Liberty and justice for all United States persons abroad

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Tag Archives: FBAR

Nine hundred thousand new FBAR filers since 2009, proving that FinCEN is grossly incompetent, can’t do basic math, and ignores comments from people who can

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As has been noted in various news articles (e.g. this one posted by Tom Alciere), the IRS is bragging about FinCEN receiving nearly 1.2 million FBARs last year:

“Taxpayers here and abroad need to take their offshore tax and filing obligations seriously,” IRS Commissioner John Koskinen said. “Improving offshore compliance has been a top priority of the IRS for several years, and we are seeing very positive results.” … In 2015, FinCen received a record high 1,163,229 FBARs, up more than 8 percent from the prior year. In fact, FBAR filings have grown on average by 17 percent per year during the last five years, according to FinCen data.

The growth just before that five year window was even more impressive: in 2011, the number of FBAR filers jumped to 618,134, according to an article by Brian Knowlton article in the New York Times, up by 124% from 276,386 in 2009, an annualised growth rate of nearly 50%. (For comparison, during the five period from 2008–2012, the IRS added 100,000 new Foreign Earned Income Exclusion users — with average incomes of about US$30k, meaning they don’t owe any U.S. tax unless Koskinen figures out some clever new way to extract money from them by imposing obscene fines on them for committing ordinary personal finance or inventing new forms of “income” out of thin air.)

Massive growth is exactly what Ms. Lucy Stensland Laederich of FAWCO told FinCEN to expect nearly six years ago, in response to FinCEN’s laughably low estimates in their Notice of Proposed Rulemaking in February 2010 (75 FR 8844) of 400,000 FBAR filers:

First, however, you note in VI. that the estimated number of affected filing individuals and entities is 400,000. In view of State Department estimates of over 5 million private sector Americans abroad and the large number of Americans and other U.S. persons residing within the United States and maintaining bank accounts abroad, I suspect that your number is vastly underestimated.

Oddly enough, as recently as 2008, FinCEN estimated that they should be getting 13 million FBARs. But three years later, James H. Freis, Jr. of FinCEN responded to FAWCO by covering his ears, ignoring the massive growth in filer numbers right in front of his eyes, and pretending that the 400,000 forms he actually received meant that his agency was getting 100% compliance already (76 FR 10244):

FinCEN received one comment on the estimated number of filers. The commenter believed that the number of filers should be higher. The commenter stated that estimates of Americans living abroad may be as high as 5 million, and that approximately 2 million of those Americans might be affected by the FBAR rules. The commenter did not provide a verifiable source or methodology for arriving at those estimates. As stated above, the rule contained in this document addresses the FBAR rules that have been in existence since 1972. FinCEN’s estimate of the number of affected filing individuals and entities (400,000) is based on the number of FBARs annually filed in recent previous years.

See how much your comments matter to the U.S. government?

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Born abroad to US citizen parents in a #CookvTait world? Are you a US citizen or do have a right to US citizenship?

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The following post is reblogged from the RenounceUScitizenship blog. It dovetails with Calgary411’s post on the same issue.

Why this topic is important

In a FATCA world there a large number of people who citizens and residents of Canada (and other countries) who may have a “U.S. taint” because they were born in Canada to a U.S. citizen parent. If the United States can deem these people to be U.S. citizens (against their will) then FATCA, CBT and FBAR will allow the United States to dramatically expand (even more) it’s “tax and penalty” base into other nations. It’s time to stop emphasizing U.S. citizens abroad. The time has come to start emphasizing the effects that the the U.S. “Alphabet Soup List of Taxes, Penalties and Life Restrictions” has on the citizens and residents of other nations – and ultimately those other nations.

Although there are many people who believe that U.S. citizenship is an opportunity, there are many others who believe that U.S. citizenship is an extreme disability. For those who do NOT live in the United States, it is clear that U.S. citizenship causes problems. Each individual is entitled to their opinion on whether being a U.S. citizen is worth the problems that U.S. citizenship implies. As I write this paragraph I am reminded of an older post I wrote, which was a letter written by a Canadian businessman to his son. The letter may be worth a read.

Introduction:

The above tweet references an earlier comment on this vitally important question.

The purpose of this post is to continue hammering away at this very narrow issue/question.

