I just noticed a comment from EmBee, who passed on to Brock a Maple Sandbox comment from “Anthony”, apparently a “Canadian lawyer”.
— Anthony actually says that the U.S. is planning to have homes of U.S.-tainted Canadian citizens FBAR’d (annual resale values etc. reported). Nonsense? Just a scare tactic?
If true, would this be that final straw that finally pushes affected, previously FBAR-obedient and quietly compliant Canadians into mass resistance, self-certification-without-permission-renunciation, and high anger?
Would you be willing to let FINCEN (Financial Crimes Enforcement Network) know the annual resale value of your Canadian-made family home in your yearly FBAR reporting?
“… This problem will only get worse in the near future.
I have been told that plans are underway to include the annual resale value of all non-U.S. property holdings, including your own home, on future FBAR reports.
That means that your primary residence will soon be fair game for the IRS.
Second, plans are underway to also include on the FBAR report any business that a designated U.S. person may own outside the U.S., including all personal details of non-U.S. partners in the venture.
So, if you are a Canadian with U.S. taint, you will soon have to report your Canadian home’s resale value, year of purchase, personal identifying details on those who also own the home, as well as the same sort of details for any business that you may own in Canada…”
This is why I hate computers. In anticipation of discussion such as ours, I very carefully saved, sorted, compilied, arranged and then backed up on to several devices and to several apps…and STILL lost access to what I found.
Back when I first found out about this, I made hard copies of everything. I will start digging through those. I am, now was, certain that I found this in several sources that I thought creditable. It is maddening to have a pile of info but no way to sort through it all.
I think the change may be in the purpose of FBAR and thus it changed who had to file it. Originally, FBAR was to aid in stopping money laundring and not for tax purposes. Perhaps the change of misdion also resulted in change of targets, or a larger target pool.
@JapanT – you’re correct that there was a change, or rather a series of changes, but it wasn’t about who had to file, it was about enforcement, penalties, and the shift to the IRS.
The .pdf you’re searching for might be “Evolution of the FBAR”, published in the Houston Business and Law Journal (2006) and available at http://www.hbtlj.org/v07p1/v07p1_sheppard.pdf.
Iota,
Thanks. That was not the PDF I was looking for but it is another one for the stack to read and add to the whole soup of info.
Although I was certain that I read that it was a change in the law and who had to file, at the business end, I wonder if it makes a difference. Most had no way to know of its existence and as there was no penalty, no one thought it worth while to teach anyone of it.
But I sure wish I could track down where I got that from.
@JapanT
Any chance that you are remembering the period between 2008 and 2010 when the IRS decided, apparently unilaterally, that FBARs should be completed not only by US citizens and residents but also by non-US persons who were “in and doing business in the US“? Of course, “doing business in” was never properly defined.
From this description of the saga: “… the IRS, in Announcement 2009-51 (6/05/2009), temporarily suspended the June 30 FBAR reporting requirement for those who are not U.S. citizens, U.S. residents, or domestic entities. In IRS Announcement 2010-16 (2/26/2010), the IRS declared the continued suspension of the June 30 FBAR reporting requirement for those who are not U.S. citizens, U.S. residents, or domestic entities.”
A mighty generous gesture from the IRS there, then! Also worth noting is that even today, filing of FBARs (now FinCEN 114s) may apparently be merely “suspended” for some undefined subset of non-US persons.
Possible, but I don’t think so. While I would keep such an article, it does not effect me directly so I don’t think I would have included it. But, then again, I a reading a lot on this from a variety of sources, so it is possible.
I do remember that luckily my accountant informed me that there had been a change from the need to file only any foreign account that totaled over $10,000, to the need file if an aggregate of all foreign accounts totaled over $10,000. So in the past one could have a multitude of accounts and not file as long as none of them ever totaled over $10,000. The screws turned quietly.
Watcher, you write:
“Any chance that you are remembering the period between 2008 and 2010 when the IRS decided, apparently unilaterally, that FBARs should be completed not only by US citizens and residents but also by non-US persons who were “in and doing business in the US“? Of course, “doing business in” was never properly defined …”
Actually this did not come from the IRS. It came directly from the FBAR statute which reads as follows:
https://www.law.cornell.edu/uscode/text/31/5314
“(a) Considering the need to avoid impeding or controlling the export or import of monetary instruments and the need to avoid burdening unreasonably a person making a transaction with a foreign financial agency, the Secretary of the Treasury shall require a resident or citizen of the United States or a person in, and doing business in, the United States, to keep records, file reports, or keep records and file reports, when the resident, citizen, or person makes a transaction or maintains a relation for any person with a foreign financial agency. The records and reports shall contain the following information in the way and to the extent the Secretary prescribes:
(1) the identity and address of participants in a transaction or relationship.
(2) the legal capacity in which a participant is acting.
(3) the identity of real parties in interest.
(4) a description of the transaction.
