Author Topic: US Congress Made All Expats Criminals  (Read 234 times)

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US Congress Made All Expats Criminals
« on: 18:25 14-Nov-2017 »

Did you know that if you didn't declare your NOVUS shopping card or a restaurant card you are subject to fines and incarceration?

Feel welcome to ask me questions; I know a lot about this subject.

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WHAT IS FATCA?

FATCA is the Foreign Account Tax Compliance Act. FATCA was intended to prevent domestic Americans from illegally hiding their taxable wealth in foreign banks, but it has instead created significant hardships for law abiding overseas Americans.

FATCA requires foreign financial institutions (?FFIs?) such as banks or investment companies to share overseas Americans? financial data with the IRS. FFIs either sign up with the IRS to send the information directly or share the information with the host countries? central tax authorities, who then pass it on to the IRS. There is no wealth threshold for the collection of this financial information: if you are an American citizen with an overseas account, then information on that account?no matter the amount of money it contains?will be collected and shared with the IRS. The information collected by the FFIs would require a warrant if gathered on domestic US citizens.

The FFIs collect this information because the US government imposes severe fines upon any FFIs found not to be in compliance. Fines can be up to 30% of all of the FFI?s revenue generated in the United States, which?if imposed?could cripple any financial institution.

To avoid these crippling penalties, banks either diligently comply with FATCA by collecting and sharing their customers? most sensitive financial information or they choose not to have American citizens as customers at all.

While compliance with FATCA certainly violates Americans? right to privacy (among others), the most crippling effect is the denial of basic banking services to overseas Americans. These services include checking accounts, savings accounts, retirement accounts, child savings accounts, investment accounts and mortgages. FATCA thus prevents many overseas Americans from participating in the basic financial services needed for everyday life.

Republicans Overseas seeks the repeal of FATCA because FATCA violates several constitutional rights guaranteed to all Americans and because FATCA impedes the ability of overseas Americans to access the financial services necessary for everyday life.

WHAT IS FBAR?

FBAR is the Reporting of Foreign Bank Accounts. FBAR is an anti-money laundering regulation dating back to 1970. It was originally devised for the US Department of the Treasury under 31 U.S. Code 5311, in the context of ?criminal, tax or regulatory investigations or proceedings, or in the conduct of intelligence or counterintelligence activities, including analysis, to protect against international terrorism.? FBAR mandates US persons to declare any account outside the US with the FBAR form (TD F 90-22.1).

FBAR assumes that any entity failing to report a foreign account is hiding profits from a criminal activity, and it therefore levies unsustainable civil penalties (up to 50% of total assets for each year of omission), obviously designed to cripple or bankrupt that entity.

In 2003, the US Department of Treasury transferred the administration of FBAR to the IRS, which shifted the focus of FBAR from its original target (white-collar criminals and international terrorists) to the mass of taxpayers, particularly ordinary American expatriates.

In 2008, the reporting threshold was lowered to $10,000 held in aggregate across all foreign accounts. This reduction applied FBAR to middle-class Americans who may already have declared those accounts to the IRS through other means.

With FBAR, not only the account owner is liable to heavy penalties (as described above), but also any ?person acting for a person as a financial institution, bailee, depository trustee, or agent, or acting in a similar way related to money, credit, securities, gold or a transaction in money, credit, securities, or gold.? Hence banks, asset managers and attorneys involved with managing overseas Americans? bank accounts are also liable to full FBAR penalties in addition to the account holder.

FBAR allows the IRS or the US Department of Justice to:

Force all overseas Americans to surrender their financial data to the IRS who are permitted to share this information with other US government agencies.

At their sole discretion, select, target, penalize, seize the assets of, agree on onerous ?settlements?, or else bankrupt any entity that failed to file an FBAR form. This includes those who were not aware of this obligation, including US expatriates, accidental Americans, and any foreign bank, in any country, where any such account was hosted.
(Information and text taken from ?Notes on FBAR vs. FATCA ?FATCA is the Hammer, FBAR is the Anvil?? by James Bopp, Jr.)



Offline AkMike

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Re: US Congress Made All Expats Criminals
« Reply #1 on: 18:31 14-Nov-2017 »
Are you sure that it's not FUBAR?   ::)
In Russia we only had two TV channels. Channel One was propaganda. Channel Two consisted of a KGB officer telling you: Turn back at once to Channel One. Yakov Smirnoff

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Re: US Congress Made All Expats Criminals
« Reply #2 on: 19:18 14-Nov-2017 »
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Are you sure that it's not FUBAR?   ::)

If you mean "f-cked up beyond all/any recognition, repair, reason or redemption," as used by our military, I would say it is that also.

So the FBAR is a kind of FUBAR.   100% FUBAR.

