties” for a piece of paper? Do they honestly think this is reasonable at all? They have this idea that they need a penalty that is scary for the bad people or else they won’t do anything. Well, fear isn’t that great of a motivator and I cannot figure out how they don’t know this.