(b) The Secretary may prescribe—
(1) a reasonable classification of persons subject to or exempt from a requirement under this section or a regulation under this section;
(2) a foreign country to which a requirement or a regulation under this section applies if the Secretary decides applying the requirement or regulation to all foreign countries is unnecessary or undesirable;
(3) the magnitude of transactions subject to a requirement or a regulation under this section;
(4) the kind of transaction subject to or exempt from a requirement or a regulation under this section; and
(5) other matters the Secretary considers necessary to carry out this section or a regulation under this section.
(c) A person shall be required to disclose a record required to be kept under this section or under a regulation under this section only as required by law.”
The requirement to requirement to file an FBAR for those “doing business in the USA” was always there. If the IRS were to change the regulation or allow the regulation to lapse, then all foreigners who are present in the USA doing business would be required to file an FBAR.
Think of the implications.
Heidi
I had thought that the test was always whether the total of the accounts exceeded $10,000. Interestingly this does NOT come from the statute but comes from the regs (which then reference the form).
https://www.law.cornell.edu/cfr/text/31/1010.350
Ҥ 1010.350 Reports of foreign financial accounts.
(a) In general. Each United States person having a financial interest in, or signature or other authority over, a bank, securities, or other financial account in a foreign country shall report such relationship to the Commissioner of Internal Revenue for each year in which such relationship exists and shall provide such information as shall be specified in a reporting form prescribed under 31 U.S.C. 5314 to be filed by such persons. The form prescribed under section 5314 is the Report of Foreign Bank and Financial Accounts (TD-F 90-22.1), or any successor form. See paragraphs (g)(1) and (g)(2) of this section for a special rule for persons with a financial interest in 25 or more accounts, or signature or other authority over 25 or more accounts.”
The specific rules are then found on FinCEN 114.
http://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html
What I find interesting is how unspecific the statute is about what is required and how it is effectively delegated to FinCEN.
“Although I was certain that I read that it was a change in the law and who had to file, at the business end, I wonder if it makes a difference. Most had no way to know of its existence and as there was no penalty, no one thought it worth while to teach anyone of it.”
According to the “Evolution of the FBAR” article, there were penalties but only if wilfulness could be proved.
So much simpler now that the law allows penalties to be charged for non-wilfully never having heard of an FBAR. No crime, no defence, no appeal. Just a penalty. Easy peasy!
That was my impression too since I first learnt about FBAR in the 1980s, that the 10K was an aggregate amount and it applied to all US citizens, regardless of country of residence. Being neither a tax practitioner nor a US person, it wasn’t something I paid much attention to in those days (so I could have got it wrong). The Federal Reserve’s Bank Secrecy Act Examination Manual of 1997 is online and it indicates the $10,000 as aggregate and that it applies to any US citizen (no mention of country of residence).
@all
Strange, this was many years ago but maybe my accountant gave me a bum steer in the first place, but I do seem to remember initially reading the return in that way. ie Any account that totals over $10,000.
@heidi, @pacifica777
Now you’ve peaked my curiosity, and I’ve done a sad thing. My first filing from abroad was in 1981 and I’m sure I filed an FBAR, so I’ve dug out all the old records.
1981
A. Schedule B – It contains Part III and the question about financial accounts in a foreign country.
(I believe the instructions for Sch. B referenced FBAR.)
B. FBAR, top instructions – “This form blah, blah blah. You are not required to file a report if the aggregate value of the accounts did not exceed $1,000.”
(That’s not a typing error, it says $1,000.)
C. FBAR Line 9 – “ If you had a financial interest in one or more….accounts which are required to be reported, and the total maximum value of the accounts exceeded $10,000 during the year,….”
(Note total maximum value of the accounts, not maximum aggregate value of the accounts, and $10,000 figure.)
D. Instructions on back of FBAR – Unfortunately, for 1981 I only have the top copy and not the back.
1982
A. Schedule B – It contains Part III and the question about financial accounts in a foreign country.
B. FBAR, top instructions – Same as 1981
C. FBAR Line 9 – Same as 1981
D. Instructions on back of FBAR – Unfortunately, top copy only..
1983
A. Schedule B – It contains Part III and the question about financial accounts in a foreign country.
(For 1983, includes directions to FBAR instructions and now asks for which countries the accounts are located in.)
B. FBAR, top instructions – “This form blah, blah blah. You are not required to file a report if the aggregate value of the accounts did not exceed $5,000.”
(That’s not a typing error, it says $5,000.)
C. FBAR Line 9 – Same as 1981.
D. Instructions on back of FBAR, Who must file – Each United States Person who has financial interest in or signature authority or other authority over bank, …..or other financial accounts in a foreign country which exceeds $5,000 in aggregate value at any time during the calendar year, must report that relationship each calendar year by filing TD F 90.22.1….”
(Note $5,000 figure.)
1984
A. Schedule B – Same as 1983
B. FBAR, top instructions – “This form blah, blah blah. You are not required to file a report if the aggregate value of the accounts did not exceed $5,000.”
(That’s not a typing error, it says $5,000.)
C. FBAR Line 9 – “ If you had a financial interest in one or more….accounts which are required to be reported, and the total maximum value of the accounts exceeded $10,000 during the year,….”
(Note total maximum value of the accounts, not maximum aggregate value of the accounts.)