FBAR mandates US persons to declare any account outside the US with the FBAR form (TD F 90-22.1).  Account is broad - even NOVUS card or restaurant card is included. 

Also includes:

- Bank accounts
- Securities accounts
- Certain foreign retirement arrangements

It has nothing to do with income, or new money earned; it means "tell us everything you own outside the U.S.", and the penalties are massive for failing.   For example, failing to report just the NOVUS card can result in a USD $10,000 fine and prison. 

For a willful failure to file FBAR, the annual penalty is the greater of $100,000 or 50% of the account balance. Criminal penalties may also apply.

It hasn't reigned in the super-wealthy tax cheats, but has pulverized Middle Class expats:

68% of checking accounts closed due to FATCA had balances of less than $10,000.
40.4% of savings accounts closed due to FATCA had balances of less than $10,000.
69.3% of retirement accounts closed due to FATCA had a balance of less than $50,000.
58.9% of investment accounts closed due to FATCA had a balance of less than $50,000.


Offline kyivkpic

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Re: US Congress Made All Expats Criminals
« Reply #3 on: 19:57 14-Nov-2017 »
God bless America

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Re: US Congress Made All Expats Criminals
« Reply #4 on: 20:56 14-Nov-2017 »
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God bless America

God Bless America, but F the MF-ers that passed this sweeping dragnet law against all Americans living overseas.   

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Re: US Congress Made All Expats Criminals
« Reply #5 on: 21:21 14-Nov-2017 »
Reggie exaggerates ...

It's possible to comply with the law, and there's got to be at least 5 or 6 US citizens who do :)

At the same time, hundreds or perhaps thousands have renounced their US citizenship in order to avoid this clusterf*ck.

When I was considering staying in Ukraine (not in prospect now), I intended to go to a highly experienced tax accountant I know.  I expected I would have to pay him at least $1000 per year to manage all those filings.

And though there were times I thought it would be convenient to have a bank account in Ukraine, this mess deterred me.

Republicans say that they want to repeal it, but they've held both houses for almost a full Congressional year now ...

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Re: US Congress Made All Expats Criminals
« Reply #6 on: 22:21 14-Nov-2017 »
"Some offshore account reporting is changing, although potential civil and criminal penalties are still frighteningly high. American citizens and residents with non-U.S. bank or financial accounts, or any non-U.S. assets for that matter, have been grappling with myriad changes the last handful of years. It can sometimes feel like the IRS does not want to you have anything anywhere that is not 100% American." -- FORBES

My Take:  Why this law?

- Terrorism?  Nope. 
      * Terrorists don't report anything anyway and it's not the responsibility of the IRS to chase down Bin Laden.  This doesn't mean finance isn't a part terrorism, or the correct focus of an investigation, but it's certainly not the TAX dimensions that are relevant in preventing terrorism.   
 
- Cracking down on fat-cat tax cheats?  Nope.
       * Otherwise these laws would be narrowly tailored, focus on high-value accounts, and target income -- income means NEW earnings, not stuff you had before.

It's a a brutal policy of draconian control over people; These laws basically signify:

(1) we own you no matter where you live;
(2) you have no privacy, 
(3) we tell you where you can live and how you can spend your money,
(4) the laws violate basic constitutional rights against self-incrimination, privacy, travel, and excessive punishments.
(5) the laws are also designed to make most expats guilty of a crime (if need be); they've got something on you.
(6) the laws basically require you to investigate yourself on a forced basis.

The people that passed these laws want Americans overseas to renounce their citizenship:
 
-- "More than 5,400 Americans overseas renounced their United States citizenship last year, a 26% increase over 2015 and more than triple the number in 2010." USA Today.

-- "1.5 Million Americans in Asia May Renounce Citizenship Over FATCA."
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* Remember: The same people that passed these laws are the same people that let illegals into the U.S., have amnesty policies for illegals, and so-called 'sanctuary cities'. 

** There are 10 Million U.S. Expats; so don't think that's a small number.  Off the top of my head that would be something like 12-15 Electoral votes of Americans living overseas.  (Maybe someone can look it up.)

"In 2015, the total number of Americans giving up on their country was 4,279, 58 per cent more than in 2014, and the 2016 figure at 5,411 is an increase over the previous year of 26 per cent. From the beginning of 2017 to the end of March, another 1,313 put their money where their mouths were and left. It seems more US expats every year are realising they don?t ever want to return to a country in chaos and are taking the only way out by giving up their passports. It?s an expensive decision, even more so since the US government increased the fee for citizenship renunciation from $450 to a massive $2,350." 
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Here is One Man's Story (There are thousands like him):

<< I live in Sweden, which is hardly a tax haven.  I am a citizen of that country as well as a US citizen.  I have lived outside of the US for close to 25 years and thought I led a normal law abiding life. Unfortunately, the overzealous and poorly thought out attempts to catch US resident tax evaders have cast me and other overseas residents as criminals.

