Category Archives: FBAR

Did Mr. #FBAR really pay a surprise visit to Canada?

Update June 19, 2017:

The Department of Justice sued Mr. Pomerantz in Seattle. The purpose of the lawsuit was to get a judgment against Mr. Pomerantz. Interestingly, the Government lost the lawsuit for reasons unrelated to the substance of the issue. The Government failed to plead the facts that it needed to succeed in the lawsuit.

A full discussion of the ongoing adventures or Mr. Jeffrey Pomerantz and Mr. FBAR is here.

The FBAR Chronicles continue …

First, A Public Service Announcement – Mr. FBAR Get’s A New Filing Due Date

 

This is one more of my posts about Mr. FBAR. Mr. FBAR is a mean, nasty vicious thug who has no place in any civilized society.

Thomas Jefferson once said:

Were it left to me to decide whether we should have a government without newspapers, or newspapers without a government, I should not hesitate a moment to prefer the latter.

My thoughts are that:

Were it left to me to decide whether we should have FBAR without outlaws, or outlaws without FBAR, I should not hesitate a moment to prefer the latter.

Unfortunately, Mr. FBAR has become the new symbol of American citizenship. Furthermore, Mr. FBAR disproportionately affects the local bank accounts of Americans abroad – becoming (in effect) a form of “domestic terrorism” against U.S. citizens living outside the United States.

Mr. FBAR As Applied To The Canada U.S. Dual Citizen …

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Part 2: Be careful what you “Fix For” – Mr. Kentera meets Mr. #FBAR in the “Twilight Zone”

Introduction …

This post is one more of a collection of FBAR posts on this blog. The most recent FBAR posts are here and here.

The “unfiled FBAR” continues to be a problem for certain Homeland Americans with “offshore accounts” and all Americans abroad,  who continue to “commit personal finance abroad”.

The above tweet references a recent post which discussed how to “fix past compliance problems“. The introduction included:

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Be careful what you “fix for”! A Holiday Gift: What to do about the unfiled #FBAR

As 2016 comes to an end …

I suspect that history will show that that the growth in renunciations of U.S. citizenship (and abandonment of Green Cards) continued in 2016. Absent a change in the way that the United States treats its “U.S. Persons Abroad”, I suspect that the growth in renunciations of U.S. citizenship will continue.

The purpose of this post and a short summary …

This blog post will hopefully encourage those with U.S. tax issues to consider whether they can deal with minor/unintentional FBAR violations as a “stand alone single problem”. There may be no need to escalate and expand one single problem into a multi-dimensional full blown tax problem that may end up with unintended and unanticipated costly professional fees as well as undue time spent!  Read on and learn why.  Keeping a calm head is most important, even if it is most difficult to do in the face of the scary situation of not being in compliance with the U.S. tax and regulatory regime.

This post consists of the following six parts:

Part 1 – Problems, more problems and the expansion of problems

Part 2 – Looking For Mr. FBAR

Part 3 – It often begins with a chance meeting with Mr. FBAR

Part 4 – How the compliance problems of “Homeland Americans” (particularly Green Card holders) differ from the compliance problems of “Americans Abroad”

Part 5 – Focusing specifically on the problem of FBAR non-compliance

Part 6 – Dealing with the tax professionals: Beware of how they can expand the number of problems

 

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Citizenship-based reporting: Mr. #FBAR as a role model for President Putin and the Russian government

 

It has been widely reported that American actor Steven Seagal has joined American boxer Roy Jones in becoming a citizen of Russia. By becoming Russian citizens, Mr. Seagal and Mr. Jones are now subject to Russia’s Currency laws, which include the requirement to report their non-Russian bank accounts to the Kremlin. Messrs Seagal and Jones may admire Russia. That said, it’s clear that the Kremlin admires the U.S. Treasury in general and Mr. FBAR – America’s most important citizen – in particular.

Citizenship-based reporting: Mr. FBAR as a role model for President Putin and the Russian government …

 

Although Russia has “residence-based taxation” it has “citizenship-based reporting”.
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False Form 8854 used as part of “willful” #FBAR prosecution

The primary story is of a U.S. professor who pleaded guilty to an FBAR violation and was subjected to a 100 million FBAR penalty.  Notably the “tax loss” was 10 million dollars and the FBAR penalty was 100 million dollars. It appears that Mr. FBAR is becoming an important tool in the arsenal used by the United States Treasury.

The more interesting (for the purposes of expatriation) was the role that a “false Form 8854 “Expatriation Statement”) may have played in the guilty plea.

The story has been reported at the following two sources:

and on Jack Townsend’s blog

What is most  interesting is the description from the Department of Justice site which includes:

Horsky directed the activities in his Horsky Holdings and other accounts maintained at the Zurich-based bank, despite the fact that it was readily apparent, in communications with employees of the bank, that Horsky was a resident of the United States.  Bank representatives routinely sent emails to Horsky recognizing that he was residing in the United States.  Beginning in at least 2011, Horsky caused another individual to have signature authority over his Zurich-based bank accounts, and this individual assumed the responsibility of providing instructions as to the management of the accounts at Horsky’s direction.  This arrangement was intended to conceal Horsky’s interest in and control over these accounts from the IRS. 

