Tuesday, April 15, 2014

U.S. Seeks to Forfeit Proceeds of Secret Swiss Account; the Enabler Turns on the Client (4/15/14)

David Voreacos, U.S. Seeks to Seize $12 Million in Swiss-Linked Tax Case (Bloomberg 4/8/14), here.  Excerpts:
U.S. prosecutors moved to seize $12.2 million they say was transferred to New York from a secret Swiss account set up by a lawyer who helped Americans hide assets from the Internal Revenue Service. 
In a forfeiture action filed today in Manhattan federal court, the government demanded the money of “Client 1” and the client’s father, who prosecutors said used a “mail and wire scheme to defraud the IRS of taxes due.” The accounts were held at “Bank A” in Zurich and “Bank B” in Switzerland, according to the civil complaint, which doesn’t name the institutions or client.
The government said the accounts were set up by Swiss attorney Edgar Paltzer, who pleaded guilty in New York on Aug. 16, admitting he committed tax fraud for more than a decade. Paltzer is cooperating with prosecutors amid a U.S. crackdown on offshore tax evasion that has targeted Swiss banks, bankers, lawyers and financial advisers. 
* * * * 
Paltzer created sham entities in the British Virgin Islands, Liechtenstein and Panama to hide the true owners of the accounts and visited the client and father in Staten Island, New York, in 2006, according to the complaint. The client and Paltzer also had dinner in Manhattan.
For a posting on Paltzer's plea, see Swiss Lawyer Pleads Guilty to U.S. Tax Crimes (Federal Tax Crimes 8/16/13), here.

Of course, one of the messages here is that those who think their enablers -- whether banks or individuals -- are honorable enough to protect them may be disappointed.

As Shakespeare said in King Henry the Fourth, part 1, Act 2, Scene 2, here, putting the following words into the mouth of Falstaff:  "a plague upon it when thieves cannot be true one to another!"

Addendum 4/15/14 5:00pm:

The Complaint in the case is here.  The action is for against $12,245,646.79 in currency held in an "IRS seized asset account."  The fund (money) is the defendant in the forfeiture action.

The funds were "was previously held in two bank accounts at a bank located in Zurich, Switzerland ("Swiss Bank A")."  The funds were nominally in account name of corporate entities owned by Client 1 and Client 1's father.  The funds were later shifted to Swiss Bank B.  They hid the funds and income from the funds from the IRS.  Edgar Paltzer, a Swiss enabler, helped them hide the funds and income.  The entities included a BVI sham entity, a Lichtenstein sham entity and Panamanian sham entities.  They also purchased real estate in the Bahamas.

Paltzer met with Father and Client 1 in the U.S to discuss Client 1's accounts.

Then:
21. In or about December 2013, the Gossen Account at Swiss Bank A contained approximately  $12,197,491 and the Second Diesel Account at Swiss Bank A contained approximately $37,043. The assets that were held in these two accounts, collectively, constitute the Defendant Currency. In or about February 2014, the Defendant Currency was wired from Swiss Bank A to an I.R.S. seized asset account located in Manhattan, New York.
There is no explanation of precisely how those wire transfers to the IRS seized asset account occurred.

The legal authority for the transfer include:
  • 18 USC § 981(a)(1)(A), here.
  • 18 USC § 1956(a), here.
The required specified unlawful activity -- commonly called SUA -- is "mail fraud (18 U.S.C. § 1343) and wire fraud (18 U.S.C. § 1343)."  [Note, I think the cited section for mail fraud is an error; mail fraud is 18 USC 1341, here; wire fraud is 18 USC 1343, here.]

In virtually all tax crimes there is some component in which the wires and the mail are involved.  Hence, the Government has the power to deploy mail fraud and wire fraud as SUA to form the basis for a money laundering violation and hence a right to forfeit.  The allegation is:
26. As alleged in this Complaint, Client 1 transferred funds from inside the United States to Switzerland in order to promote Client l's mail and wire scheme to defraud the IRS of taxes due and owning relating to the funds held in Client l's undeclared accounts in Switzerland. By reason of the foregoing, the Defendant Currency is subject to forfeiture pursuant to Title 18, United States Code, Section 98l(a) (1) (A).
I quote the DOJ policies below limiting the use of mail fraud and wire fraud, either as the base charge or as an SUA predicate.  This, of course, is just the civil forfeiture action and not money laundering charges.  But, there is no indication as to why this case was so egregious that civil forfeiture was appropriate.  Or is it a signal to all of those not in the program that they should get in soon.