Does the United States have the right to deem a person born outside the United States to be a U.S. citizen? Can the United States forcibly impose citizenship on a person NOT born in the United States?
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From @YourVoiceatIRS Conference: @TaxPolBlog – Forget what the law says, this is what it means

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After having read Professor Christian’s presentation, I request that you respond to the following in as comments:

In a purely practical, “day to day” sense, how has U.S. citizenship-based taxation affected and/or changed your life?

On November 18, 2015 McGill Professor Allison Christians spoke at the Taxpayer Advocate Tax Conference in Washington, DC.* On November 20, 2015 a video of an interview with her was posted here at the Isaac Brock Society. It was an excellent interview which highlighted and demonstrated some of the injustices of U.S. ‘place of birth taxation”. The interview was also posted on the IBS YouTube channel.

Now, TaxNotes has made the text of her speech available for general reading.

Why Professor Christian’s speech is important
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Linking of passport to taxation confirms “taxation-based citizenship” undermining #CookvTait

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This post ends with the following question:

Are Americans really “so beaten down, so subservient, so fearful of authority that it complies with the most horrific and undemocratic “laws” and is unable to unite and simply say NO, collectively.”

I invite you to express your answer in this poll:

Perhaps you could consider this question while reading the following post.

_____________________________________________________________________________________________

The above tweet references the following  comment from @Homelander_NOT on Robert Wood’s blog.

Yet another punitive measure that will further the creation of a US Berlin wall plus make life more complicated for Americans/”U.S. Persons” abroad. Other recent moves which demonstrate the tendency of the U.S. government to repeatedly “do the wrong thing:” ” Is US considering not publishing #USExpatriation list anymore? If yes, efficiency or embarrassment?” https://www.federalregister.gov/articles/2015/12/01/2015-30366/proposed-collection-comment-request-for-information-collection … (not at all sure that is what implied by this tweet I received) and Executor liability for U.S. income tax and penalties, interest, etc., may extend to you if you were aware that the decedent owed the U.S. treasury for say tax from unfiled tax returns.http://www.taxconnections.com/taxblog/good-to-know-part-3-from-larry-stolberg-cpa-ca/#.Vl79_PmrTIV . For such an “ advanced” nation, the U.S. seems not to understand basic psychology. The more one tries to restrict somebody, the more they are likely to be resisted. If it is true the Name & Shame List’s days are numbered, it won’t be of any consequence. Who reads the Federal Register anyway? Personally, I could care less if they kept an ongoing list published in the NYT and like many, consider it a badge of honor. Proof of being a ‘real’ American if you will. And more nonsense/confusion for an executor (really? even an “alien one? Just how would they enforce that?). Or is it more along the lines that no one can even imagine someone having the gall to not obey the exceptionalistic conditioning that can only be dumped by experiencing the rest of the world? It is a well-documented problem that the IRS does not have records for expats; even with FATCA there are likely to be many pieces of undeliverable mail. Yes the IRS cares not and will continue to follow their own procedures. I expect thousands upon thousands to simply ignore those letters. People are developing resistance and figuring out there is not much the U.S. can do. Other than count on the fact that such folks will surely want to come to the U.S. so “we’ll get them at the border.” Lots of people are figuring out the better choice is simply to go elsewhere for vacations and have family visits where the expat families are. All of this is pathetically sad. All this grief for insistence on filing forms to show there is likely no tax owed-when everyone KNOWS its the big fish living in the U.S.that all this effort should be expended toward. Again, such a very basic, basic thing that eludes those running the most dominant, most fortunate country on earth. I remain puzzled that this is what has happened to the country I grew up in and in spite of awareness of its many flaws, still loved until FBAR.

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#CookvTait: Does the FEIE available to #Americansabroad discriminate against Homeland Americans?

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Updated with a poll at the end.

Thanks to Trish Moon for her “work in progress” documenting the history of the “FBAR Fundraiser” and how President Obama, Secretary Geithner and Commissioner Shulman launched their assault on those they considered U.S. taxable property U.S. citizens abroad. The post referenced in the above tweet references a blog post by Wayne State Law Professor Linda Beale which reveals much about the “Homelander Mindset” towards these matters. Professor Beale has been he subject of previous discussion at Brock.

As we consider how to explain our position to Homelanders, I strongly suggest reading some of her posts and comments. She (like many Homelanders) appears to be unable to conceive that there is a world outside the United States. Because of the strength of her convictions (ill conceived or not) it’s important to understand her positions.