In 2013, the individual who had nominal control over Horsky’s accounts at the Zurich-based bank conspired with Horsky to relinquish the individual’s U.S. citizenship, in part to ensure that Horsky’s control of the offshore accounts would not be reported to the IRS.  In 2014, this individual filed with the IRS a false Form 8854 (Initial Annual Expatriation Statement) that failed to disclose his net worth on the date of expatriation, failed to disclose his ownership of foreign assets, and falsely certified under penalties of perjury that he was in compliance with his tax obligations for the five preceding tax years.

Horsky also willfully filed false 2008 through 2014 individual income tax returns which failed to disclose his income from, and beneficial interest in and control over, his Zurich-based bank accounts.  Horsky agreed that for purposes of sentencing, his criminal conduct resulted in a tax loss of at least $10 million.  In addition, Horsky failed to file Reports of Foreign Bank and Financial Accounts (FBARs) up and through 2011, and also filed false FBARs for 2012 and 2013.

The point is that the false Form 8854 (used primarily to provide information about whether one is a “covered expatriate” and to calculate the Exit Tax) was used as evidence of part of a conspiracy to evade taxes. This is an interesting use of the Form 8854,  which is primarily an “information return”.

Obviously this a “general interest” post with extremely unusual circumstances. But, it is an example of how associations with others, in the  “Wide and Wonderful World of U.S. Tax Forms” can become a problem.

This is also a reminder the “information returns” DO matter!

 

 

 

 

 

 

 

 

 

Around the world in 192 pages: Experiences of #Americansabroad in an #FBAR and #FATCA world

Here it is:

richardsonkishcommentsamericansabroadapril152015internationaltax-2

This is one of seven parts of the Richardson Kish submissions to the Senate Finance Committee in April of 2015. I thank Patricia Moon for her unbelievable effort in putting this document together!

And speaking of Americans abroad in an FBAR and FATCA world, you might like to read:

The message is:

When In Rome, Live As A Homelander

#YouCantMakeThisUp!

John Richardson

 

Will a business trip to the United States of America trigger a “chance” encounter with Mr. #FBAR?

Prologue: Circa 1948 – George Orwell anticipates the arrival of Mr. FBAR

‘By the way, old boy,’ he said. ‘I hear that little beggar of mine let fly at you with his catapult yesterday. I gave him a good dressing-down for it. In fact I told him I’d take the catapult away if he does it again.

‘I think he was a little upset at not going to the execution,’ said Winston.

‘ Ah, well — what I mean to say, shows the right spirit, doesn’t it? Mischievous little beggars they are, both of them, but talk about keenness! All they think about is the Spies, and the war, of course. D’you know what that little girl of mine did last Saturday, when her troop was on a hike out Berkhamsted way? She got two other girls to go with her, slipped off from the hike, and spent the whole afternoon following a strange man. They kept on his tail for two hours, right through the woods, and then, when they got into Amersham, handed him over to the patrols.’

‘What did they do that for?’ said Winston, somewhat taken aback. Parsons went on triumphantly:

‘My kid made sure he was some kind of enemy agent — might have been dropped by parachute, for instance. But here’s the point, old boy. What do you think put her on to him in the first place? She spotted he was wearing a funny kind of shoes — said she’d never seen anyone wearing shoes like that before. So the chances were he was a foreigner. Pretty smart for a nipper of seven, eh?’

‘What happened to the man?’ said Winston.

‘Ah, that I couldn’t say, of course. But I wouldn’t be altogether surprised if-‘ Parsons made the motion of aiming a rifle, and clicked his tongue for the explosion.

Chapter 5 of George Orwell’s 1984

Writing in 1948, George Orwell (in his book 1984) identified the need to identify and punish all things “foreign” as being important for domestic security.

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US tax lawyer, blogger and #FATCA researcher inducted into “Hall Of Fame”

So much publicity! So little relevance!

The New York primary was this week. Both Donald Trump and Hilary Clinton extended their leads and moved one step closer to their respective party’s nominations. (Mrs. Clinton with the approval of the Democratic Party and Mr. Trump with the disapproval of the Republican Party.) Interestingly both Mr. Trump and Mrs. Clinton have higher disapproval ratings than approval ratings. Yet each of them appears likely to represent their respective parties in the upcoming Presidential election. One of them will win the election (this is not the same as having been elected). Will the eventual winner make a positive difference in the life of any individual? Doubtful. Watching the political process contributes to a sense of negativity about human nature.

But, wait! The World Is Full Of Good People!

