Tag Archives: American Citizens Abroad

Paperwork and Punishment: It’s Time to Fix FBAR

6 Jan

Long Arm of IRS to Expats

Paperwork and Punishment: It’s Time to Fix FBAR” is an academic paper published in Tax Notes International in October 2014 by Allison Christians, Associate Professor who holds the H. Heward Strikeman Chair in Tax Law at McGill University Faculty of Law. In it she vividly details the fallacy of FBAR as a tool to catch criminals, tax evaders, money launderers and terrorists. To wit, the responsibility for collecting the Foreign Bank Account Report has been handed over to FinCEN, Financial Crimes Enforcement Network, described by the Treasury Department as the Financial Intelligence Unit of the United States. Thus there is a criminal stigma associated with entering oneself in a crime enforcement registry. In her introduction, she states, “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. The difficulty is that FBAR is still relatively obscure to those not caught in its grasp, and the extent of the damage it is doing to U.S. taxpayers and to the integrity of the tax system is thus under-appreciated. This damage is real, but it can be reversed by re-focusing FBAR where Congress intended: on likely criminal activity. In short, this Essay demonstrates that the FBAR regime is broken and it is time for Treasury to fix it.

Did you know that the FBAR came about as part of the Bank Secrecy Act of 1970? The $10,000 threshold for requiring that all foreign financial institution accounts be reported has not changed since it was first chosen as the criterion for reporting. With no inflation adjustment, its impact has significantly broadened over the years, and it now inflicts huge penalties on millions of individuals who should never have been in its sights. Had it been inflation adjusted, it would require you to list all your foreign accounts if their total reached approximately $50,000.

U.S. persons  living  permanently  in  other  countries  may  disagree  with  the  U.S. policy of taxing citizens on a global basis. A harsh regime that involves extensive and duplicative financial reporting with a criminal stigma attached is a recipe for deepening resentment. If the United States takes the sensible route in adopting residence based taxation, the extreme cost of FBAR filing, measured in dollars and time spent as well as an increasingly fragile taxpayer morale, will disappear along with millions of unnecessary annual returns showing no tax owed. This will free up scarce administrative resources, allowing the IRS to turn its focus where it belongs; on those who are determined to cheat and evade the system to the detriment of everyone. Until then, it is in the  interest of al  taxpayers, the IRS, and the  income  tax  as a whole that FBAR compliance be a  normal rather than criminal experience, and that it be no more difficult or draconian than is absolutely necessary.

Americans Abroad Caucus is Growing

1 May

At least there is some degree of indirect representation for those of us EXPATS who are taxed. So now I suppose that I must amend my statements made in the past about taxation without representation. Well, it is not really representation in the fullest sense of the word. The origin of the word caucus, is debated, but there is some agreement that it first came into use in the English colonies of North America and was first written in a February 1763 entry in the diary of John Adams of Braintree, Massachusetts. There are presently some 257 caucuses listed alphabetically in the Wikipedia page on Caucuses of the United States Congress, including from the Addiction, Treatment and Recovery Caucus to the Zero Capital Gains Caucus. What is their value to those whose interests are “represented” by them? How much influence do these caucuses have in initiating and passing legislation? These questions remain to be answered. But at least there is a place to which we otherwise relatively unrepresented citizens can turn.

The Americans Abroad Caucus has a new member – Dina Titus (D-NV).  Serving the First Congressional District of Nevada, Congresswoman Dina Titus has built a strong record of achievement as both an educator and a public servant.  The Americans Abroad Caucus counts 28 members as of April 2014, representing many states and all regions of the nation.  Twenty-two Democrats and six Republicans are members, (find their profiles here.) as listred by the American Citizens Abroad. The ACA newsletter states that they “look forward to working with these Representatives in Congress to advance the cause of Americans residing and working overseas.”

Write Your Congressman to Vote FOR H.R. 6263 (Commission on Americans Living Abroad Act)

24 Oct

Supporting new legislation for Americans abroad

capitol2.jpgRepresentative Carolyn B. Maloney (D-NY) and two other members of Congress have introduced legislation in the House (H.R. 6263) which would substantially improve the situation for millions of American citizens living outside the USA.

The bill, known as the “Commission on Americans Living Abroad Act” is cosponsored by Reps. Michael M. Honda (D-CA) and Charles B. Rangel (D-NY).

You can help promote passage of this legislation by writing to your member of Congress NOW, before the November elections.  A model letter in available here in text or Word format.

This is from the American Citizens Abroad website. I apologize for not bringing it to your attention sooner, but I just discovered it today. If you change the wording appropriately, you can still send your urging to vote for this bill after the election. It is, in my opinion, a step forward for EXPATS to get a little bit more away from taxation without representation.