For example:

Mike Citizenship carries both benefits and responsibilities. So renounce. Fine with me. But til you do, all I ask is that you comply with the law. As for the exclusion for foreign earned income, one could easily see how the person staying at home could find it unfair that someone from their company working broad for 2-3 years and earning the same or more in gross income from the firm would pay taxes on a very small portion of that. Like the “active business exception” to offshoring company assets, the exclusion acts as an incentive to encourage working abroad and results in tax discrimination against those who don’t do so.

I would be interested in how to best counter the argument that the FEIE (Foreign Earned Income Exclusion) discriminates against Homeland Americans because they can’t exclude part of their income.

Is the answer the same as that suggested by many Homelanders:

Well, the same laws apply to everybody. If you don’t like it then you can move abroad too. Just don’t let the door hit you on the way out.

By the way, I have just discovered that Wayne State has a new faculty member – Senator Carl Levin himself. Understand that this provides the best opportunity for dialogue that there ever was. This is great news and the possibilities are endless.

Update:

See the comment below that asks the question:

Should Americans abroad take the position that the FEIE be abolished?

 

Teaching of #CookvTait is that the US Government benefits #Americansabroad

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But, on this note one must ask the question:

Americans abroad are “everyday people”. They can be found on every street corner in every town and in every country. Because they are “every day” people, they have “every day” needs. They must have pensions, savings, homes and they must plan for retirement. On the other hand, the United States requires that they live exactly like “Homeland Americans”. This leads to all kinds of problems and severe difficulty in investment and retirement planning.

Most blogs, focus on identifying financial products that are “unsafe” for Americans abroad. The truth is that almost all forms of retirement planning and investing outside the United States are “foreign” and involve “tax deferral”. Both of these things are punished by U.S. law. In fact that vast majority of non-U.S. financial products are either PFICs or Foreign Trusts.

My question is: Can you identify the kinds of investments in your country of residence that are permitted to Americans abroad. By “permitted”, I mean: do NOT encounter either punitive taxation or expensive reporting.

It seems to me that the U.S. Government does NOT benefit Americans wherever they may live. In fact the U.S. Government is an impediment to Americans living outside the Homeland.

But seriously, what are the financial products in your country that are “permitted” to Americans?

Obama signs temporary highway bill: FBAR & 3520 due date changed, no passport revocation (for now)

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Highway-Sign

The Hill reports that President Obama signed a three-month highway funding extension (H.R. 3236, Pub.L. 114-41), while expressing irritation at Congress for their failure to pass a longer-term highway bill. The short-term bill passed the House on Wednesday by a vote of 385–34 and the Senate on Thursday by 91–4. Among the revenue offsets, there are changes to the due dates of various tax forms, including three which are relevant to the diaspora: Form 3520, Form 3520-A, and FBAR. (Hat tip to Socrates, who alerted us to the bill before it passed in a comment on Wednesday.)

Fortunately, the short-term law does not include Orrin Hatch’s persistent proposal to deny new U.S. passports to, and revoke existing passports of, people who do not provide SSNs. (It is not clear whether his proposal would affect passport applicants who never had SSNs in the first place.) That provision remains, however, in a longer-term highway funding bill which passed the Senate on Thursday. Brad Plumer at Vox summed up the situation: “Congress keeps finding increasingly absurd ways to avoid raising the gas tax”.

Also, just because Congress keeps trying to pick the pockets of the diaspora to pay for highways, it doesn’t mean that any of those highways are actually for the diaspora. My plans for a Christmas road trip from Seoul to Honolulu have been shattered once again.

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Forcing #Americansabroad to renounce US citizenship is like #Civilforfeiture – Now “ain’t that America”

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Cross posted from the Renounce U.S. Citizenship blog.

 

Introduction – The general principles of Civil Forfeiture Reexamined

Civil forfeiture is becoming increasingly prevalent in the United States and in Western democracies. In it’s simplest form, Civil Forfeiture is a process where governments seize your property without going through the judicial process. Governments love it. It’s efficient, profitable and risk free.  It’s on the rise in both Canada and the United States. It has been the subject of numerous posts at the Isaac Brock Society. Certainly, FBAR penalties and other penalties for “Form Crime” are instances of civil forfeiture. I have argued that OVDP is a form of Civil Forfeiture.

 

Your property, your U.S. citizenship and the forcible taking of your U.S. citizenship

As I have pointed out time after time, after time ….