For the DOJ policies on charging mail or wire fraud in tax cases:

DOJ CRIMINAL TAX MANUAL:  

25.00 Tax Money Laundering - 18 U.S.C.  § 1956(a)(1)(A)(ii), 25.01 Tax Division Policy, here.
25.01 TAX DIVISION POLICY  
 The Tax Division must approve any and all criminal charges that a United States Attorney intends to bring against a defendant in connection with conduct arising under the internal revenue laws, regardless of which criminal statutes the United States Attorney proposes to use in charging the defendant. Conduct arising under the internal revenue laws includes a defendant's submission of documents or information to the IRS. USAM § 6-4.210.  
 Prosecution for money laundering offenses requires Tax Division authorization when (1) the indictment also contains charges for which Tax Division authorization is required, including allegations of a tax fraud (e.g., Klein) conspiracy, or (2) the intent to engage in conduct constituting a violation of 26 U.S.C. § 7201 or 26 U.S.C. § 7206 is the sole or principal purpose of the financial transaction which is the subject of the money laundering count. USAM § 9-105.750.
The Tax Division will not authorize such charges where the effect would merely be to convert routine tax prosecutions into money laundering prosecutions, as the statute was not intended to provide a substitute for traditional Title 18 and Title 26 charges related to tax evasion, filing of false returns, or tax fraud conspiracy. Appropriate tax-related Title 18 and Title 26 charges should be utilized when the evidence so warrants. However, the Tax Division will approve money laundering charges when warranted by the circumstances. See Tax Division Directive Number 128. 
Tax Division authorization is not required when (1) the principal purpose of the financial transaction was to accomplish some other covered purpose, such as carrying on a specified unlawful activity like drug trafficking; (2) the circumstances do not warrant the filing of substantive tax or tax fraud conspiracy charges; and (3) the existence of a secondary tax evasion or false return motivation for the transaction is one that is readily apparent from the nature of the money
laundering transaction itself. USAM § 9-105.750.
Tax Division Directive No. 128, Charging Mail Fraud, Wire Fraud or Bank Fraud Alone or as Predicate offenses in Cases Involving Tax Administration, referred to in the policy is here.

UNITED STATES ATTORNEYS MANUAL

USAM 6-4.210, Tax-Related Mail, Wire, or Bank Fraud, RICO, or Money Laundering Charges, here.

USAM Tax Resource Manual

14. Tax Division Directive No. 128 (supersedes Directive No. 99) Charging Mail Fraud, Wire Fraud or Bank Fraud Alone or as Predicate Offenses in Cases Involving Tax Administration, here.

33 comments:

  1. America's current program of ethnically cleansing Americans from Switzerland will certainly help the US to become less confused about residency. Once all US citizens only live in America, thanks to America's treasured national origin discrimination, then the US government will finally realize that a resident of America is someone who lives in US jurisdiction. The US government is very slow and not very smart, but eventually it will get there. Just be patient.

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  2. When Jack writes......."Or is it a signal to all of those not in the program that they should get in soon.".......Lets be clear about a couple of things here :
    The author of this blog has no or very little practical experience with SFCP,QD,GF or VD. His expertise in the "offshore account arena" is mainly limited to OVDI/P cases.
    I am not a fan of generalization but what and who does he mean by "all of those" ?
    Are his "fear mongering comments" addressing :
    1. US citizens and permanent residents who live in the United States;
    2. US citizens and permanent residents who are on temporary work assignments outside the United States or who work for US government agencies overseas;
    3. US citizens, not covered by Category 2 above, who have resided outside the United States continuously beginning on or after January 1, 2003;
    4. US citizens who have resided outside the United States continuously for more than ten years as of January 1, 2013 and continue to reside outside the United States;
    5. US citizens who were born in the United States, but moved from the United States prior to their 18th birthday and have resided continuously outside the United States since that time;
    6. US citizens born outside the United States who have never resided in the United States.
    The OVDP exists for people in categories 1 & 2, and is a good option for such people to bring themselves into compliance with their US tax and bank reporting obligations.

    In any event lets please stay factual and remind everybody here that for the > 7million of expats these headlines or threats mean nothing .

    The forfeiture action because of Tax-Related Mail, Wire, or Bank Fraud, RICO, or Money Laundering Charges will apply to 0.1% of the cases.

