Peter W. Dunn has never filed an FBAR form. The recent refusal by guardians of the temples in India to expose their gold holdings to their government provides an analogy for why he refuses: no government requires an inventory of a person’s assets unless it is preparing eventual seizure. But by common law, a man’s home is his castle.
In early 2010, after I decided to relinquish my US citizenship, I was casually browsing the 1040NR booklet that the IRS sent out to me every year. That is when I first learned about FBAR and its potentially extortionate fines and criminal sentences. I was dumbstruck. While I, as a naive son of the United States born in Chicago to two citizens, had filed my tax returns to the IRS every year, never owing a thing, I had never heard of FBAR. I still have never even looked at an FBAR form. For I realized that I could not fill out one of these forms without being seriously screwed–not just me, but also my wife who is not even an American but a Canadian born on Canadian soil to two Canadian parents.
This is a matter of trust. If I had continued in my naivete about the intentions of government, believing that the United States is largely benevolent, then I suppose I could have just followed the IRS instructions in the 1040NR booklet, to file delinquent forms with a letter explaining why I had failed to file in the past, trusting that the IRS or the Justice Department wouldn’t throw the book at me. But in my anxiety, I decided to investigate whether the IRS would show lenience to those making such a disclosure of non-compliance in years gone by. I stumbled upon Phil Hodgen’s blog and read the voluntary disclosure stories of many Americans abroad who received extortionate disclosure settlements. These stories fully dissuaded me from ever filing an FBAR. I had taken the red pill and no longer believed the virtual world that United States had created in the minds of its people, that it was the freest country in the world. It had become a diseased and ravenous predator, seeking to devour its own citizens abroad.
My rationale for deciding that I could not trust the IRS with the banking information required in the FBAR form was just this: If they threw the book at those who were in an amnesty program, how much more were they going to destroy those outside the program? This OVDP raping and pillaging of US citizens abroad continues to this day. The most recent story that I heard a few days ago was of a disabled Canadian resident whose Canadian-based US lawyer had unscrupulously made her sign documents entering her into the OVDP in 2009, and the settlement fines, which she paid, has destroyed her life savings. Thanks to the IRS, she will now nothing preventing her from becoming a burden to the government of Canada and thus to all Canadian taxpayers. (This is a good reason to pass a law forbidding US lawyers from practicing tax law in Canada–they are spies for the United States and destroyers of the wealth of law-abiding Canadian residents).
After reading Hodgen’s blog, I felt that the injustice was so severe that I wrote an article, in collaboration with Monty Pelerin, for the American Thinker, “When government turns predator“, but I asked Monty to use his pen name alone, not giving me credit. He kindly agreed to protect me. My thinking was that if the Feds knew that I’d written an article explaining the FBAR jihad of the Obama administration, they could charge me of willful violation of the FBAR requirements, which had higher fines and the possibility of criminal indictment. Once, however, the honourable Jim Flaherty announced that Canada would not collect FBAR fines, I realized that my assets were safe from the IRS. I came out in the open with my knowledge of FBAR and later publicly confessed my refusal to ever file an FBAR.
What I don’t really understand is why so many of my fellow Canadians, even Brockers (our affectionate name for regular readers and contributors to this website) have filed FBARs, out of the blue as it were, because many had never even filed their US taxes before the Canadian media made them aware of the IRS’s expectations. (This made the Canadian media an accomplice, or better a collaborator, of Obama’s IRS). In India, the government has recently asked the temples to provide them with an inventory of their gold. The majority of temples have refused, claiming that the Indian people have donated this gold to honour their gods and that the government has no right to it. The Indian assumption is correct. The only reason that any government would require that its citizens provide them with an inventory of assets is in case it decides to seize them. It is the preparation for eventual theft. Thus, English law retained the concept of a “man’s home is his castle”. In principle, the king had no right to enter, inventory or seize the contents of man’s castle, unless there was reasonable cause, i.e., the suspicion that the castle owner had broken a law. This right over one’s castle was enshrined into United States law in the Fourth Amendment.
The guardians of the temples in India believe that their government is desperate and that is why it wants an inventory of the gold assets of the temples. Reason dictates that the United States has begun to insist upon the FBAR law, after many decades of neglect, only because it has fallen into financial morbidity and is therefore desperate to find new sources of revenue.
In July I flew to Alaska in an urgent search for my missing father, and I was not arrested. Now that I think that my father has disappeared forever, I have no further reason to enter the United States again before the FBAR statute of limitations (six years after my relinquishment of US citizenship in 2011, i.e., 2018). So I can openly defy the United States with even greater impunity. Those of you who are less vocal have nothing at all to worry about, provided your assets are in Canada. So this is what I have to say to the United States Federal Government regarding FBAR filing requirements:
[While the common expression begins with a four-letter word beginning with “F”, discretion and good manners prevents me from actually writing it here–but as my wife always says to me, “Consider it said!”]