D. Instructions on back of FBAR, Who must file – Same as 1983. ($5,000)
1985
A. Schedule B – Same as 1983.
B. FBAR, top instructions – “This form blah, blah blah. You are not required to file a report if the aggregate value of the accounts did not exceed $5,000.”
(That’s not a typing error, it says $5,000.)
C. FBAR Line 9 – Same as 1981.
D. Instructions on back of FBAR, Who must file – Unfortunately, only top copy.
1986
A. Schedule B – Same as 1983.
B. FBAR, top instructions – “This form blah, blah blah. You are not required to file a report if the aggregate value of the accounts did not exceed $10,000.”
(It now says $10,000.)
C. FBAR Line 9 – Same as 1981.
D. Instructions on back of FBAR, Who must file – Unfortunately, I only have the top copy.
From my limited files confusion reigns. For 1983, as for 1981, (C) FBAR Line 9 mentions “total maximum value of accounts exceeded $10,000”, but the instructions on the back of the FBAR states “which exceeds $5,000 in aggregate value at any time during the calendar year”. The (B) Top instructions don’t mention $10,000 until 1986.
I’m now off to find a life.
Thanks OAP.
As usual, it’s as clear as mud.
I have to get out more 🙂
Ҥ 1010.350 Reports of foreign financial accounts.
(a) In general. Each United States person having a financial interest in, or signature or other authority over, a bank, securities, or other financial account in a foreign country shall REPORT SUCH RELATIONSHIP TO THE COMMISSIONER OF INTERNAL REVENUE for each year in which such relationship exists and shall provide such information as shall be specified in a reporting form prescribed under 31 U.S.C. 5314 to be filed by such persons. The form prescribed under section 5314 is the Report of Foreign Bank and Financial Accounts (TD-F 90-22.1), or any successor form.”
Cute. TD-F 90-22.1 used to say DON’T send that form to the IRS and specified a different address of the US Treasury to send the form to. That different address of the US Treasury either handed the forms over to the IRS or was a deceptive front for the IRS itself.
While I believe that the details of how FBAR came to be applied to USCs overseas does not change the reality USCs living outside face, I do think it is crucial to the effort to spread the word to have factual information. I have found statements that MAY support my recollection of FBAR not originally being intended for USCs overseas but I have not (yet?) found any direct statements.
Another line of thought that occured to me is that it may not have been a change in who had to report but in what they had to report. IF for example, FBAR only required accounts held in countries other than the country the account holder resided, then it would not apply to those who lived overseas and had accounts only in the country they resided in. IF this was changed to requiring all accounts outside the US held by a USC to be reported, then it would then apply to us with out specifically changing who had to report. Not sure that this is what happened, just trying to track down where, why and or how I came to believe that nonresident USCs were not required to file FBARs but now are. I was certain that this was established fact.
Well, just saw the last several posts…didn’t before postimg my last.
So, it appears that the law did not change but as pointed out, the law requires all foriegnors doing business in the US to file FBARs, so are they required to do so? No but can/will be if the IRS makes a rule to do so.
Was it the same with nonresident USCs?
What other dormant horrors in the 90,000 page US tax code await a rule to bring them to life?
“the law requires all foriegnors doing business in the US to file FBARs, so are they required to do so?”
Yes, and they have to report SSNs, so they have to fabricate SSNs.
An obsolete publication of the US Department of Justice reported an obsolete statute and obsolete court ruling that fabrication of SSNs was illegal and punishable, but the US Department of Justice persuaded US Court of Appeals for the Federal Circuit to overturn the obsolete stuff to punish me for FAILING to fabricate an SSN for my spouse. Anyone who needs an SSN, can’t get an SSN from the SSA and can’t get an ITIN from the IRS, you’d better make an SSN yourself.
The FBAR site doesn’t accept ITINs so even if you have an ITIN you have to fabricate an SSN.
In summary,
US law is whatever the US gov. says it is.
Now pay the penalty and off to prison, criminals.
And we argue over what such and such statute, rule or regulation means.
Learning that my “criminal activity” began with setting up,a joint account with my spouse instead of a change in the law is not comforting.
Well, @Japan T come on. You know perfectly well that marriage to a non-.U.S. spouse is a presumptive form of tax evasion.
“marriage to a non-.U.S. spouse is a presumptive form of tax evasion.”
So is residence outside the US, regardless of marital status.
So is having a bank account in either your country of residence or country of other citizenship, regardless of marital status.
Marriage does make it worse though.
I do know that now but did not at the time. At the time, I believed in the myth of presumed innocence.
Actually, it is becoming apparent that anything short of voluntarily turning over 100 % of your assets to be managed by the state, for your exclusive benefit no doubt, is a presumptive form of tax evasion.
You know, with all the intentional confusion between tax avoidance and tax evasion, I am waiting for the day when homelanders find that they must pay which is the higher gasoline tax rate, that of the state they buy gas in or that of the state which issued their driver’s license.
“Actually, it is becoming apparent that anything short of voluntarily turning over 100 % of your assets to be managed by the state, for your exclusive benefit no doubt, is a presumptive form of tax evasion.”
Only 100%? Didn’t they demand 300% from Trish?