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  3. USTax,

    Your information about my lack of experience is incorrect. I have been practicing in the criminal tax area for many, many years -- most of which preceded OVDI/P. I am thoroughly familiar with the criminal tax enforcement system and priorities and representing clients successfully in that system.

    I do agree that the actual fact forfeiture is not likely to play a prominent role in the offshore initiative. However, as with many aspects of the Government's criminal tax initiatives, it could be designed to make people think that it could happen to them.

    For example, the Government can prosecute only relatively few taxpayers in any given year. But those few prosecutions are designed to "incentivize" all the rest to get with the program -- whether it is filing good returns (and FBARs) or joining some voluntary disclosure initiative (such as OVDP). It is not the actuality or certainty that something will happen to any given taxpayer, but the possibility that it could. That is the message that the Government tries to convey by its various initiatives which necessarily given the universe of the taxpayer population must be anecdotal.

    So, if a client were to come in today and want to know the downside of the offshore account shenanigans of the type done by the taxpayers in the case discussed, I would have to indicate the possibility of various bad things, including forfeiture. Not the certainty, but the possibility.

    While I don't see the likelihood of many forfeiture cases, I do see the likelihood of some forfeiture cases, perhaps enough to be an important factor in some taxpayers' decision making processes.

    I like your categories of characteristics of US persons with US tax noncompliant foreign bank accounts. It is very useful for analysis. And I think you are generally correct in your conclusions as to the design of the program. I think however that you are not nuanced enough in excluding categories 3-6. I don't think, for example, that persons in categoy 3 are exempt from criminal prosecution or stiff FBAR penalties; those persons might be good candidates for OVDIP.

    Finally, I think you are overreacting to reality in accusing me of fear mongering. In fact, if you have read this blog over time, you will know that I do not push clients into OVDI/P. A number of my clients have made the decision, after counseling by me, to do QDs or GFs. And I have said the OVDI/P is not for all taxpayers with noncompliant foreign accounts. But it is for some of that universe.

    Thanks for your comments.

    Jack Townsend

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  4. I have read your blog for about 3 years now and I can count dozens of examples where you comments clearly indicated and even in many cases you wrote that you were not familiar with this particular aspect or option.
    I even had the chance to speak to a few former clients or people that had consultations with you to confirm my pov. This is not about bashing JAT but your comments here are sometimes a bit "strange" and misplaced.
    I am sure that you have a lot of theoretical experience in a lot of areas but my view is that you lack practical experience in SFCP,QD,GF or VD and I am sure you have been practicing in the criminal tax area for many, many years -- most of which preceded OVDI/P.
    I disagree with your comment that categories 3-6 are "good" candidates for OVDP.... and I certainly have quite a few other nuances available but not mentioned here.

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  5. uscitizenshipnightmareApril 16, 2014 at 7:46 AM

    Mr. Townsend: A question if I may as to the value of legal representation once someone is inside the OVDP. How much value do you think lawyers add once a candidate has been accepted into the program versus the value added by accountants doing the actual technical work on amending returns? Does that value diminish and then only reassert itself upon opt out. I ask because I am disappointed with my lawyers and feel I have spent more than expected simply to get into a position to file the initial OVDP letter with attachments. I found that much of the cost was to confirm positions that I more or less knew to be correct and that their actual value add was relatively limited. I am more than happy to pay for (and would prefer to have) representation but if it simply doesn't make economical sense, I am fairly certain I could do it myself assisted by able accountants. Where does the additional value add come from? For example, calculating and negotiating with IRS on the penalty base, advising on the opt out? I am not asking for legal advice and I know this is a very general request but would be interested in your thoughts.

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  6. USTax,

    I did not say that persons in categories 3-6 were "good" candidates for OVDP. That can only be determined based on facts and circumstances beyond the characteristics you identify in making the categories. I simply said that people in those categories were not automatically exempt as you suggested.

    My experience tells me that clients who have their liberty and their money at stake need more nuance in making key decisions. My concern would be that, to the extent any reader gave your comments credibility without more nuance, they might conclude that, since they are not in Categories 1 and 2, they don't need the benefits offered by OVDI/P. I think that is the wrong inference to draw. Maybe that was not your intent, but I think readers can read your comment that way.

    I think we have exhausted this discussion. Feel free to comment if and as you wish. I will not respond further.