I agree. FBAR and FATCA are nothing more than inventories of assets and really, the FBAR regulation was written at a time when the USG regularly assumed that those who took foreign citizenship had relinquished, so it wasn’t written with them in mind anyway but instead for homelanders who banked off-shore.
It astounds me that other nations so readily agree to allowing the USG to use their citizens as Trojan horses.
@YogaGirl, thanks. The purpose of the Bank Secrecy Act and the manner in which the Obama administration has wielded the FBAR law is not in accord, to be sure. However, the original Bank Secrecy Act was nevertheless a circumvention of the Fourth Amendment, as I argue in my American Thinker article, “When government turns predator.” It requires no suspicion or warrant, just simply, tell us or we are going to bust your ass. It is from the beginning, a law written by a bully.
I’d love to join you in your one fingered salute, Petros, but I’m still stuck in OVDI samsara.
I like your predator analogy. With every US citizenship that’s devoured at a US consulate, a free citizen of another country is born.
@bubblebustin, well, my generally contrarian character causes me to question authority. Just as I will not take statins without first doing my own research, I wasn’t going to do what the IRS was requiring without first informing myself of my rights, etc.
Petros, that’s the other thing. Our rights. It’s just assumed that as expats we have no rights in this area and I know that Canadian law gives the govt here the right to suspend certain rights but only when their is a compelling reason to override them. It’s not done frivolously and without justification. Things like FBAR and FATCA assume first that we are criminals and then presume to make us prove – yearly – that we are not. Pretty sure, Sir John A. would have told the USG to … pound sand.
It irks me that the USG treats me like chattel, but I suppose one could say that it treats those trapped within its borders dismissively as well. They are under constant watch though they don’t seem to mind – even if they are fully aware of it.
@Petros
Everything has its cost. Often the more principled pay a higher one it seems, but in the long run it is one you can live with.
Petros, well said. I also raise the finger salute to the US government, and IRS. I would also add the 8854 to the FBAR and FATCA, in the ways they attempt to get a list of your assets.
I have never filed an FBAR or 8854 and never will.
Never FBAR’d; never will.
I will not file an FBAR either. I intend to renounce as well.
But an important question: does not filing FBAR lead to problems renouncing?? I do not have anything owing to IRS, but was wondering if failure to comply might be a hinderance. Would they attempt to fine before allowing renunciation?
Thanks – and apologies if question is already answered elsewhere. Just getting my head around this whole mess.
@Oliver, the right to renounce is a universal human right. It is a violation of a fundamental right to place and obstacle such as an exit tax in front of the exercise of that right. That is the answer to your question, in principle.
However, the United States has fallen from its vaunted position of the chief proponent of human rights to have become a chief abuser of rights, requiring an exit tax of those who expatriate: but this is a trailing requirement. One may renounce or otherwise relinquish one’s US citizenship at any time by following the procedures of the State Department (US Consulate). Proof of tax filing or FBAR compliance is not necessary to complete the State Departments procedures. The IRS will only try to catch up with you later, but if you and your money (your ass and your assets) are in Canada, any exit tax would be uncollectable, as it would be applied (in most cases) to a Canadian citizen (i.e., someone who relinquished by becoming a Canadian citizen). These things would probably apply if you live in some other countries too, though each country must be taken on a case by case basis.
FBAR is not part of the tax code and it is not covered by the Canada-US tax treaty. Thus, under no circumstances will Canada collect FBAR fines from anyone.
FBAR is not part of the tax code and it is therefore not necessary to have filed FBARs in order to indicate on the 8854 that you have complied with the last five years of tax compliance. I have filed the 8854. I have never filed FBAR.
If you don’t want to ever go back to the US to visit, you don’t actually need to even file US taxes for the 5 years or do FBARs or any other form when you relinquish. IRS can’t do anything to you unless you cross the border or fly over US air space.
@greyowl
It seems that many have decided to take this route. I’m curious as to why anyone would bother renouncing if they’re never going to the US again anyway. Yes, you are freeing your future, but what’s unknown is what your past will cost you in the future, especially when your actions substantiate wilful tax evasion.
@bubblebustin,
I agree, why renounce if you are never going to USA? It seems like opening a can of worms to me.
The only reason to do it, imho, is if your bank threatens you with account closures or will be sending your account info to the USA. So far, Canada has not agreed to an IGA. There is a good chance it never will. People who are renouncing in Canada, out of fear of FATCA, may be acting prematurely, and unnecessarily.
WhiteKat,
…or on principle and closure in their lives.
@bubblebustin, to clarify, I meant why renounce, yet not file? Like my step dad used to say to me, ‘If you are going to do the job, do it right the first time, or don’t do it at all’.