Starting at the age of 7 or 8, I participated in four seasons of organized sports. To be truly effective, organized sports are highly dependent on adult volunteers. I well remember a guy named “Bob D.” Although I thought of him as old, he was probably somewhere between the age of 20 and 25. Anyway, “Bob D” was helping with baseball. “Bob D.” was helping with basketball. “Bob D.” was helping with football. “Bob D.” was always volunteering his time and coaching.  I have a memory of my father noticing “Bob D.” and commenting “There are a lot of good people in this world”. So true.  I don’t believe that “Bob D.” received a lot of recognition or a lot of gratitude. Yet year after year, season after season, week after week, day after day. “Bob D.” showed up. He clearly made a positive difference in the lives of others.

The Unsung Heroes of Life

You will find people like “Bob D.” in every facet of life. They do things for people, just because they want to. They contribute to their communities, just because they want to.  They provide mentorship for people, just because they want to. They put their kids through university because they want to. They are the true “Unsung Heroes of Life”. I once thought of writing a little book about these “Unsung Heroes of Life”.

Although, I can’t do a book. I can offer this “Bedtime Story” …

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Tax Haven or Tax Heaven: Introduction – Were the “Panama Papers” about #offshore “tax evasion” or “tax avoidance”?

The above tweet references an article written by Tony Burman, which appeared in the Toronto Star (and other papers) on April 9, 2016.

The article included:

The global aftershocks of the so-called Panama Papers are only beginning to be felt. More revelations are expected in the weeks ahead, and this will only add to the uproar.

The prime minister of Iceland has already been dumped. Other government leaders have been embarrassed. Several countries have announced inquiries into the secretive world of offshore tax evasion. And public anxiety about the corrupt coddling of the world’s superwealthy “1%” is showing signs of turning into red-hot anger.
But we shouldn’t be surprised. It’s not as if we didn’t already know that the world’s political and business elites frequently cheat and steal, that our governments are swindled out of trillions of dollars of revenue and, as a consequence of this greed, the vast majority of people suffer from a painful culture of austerity so these freeloaders can get richer. We already knew that.

However, it is the disgusting detail contained in this week’s revelation of leaked documents that is so revolting — and, of course, the appalling fact that so much of this is technically “legal.”
With their own interests in mind, politicians and business leaders in many countries have worked quietly in the dead of night to make this so. The result is that, more than ever, taxes now appear to be primarily for the little people.
The documents come from an influential Panama-based law firm. They include 11.5 million internal records disclosing the financial secrets of heads of state, billionaires, drug lords, celebrities and others.

While expressing outrage at the part of the “Panama Papers” that represents tax evasion, Mr. Burman identifies that much of the revelations of the “Panama Papers” was the result of clear and deliberate government policies and laws. In other words, the story of the “Panama Papers” is mostly about “legal tax avoidance” and ” NOT illegal “tax evasion”. Therefore, it is entirely unreasonable and counterproductive to focus on “tax evasion” and exclude “tax avoidance” from the discussion.

Nevertheless, when it comes to tax evasion …

The OECD’s Q and A about the “Panama Papers” reveals:
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US Passport application links Citizenship @StateDept to Taxation @USTreasury to enforce “Taxation based Citizenship”

Yesterday I was forwarded an email which originated from the U.S. Consulate in Toronto. The purpose of the email (included at the end of this post) was to give notice of  U.S. tax obligations for U.S. citizens living outside the United States. In other words, the State Department is assisting the IRS by notifying Americans abroad of their U.S. tax filing obligations. Put another way, this email represents:

“Tax Education Outreach” from the IRS delivered by the State Department”

I do NOT recall this in previous years. That said, this email notification is extremely significant. It means that the IRS can argue that those who received this email may well have had notice that they were required to file U.S. tax returns. Over time, this will increase awareness of U.S. tax filing obligations. The greater the increase in awareness of U.S. tax filing obligations, the harder it will be to claim ignorance of those obligations. (This is in addition to the “Educational Outreach” coming in the form of FATCA letters from your local bank and your friendly journalists. In both cases, you are being asked to consider the question of: “Are you or have you even been an American citizen?“) Although, this is NOT an immediate problem, it seems logical that sooner or later it will become more difficult for Americans abroad to claim ignorance of their U.S. tax filing obligations. This may have implications for coming into U.S. tax compliance.

 

Q. Who would have received this email from the U.S. consulate?

A. Anybody who is on the U.S. Consulate email list.

Q. Who would be on the U.S. Consulate email list?

A. It would include almost anybody who has applied for a U.S. passport.

To put it simply:

One who applies for a U.S. passport is now putting oneself in a position where one will be told about U.S. tax filing obligations. Since most Americans abroad need a U.S. passport, it stands to reason that those who apply for a U.S. passport are creating a situation where they will be told about U.S. “taxation based citizenship”. You can see where this is going.

This appears to be the next step in the progression that includes …

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