    Jack Townsend

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  7. USTax,

    Thanks for being a loyal reader of my blog. Well, if not loyal, at least a long-time reader of my blog.

    Since you claim to have more practical experience than I do, I will appreciate your future comments to help enlighten my readers to the extent they find your comments credible.

    That is the test I use for my blog entries and comments. I hope that my entries enlighten the readers.

    Apparently, you do not find some or much or even all of my entries credible. I can respect your view on that. So please post comments as you feel necessary to correct any inappropriate information you feel I am providing on this blog.

    Or better still, create your own blog and identify yourself, so readers will be better able to assess your comments. You may be sure that I will read your blog entries if they are enlightening and make me a better lawyer.

    Best regards,

    Jack Townsend

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  8. sure Jack all of us will try our best to enlighten you and provide you with practical experiences and wisdom and certainly the ultimate goal would be to make you a better lawyer .

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  9. I agree with Jack's characterization of the "bully news pulpit" and Sally's comments.


    The effective, simple way to communicate this message would be to put one sentence such as "Bank and securities accounts outside the US must be reported on FINCEN Form 114 and the income must be reported on 1040-B" on the top first page of the tax return form. Those 22 words would take far less space than the "Do you want $1 to go to the Presidential election fund" question, and would be fair warning, unlike tiny type in convoluted language at the bottom of Schedule B. Newspapers put headlines in big type on the front page, not in tiny type with the classified ads. Tiny type disclaimers buried in the contract are typically used by shady businesses.

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  10. Student1922, I'll save Jack the trouble of defining QD and GF. Everything I know about this, of course, I learned from this blog.



    QD, Quiet Disclosure, means filing amended returns and FBARs for past years (how many years depends on the situation) but doing so quietly, i.e. without calling special attention to yourself. On the tax side it's just like you would amend a return if you had some income or deductions you had not reported but should have. On the FBAR side there is really no provision for amending or filing late FBARs, but you are providing the information late, as in better late than never. The positive is that it shows you're fixing past noncompliance, the risk is that by doing so you are calling attention to yourself.


    GF, Go Forward, means that from this moment on you comply with all your future obligations as to tax and FBAR (now called FINCEN Form 114) filing, but do nothing about the past. It doesn't call as much attention to yourself as QD, but it doesn't look as good to do nothing about the past, if you are examined.



    And there are options within these two. For QD, how many years do you go back? Generally the choice is between 3 or 6 yrs. for taxes, depending on how many years are open, which depends on how much income was understated. For FBARs you might file for fewer years if the income was reported but no FBAR was filed.


    And I suppose you could do a hybrid of QD/GF. For example, I am writing this on 4/16/2014. If you've filed the tax return for 2013, you might file the FBAR (now FINCEN 114) for 2013 by the 6/30/2014 deadline AND amend the 2013 return.


    Which of these two (or OVDI) to do depends on the facts of your situation, and tolerance for risk. You should get legal advice from someone with experience in this area, which is difficult since most/all attorneys have little experience with optouts, and not enough time has elapsed to see what happens with QD and GF.

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  11. I need to step into this discussion. I have also been a loyal reader for about 2 1/2 years, when I started doing research into reporting obligations I did not know about.


    I went to another lawyer who pushed me into OVDI. He mentioned the possibility of QD but dismissed it. I wish I had consulted with Jack before joining OVDI, because Jack has been one of the earliest and most vociferous lawyers on the web to say that OVDI is not for everyone. I did in fact later pay Jack for two hours to discuss the possibility of opt-out and will do so again when I am pushed to make a decision. I got much more out of that two-hour consultation than the $25K that I spent with my first lawyer only to have him do the simple administrative work of OVDI.


    As to lack of experience by lawyers in general: the sad reality is that the IRS has made the process opaque as to what happens on optouts (or QD/GF) or the criteria used in calculating the penalty. It keeps threatening/scaring people with 300% penalties. And the process is so slow that we still don't know what happened to disclosures initiated years ago. In my case I initiated my disclosure in Sep. 2011 which is over two and a half years ago, I would have hoped that by now there would be evidence out there as to what to expect on optouts, so I can decide what to do, but there is still only Just Me, Moby, Sally and ij's experience for me to draw on. As to QD/GF it can take years for the IRS to act and the only way to know what happens is when the SOL expires, but even then, by 2013 you might know what happened to a QD/GF initiated in 2007, which may not be indicative of what will happen to a QD/GF initiated today.