@Calgary,
Yes, I get the principle thing. I may renounce in future, based on principle and to have closure. I just don’t get why someone would want to put a bulls eye on themselves by renouncing without filing, when we don’t even have an IGA in Canada yet.
That’s what makes this site and Sandbox so valuable to US Persons in Canada and other countries. Expatriation decisions need to be made with full thought, including premature consequences. There are those who will want to return to the US; there are those who do not and feel we owe our allegiance to one country. We here and wherever we comment in media ARE the true media for this 3% of Canada, providing information to be able to make wise decisions and ones they will not regret.
…and there are those who intend to never visit the US again, but because of unforeseen circumstance must return there!
@Petros – thank you for your response, and everyone else too.
My life is in Canada, but I want/need to return to the US, as a visitor. I also want closure, and to protect my (non-US) family in Canada. Renunciation appears to be the only way. I hope they’ll let me back in!
More generally, how many folks have sought legal advice prior to renunciation? Maybe I’m paranoid, but I’m concerned about not being able to re-enter the US once I renounce. Thanks.
You have the same ability to travel to the US as a Canadian as any other Canadian, though you may have to prove that you are no longer US person. If you do not file an FBAR, don’t fret it. Just fail to mention ever that you have bank accounts. If you don’t file your exit tax forms, the fine for not filing is $10,000. The liability assessment is unlikely if you are not in their system. If you have filed and can file 8854 there is nothing to worry about. The signals of $50,000 unpaid to IRS are the likely starting point where they will begin to nab people at the border–but they haven’t started doing that yet.
However, if you have not filed FBAR, but plan to file 1040, you will now have to exercise your Fifth Amendment right on your 1040 as I have done both on my 8854 and 1040 on Schedule B, 7a — write Fifth Amendment, because you can’t answer that question honestly–if you do, then you will be “willful” if you don’t file the FBAR and if you answer it dishonestly, they can charge you with perjury. But you can plead the Fifth Amendment on tax form provided that the information that you give can incriminate you and the information is not necessary for assessing a tax liability.
As for a lawyer? Would you consult a shark about when it is safe to swim in the ocean?
See: http://isaacbrocksociety.ca/2012/04/29/form-8854-fbar-and-the-fifth-amendment/
Canada is a lot safer than Switzerland, it seems to me (though I’m very happy about the referendum news in CH).
In my case, I may HAVE TO renounce simply to qualify for a bank account if my current banking relationship in Switzerland goes belly up.
Here’s the thing: the US-Swiss tax deal (as opposed to FATCA) applies FATCA-like arrangements to past banking business. Regarding FATCA, simply stay below the USD 50,000 limit and you won’t set any alarm bells off.
That is a harder proposition when the USD 50,000 limit is used to review accounts IN THE PAST. At some point in the 2008-2013 period, one of my accounts was above this level. So independent reviewer checks it out and, hey presto, US place of birth comes up. That’s me fried.
So, if I’ve correctly understood the agreement, the bank will force me into Offshore Disclosure or terminate my accounts. I’m then assuming that no new bank in Switzerland will want to go near me if I’ve had accounts closed at one particular bank (or I’m not willing to take that chance).
So to use White Kat’s bullseye analogy above, I’m planning to renounce (and may or may not file the paperwork; that remains to be seen) simply because if my bank decides to participate in this tax deal, and my number comes up (“victim” as opposed to “perpetrator”…), then I’ll need to pull a CLN from my pocket, hoping that will defuse the situation.
This may be slightly off topic but this issue (falling foul of US-Swiss tax deal as opposed to FATCA) is weighing heavily on my mind and has not seemed to attracted comment in the wake of the deal’s signature.
Ah…thank you for the concrete advice. Will definitely look into this as soon as SO gets Cdn. citizenship and we intend to do that fast, as soon as she has it in hand. 1040s & Schedule 8854 will be filed along with a photocopy of a middle-finger relevant Fifth Amendment cites.
The US government (as I am a Canadian born citizen; born to two Canadians (one born in Canada, one naturalised (born in Japan)) does not have a single right to any information from ME despite my US spouse and I’ll stonewall the IRS as far as the Supreme Court of Canada.
My middle finger is up as far as the IRS is concerned.
I like Petro’s attitude. What you do not say cannot hurt you. I renounced like Atticus this September. I just file my 1040s backing up the data using the Canada tax “notice of assessment” (which means I file Canada tax first). FBARs are outside of the requirement to show that your taxes are paid as a renouncing US person. I have jet lag from China, I think the House of Representatives is the Terra Cotta Army (I was there!). http://www.youtube.com/watch?v=RsUE-ZtcUFg
My CLN is probably delayed by US politics. Good riddance!