The Supreme Court of the United States has made it clear that those born or naturalized in the United States have a constitutional right to NOT have their citizenship “stripped from them”. I explored this in:

Cook v. Tait 12: Afroyim v. Rusk, the 14th amendment, and the forcible destruction of citizenship

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Court approves #FBAR Penalty – Known Unknown issues addressed but still likely unknown

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I am of two minds in posting these. On the one hand, I don’t want to contribute to “fear mongering”. On the other hand, the discussion in these two posts is of some interest. In the interests of NOT getting upset, I point out the facts in this case do NOT deal with Americans abroad. The judge interprets the FBAR rules to mean (see page 2 of the decision) that any person RESIDING IN THE UNITED STATES must file an FBAR. The decision also confirms the plain wording of the FBAR statute which says that no FBAR penalty will be imposed if there is “reasonable cause” and the balance in the offending account was properly reported. We are still left with the “fact specific interpretation” of what constitutes “reasonable cause”.

What I find interesting is that this is yet one more “octogenarian” who is having “Adventures with FBAR“. It’s as though by the time a Homelander reaches  80, he will have to deal with the state of his FBARs.

The following two tweets link to articles that provide “CondorSpeak” (perhaps a “sing along” to “Form People“) on issues surrounding our friend Mr. FBAR.

 Are you frightened yet?

April 28, 2015 – 1 of 2

 

The opinion is interesting for many reasons, including its extensive discussion of the Administrative Procedure Act and the constitutional challenges Moore raised in opposition to the IRS’s assessing FBAR penalties. In addition, the opinion discusses the merits of Moore’s reasonable cause defense, a defense with considerable law in the context of civil tax penalties but not much law in the world of FBAR penalties.

 

April 29, 2015 – 2 of 2

 

 

We had previously posted Court Approves FBAR Penalty and Raises Important Administrative and Constitutional Law Issues where we discussed that on April 1, 2015, in response to a summary judgment motion, in Moore v. U.S., (DC WA 04/01/2015) 115 AFTR 2d ¶2015-591 the district court for the western district of Washington reviewed the procedures and standards that apply to penalties for non-willful failure to file the FBAR.

The opinion was interesting for many reasons, including its extensive discussion of the Administrative Procedure Act and the constitutional challenges Moore raised in opposition to the  IRS’s assessing FBAR penalties. Rubin on Tax details the decision and how it addresses some of the unknown and uncertain penalty issues relating to failure to file FBARs. These issues include:

 

 

 

 

Interesting perceptions of @TaxPolBlog on “Global tax disorder” and the role of #FATCA

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Very interesting read includes:

According to Allison Christians of McGill University Faculty of Law, the problems addressed by the conference’s panel on international taxation are not much different from those faced by four academics more than 90 years ago when asked by the League of Nations to study the question of how to share the world’s income tax base. Christians said the crucial issue now is the failure to tax income as opposed to double taxation, which worried policymakers then.

“If you gave international tax a grade over 90 years, it would be an F,” Christians said.

“We will not take fairness seriously on the international stage.”

Christians said that powerful countries too often end up calling the shots, much to the detriment of a fair and orderly international tax system. “When we turn to power, we sacrifice both efficiency and equity . . . and administrability as well,” she said.

Christians was especially critical of the U.S. for using the Foreign Account Tax Compliance Act to expose underpayment of U.S. personal income taxes while cautioning that the OECD’s base erosion and profit-shifting initiative could negatively affect U.S. multinationals.

“FATCA leverages U.S. control over the global financial system, thereby forcing the populations and governments of poorer countries to direct precious tax administration and regulatory compliance resources toward the enforcement of the U.S. tax system over their own,” Christians said. “Yet the U.S. has not used this same leverage to respond to base erosion. U.S. lawmakers have not seen as great a good in stopping tax avoidance by U.S.-based corporations as they have in stopping tax evasion by U.S. individuals.”

 

Speaking of Allison Christians, read her thoughts on Mr. FBAR:

 
You can download the paper here.

Some persuasive arguments:

The Foreign Bank Account Report, or FBAR, is part of a regime designed to stop
terrorists, money-launderers, and tax evaders. Unfortunately, its increasingly
draconian requirements and consequences now apply to millions of innocent
bystanders who are collateral damage in the ongoing battle against financial
crime. Their inclusion in the FBAR regime is a massive waste of both government
and taxpayer resources, effectively criminalizing activities that are wholly
unconnected to financial crime, and perversely discouraging compliance. All of this
is unnecessary because as the administrator of FBAR, Treasury can immediately fix
the problems.

 
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