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  12. uscitizenshipnightmareApril 16, 2014 at 11:48 AM

    @ Anonymous, I posted a question on this earlier this morning to the author but thought I might address you as well. Do you think your lawyer added value? If so, at what stages? I find that I am paying more than I would like for what seems to be relatively administrative work, work that I could do myself with the help of a technical accountant. Legal advice has more or less simply confirmed what I had previously thought without representing any substantive advice or proper advocacy. Is the legal value add at the time of the initial filing and then perhaps on opt out or is there any reason to have them during the more administrative phase and/or during negotiation of penalty base with the IRS? Appreciate your or anyone else's thoughts on this?

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  13. Student 1922,


    Anonymous gave an excellent summary. I can't improve on it.


    I did not understand your question about the treaty. You will have to check the treaty or treaties between the U.S. and the country where the retirement account exists. Depending upon negotiating positions of the parties, they may have provided for U.S. equivalent pension treatment (no taxation during internal buildup; taxation when distributed). Just have to check. (I infer from what you said about it, though that it may not be enough like a pension to have warranted treaty treatment, but don't give up on being able to exclude it from the in lieu of or FBAR penalty calculations if it has characteristics of a pension.



    Jack Townsend

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  14. Thanks, Anonymous. Your summary is excellent.


    I am going to cut and paste it and hold it for use when someone else asks about it. I will give you credit -- Anonymous -- with a link to your comment.


    Jack Townsend

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  15. Lol...with Jacks words ... "a good agency full of good people"..... and especially the 2800 that received bonuses despite facing disciplinary action... I guess ensuring the integrity of the system and enforcing tax laws is secondary when it concerns employees of the IRS !!
    Somebody should pass the message to Koskinen that assessing FBAR penalties while it may be fun and very lucrative but it will not last for much very longer.



    http://hosted.ap.org/dynamic/stories/U/US_IRS_BONUSES?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2014-04-22-16-25-14

    ReplyDelete
  16. From The Yale Law Journal :

    Citizenship, Passports, and the Legal Identity of Americans: Edward Snowden and Others Have a Case in the Courts’

    http://yalelawjournal.org/forum/citizenship-passports-and-the-legal-identity-of-americans

    ReplyDelete
  17. Hi Jack, the article did not cover a topic i hoped it would, that being, is a person who gives up US citizenship in current year still a US person for FBAR purposes? Any thoughts? Thanks.

    ReplyDelete
  18. update on "a good agency full of good people" :
    Senators Roberts, Enzi, & Thune Introduce Bill to Block Bonuses to IRS Employees Who Break Tax Law or Have Tax Debt

    U.S.Senators Pat Roberts (R-Kan.), Mike Enzi (R-Wyo.) and John Thune
    (R-S.D.) today introduced legislation to prohibit the Internal Revenue
    Service (IRS) from providing performance awards to employees who owe
    outstanding federal tax debt or who have violated U.S. tax law.

    “Given what we know about recent IRS actions — and the growing discontent with
    the agency that I hear every day from Kansans — continuing to award
    personnel bonuses to employees who have outstanding tax liabilities or
    have violated the tax laws is outrageous and should be stopped,” Roberts
    said. “This isn’t a partisan issue – it’s just commonsense. Until the
    IRS gets back on course, it should not be in the business of awarding
    bonuses – particularly to its agents who are unable or unwilling to
    abide by the tax laws they are directed to uphold.”

    “The agency directly entrusted with the mission of making sure Americans pay
    their taxes should not be rewarding its own employees that are
    delinquent on their own taxes or have broken the law,” said Enzi. “This
    revelation just shows how out-of-touch this agency is with the real
    world and it’s a double standard that should anger every tax payer.”

    “It is unconscionable that while the American people spent $168 billion
    complying with the tax code, many of the IRS employees responsible for
    collecting federal taxes failed to pay their own taxes,” said Thune.
    “Even worse, these IRS employees actually received bonuses for their
    subpar performance. Congress has a responsibility to the American
    taxpayers to ensure we institute a permanent fix to this egregious
    behavior by moving forward with our common-sense legislation to prevent
    the IRS from awarding taxpayer-funded bonuses to employees who have
    failed to pay their taxes or fulfill their responsibilities.”

    At issue is the report from the Treasury Department’s Inspector General
    for Tax Administration on Internal Revenue Service on bonuses awarded to
    personnel who have violated the tax laws or who have been subject to
    serious infractions of employee policy.

    According to the Inspector General, close to $3 million was awarded to staff with
    violations on their records, with about half of that amount going to
    people with tax violations on their record.

    Other personnel at the IRS received cash bonuses or other awards despite
    being cited for drug use, making violent threats, fraudulently claiming
    unemployment benefits, and misusing government credit cards.

    In fact, the report indicates that close to 70 percent of IRS personnel receive some sort of performance reward.

    The bill, the “No Bonuses for Delinquent IRS Employees Act” would:

    prohibit the IRS from providing any performance award to any IRS employee who owes an outstanding federal tax debt;
    block any performance award to an employee who has entered into an
    installment payment plan for an outstanding tax liability until the
    payment plan has been completed.

    Companion legislation, H.R. 4531, has been introduced in the House by Representative Sam Johnson (R-TX).

    Roberts,Enzi, and Thune are members of the Senate Committee on Finance. The
    bill is also cosponsored by Republican Leader, U.S. Senator Mitch
    McConnell (R-Ky.).

    Permalink: http://www.enzi.senate.gov/public/index.cfm/2014/5/senators-roberts-enzi-thune-introduce-bill-to-block-bonuses-to-irs-employees-who-break-tax-law-or-have-tax-debt

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  19. Very good question PCH (btw. greetings to the "Goldküste") unfortunately Jack has not provided an answer or any thoughts yet.

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  20. Finally, an article focussing on to the plight of US immigrants:
    The author says “… going after the assets that they have built up over a lifetime of living outside the U.S. could cause a brain drain of some of the most talented people who are helping to fuel our economy.“.......... Hello. Too late, already in progress !!

    http://www.forbes.com/sites/janetnovack/2014/05/02/welcome-to-america-now-give-us-your-money/

    ReplyDelete
  21. from 5/2 The IRS published the list of former U.S. citizens for the first quarter of 2014 and it can be reviewed here. It’s a record for any first quarter by 47%.

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  22. PCH if you're asking about FBAR my understanding is that if you were a USP part of the year you must file a FBAR for that year (might not have to report for example a new account opened that year but after renunciation.) However I am not a lawyer.

    If you meant FATCA my understanding is that once you renounce (and have proof, if your ID shows a US birthplace) is that banks will not turn you down because you are no longer a USP. However any activity occurring in the account while you were still a USP would be reportable under FATCA. Again I am not a lawyer.

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  23. Here's an alternative to the "bully pulpit."
    When I recently went to irs.gov to print out a copy of Form 1040, the document that came up was actually three pages. The 1040 was on pages 2 and 3. Page 1 was in huge type with a red headline, and was a notice about being able to deduct contributions to the Philippine tsunami made in early 2014 deductible on the 2013 return.
    Now, deducting contributions a year early may help some people, but not much.
    But couldn't the same have been done to inform people about the FBAR (and new requirement to report foreign accounts on the tax return as well) if the IRS REALLY wanted people to know about this?

    ReplyDelete
  24. IRS Investigations





    This week, the House will begin investigating the IRS's targeting of conservative nonprofit groups.
    And things will get really heated as the House votes on whether to hold
    former IRS official Lois Lerner in contempt of Congress. Lerner was the
    former director of the IRS division overseeing tax-exempt organizations
    and is seen as "the face of the investigation" into whether the IRS
    applied extra scrutiny to conservative groups seeking a tax-exempt
    status.

    ReplyDelete
  25. Allegedly the IRS has fairly good computer programs that can filter taxpayer information. They could have used those a few years ago to identify people with non-US addresses and a certain level of income. Then they could have easily sent a letter saying: we notice you have a non-US address and a certain level of income. We are taking the opportunity to remind all taxpayers who live overseas that they have obligations to file reports on their foreign bank accounts. This means that you will need to file the report, by June 30, of every year for most of your non-US bank accounts. Should you have any questions, please refer to irs.gov.

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  26. See below for a Forbes article who steps beyong the official government
    figures to point out their inaccuracy. Technically, it doesn’t really
    matter if the figures are accurate or not since migration is a human
    right and since there really shouldn’t be such a list, given that it is a
    privacy violation. Yet, one would think that if such a list must exist,
    then it should at least be accurate as required by law. Yet, expats
    have always been excluded from the protections of US law, except when
    the government grabs money earned in other countries. I suspect when the
    2014 numbers are released, they will be through the roof. This period
    will go down as a sad and sorry chapter in US State Department history.
    No one wins when cliches, oversimplified and inaccurate observations,
    and misrepresentations outweigh careful consideration of all the facts.

    Btw.
    there were and still are quite a few "Solving US Citizenship Issues
    Info Sessions" now (given all across Canada as well as UK, DE & CH)
    from Jan 2014-present.
    We are all at a very different place than
    when we first came together in late 2011 and though it didn’t seem so at
    the time, things have moved from being terrifyingly unclear to testing
    the waters with info perhaps outside the mainstream perceptions of
    requirements to now, where some things are reasonably predictable and
    the shift to larger groups taking large actions that inevitably will
    push solutions to the forefront

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  27. Jack,

    A question for you and/or any of your readers on the status of long term residents (ie, greencard holders) who give up their green cards and their obligations under US tax. From what I can tell, for tax purposes, a greencard holder has to officially renounce the greencard (e.g., on form I-407, or election of resident treaty rights or revocation by US government) and also file Form 8854 to terminate US tax obligations. Failure to do those official acts would seem to void the renunciation for tax purposes, and thus, the LTR would still need to file. However, for FBAR purposes, it is not clear that the same analysis applies; indeed, the IRM on FBAR explicitly says that term is not defined in the BSA and that the IRC definition does not apply (see: http://www.irs.gov/irm/part4/irm_04-026-016.html ). Furthermore, the guidance provided in the IRM would suggest that someone letting a greencard expire or somone officially renouncing for immigration purposes (but failing to file Form 8854) would not be a US person for FBAR. Any thoughts or experience on this point?

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  28. gottaloveUStax,


    I have never researched the issues you raise and hence cannot comment.


    Perhaps other readers can respond.


    Best regards,


    Jack Townsend

    ReplyDelete
  29. This cartoon illustrates why those abroad will abandon US citizenship – we know the 2008 campaign promises to listen to us and represent us just as homelanders are represented are
    clearly empty, and were even disingenous.

    Abraham Lincoln : “The best way to get a bad law repealed is to enforce it strictly.”
    CBT has only survived because it’s never been truly enforced against anyone, let alone against people who for whatever reason cannot renounce US citizenship. America’s dirty little secret needs to continue being told.

    http://www.veooz.com/photos/bHAdVVY.html

    ReplyDelete
  30. “The U.S. government is the biggest threat to my style of living.”

    .....The additional compliance costs for companies to ensure that Americans they hire are filing the correct U.S. tax returns and asset-declaration forms are $7,000 per person, according to Ledvina. The U.S. accounting costs for individuals opting for expatriation are typically about $4,000per year, he said.....

    http://www.bloomberg.com/news/2014-05-11/brynner-s-tax-spat-augurs-rush-to-give-up-u-s-passports.html

    ReplyDelete
  31. People who think this issue is about tax-dodging are ignorant of what's really going on.
    For years US citizenship had an almost mystical quality. It was the citizenship that "no one ever gives up." Americans abroad cared so much about that citizenship that they fought long and hard to be able to pass it along to their children born abroad. Now it has been right-sized with a vengeance and that devaluation effects ALL Americans wherever they live.

    I note that right now all we seem to be doing is going around and around with no solutions in sight. The US government isn't taking the situation seriously and the American public only does so when that horrible list comes out every quarter. And Americans are still marching down to the consulates and making appointments.

    ReplyDelete
  32. My wife and I are joint owners of overseas accounts totaling $75K. Separately, I am joint owner with my sister (not a US resident/citizen) for a $10K account, and my wife is joint owner with her brother (not a US resident/citizen) for a $18K account. I am assuming therefore, that I would need to file a FBAR showing a value of $85K ($75K + $10K), and my wife will need to file another FBAR showing a value of $93K ($75K + $18K). I am also assuming that each of us will need to complete a separate Form 114a, Record of Authorization to Electronically File FBARS, even though in reality I will be filing both FBARS, one for my SS# and the other for my wife's SS#. Thanks for this blog, I have found it tremendously useful!

    ReplyDelete
  33. Recently i ran into your website and so are already reading along. I think I’d leave my first comment. I don’t understand what to share with the exception that I’ve enjoyed reading. Nice blog. For certain i will keep visiting your blog really often

    PIC Grant Singapore

    ReplyDelete

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