I am one of the few overseas residents who actually knew that I had to file taxes and did so. Last year, I needed to amend my US taxes due to a reporting error made by my overseas employer and I learned that as I had failed to file a form reporting my overseas bank accounts (the FBAR), the only option I had was to enter a so-called amnesty program, in which I have been told  for this omission, I  need to pay the US government 25% of my life savings, retirement plans, house, and car, all of which have been earned by legitimate employment overseas.

The  "bank accounts"  that I must report to the US government include life insurance policies, telephone prepaid cards, my customer card at the supermarket and my lunch card at work. The latter three must be reported, along with their highest balance (try to calculate that on a supermarket rebate card) all because they fit the definition of a debit card.  All of this under threat of a penalty of USD 10,000 per account if I make a mistake in reporting. I think the most my lunch card has ever had on it was USD 60.

To add insult to the injury I described above, during 2011, FATCA began to be implemented in Sweden and my Swedish bank informed me that I would no longer be allowed to have any investment accounts because of my American citizenship.

FATCA also requires that for my 2011 taxes, I will need to file another form that repeats a lot of the information on the FBAR form and will cost me at least another three hours of accountant time.  The much loved number of USD 10,000 in penalties is again threatened if I make a mistake on this form.

American information reporting requirements have become so demanding that I have made all kinds of new friends in my Swedish bank and tax authority.  I get to challenge them  to provide documentation that makes no sense in Sweden, but helps me to meet the US requirements.  Without these wonderful FATCA requirements, I might have just led an unobtrusive life and like most other residents here, had very little to do with these people. Now I stick out like a sore thumb.  FATCA has afforded me with the opportunity to prove to Swedes that Americans are different, demanding and difficult.

I no longer have any family in the US and I have spent less than a year there in the last 25 years.  Where you spend your childhood stays with you and I have a strong emotional tie to the US.  So even though indications are that it would be in my best interest to renounce my citizenship, I plod stubbornly along in the face of all the abuse and try to believe in the American "truth and justice" I was taught about as a child.

That is why I appreciate your article. It will help to make public the unfortunate consequences of the poorly conceived FATCA legislation.  Maybe it will help me and other overseas US citizens to be able to return to leading a normal life.  That is all I desire in my American dream.>>

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« Last Edit: 22:42 14-Nov-2017 by Reggie »

Offline kyivkpic

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Re: US Congress Made All Expats Criminals
« Reply #7 on: 22:37 14-Nov-2017 »
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It's a a brutal policy of draconian control over people; These laws basically signify:

(1) we own you no matter where you live;
(2) you have no privacy, 
(3) we tell you where you can live and how you can spend your money,
(4) the laws violate basic constitutional rights against self-incrimination, privacy, travel, and excessive punishments.
(5) the laws are also designed to make most expats guilty of a crime (if need be); they've got something on you.
(6) the laws basically require you to investigate yourself on a forced basis.

The people that passed these laws want Americans overseas to renounce their citizenship:
 

premise and 1-6, absolutely but they don't want us to renounce, the people that wrote these laws had much more pernicious reasoning, I think.

They've also passed legislation that allows your passport to be revoked for overdue taxes.

Good time for this. Slavery is freedom and freedom is slavery

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« Last Edit: 22:47 14-Nov-2017 by kyivkpic »
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Re: US Congress Made All Expats Criminals
« Reply #8 on: 22:45 14-Nov-2017 »
@KP,

We basically agree.  Added in my earlier post that they jacked up the fee for citizenship renunciation from $450 to $2,350.  So they are really trying to squeeze people.  Really criminal behavior.  It's so extreme I'd call this a soft revolution of sorts; it's almost like the beginnings of when the USSR came to power.     

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Re: US Congress Made All Expats Criminals
« Reply #9 on: 12:39 15-Nov-2017 »
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@KP,

We basically agree.  Added in my earlier post that they jacked up the fee for citizenship renunciation from $450 to $2,350.  So they are really trying to squeeze people.  Really criminal behavior.  It's so extreme I'd call this a soft revolution of sorts; it's almost like the beginnings of when the USSR came to power.   
 

You're just now realizing our federal government has gone off the rails?

It was clear to me by the end of 2008 with the bailouts for bankers committing fraud while the rest of us lost our investments and homes and had to eat poop.

The fed gov made us all slaves and criminals long before FATCA and FBAR. There was the Patriot Act and much more.

« Last Edit: 12:51 15-Nov-2017 by kyivkpic »
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Re: US Congress Made All Expats Criminals
« Reply #10 on: 16:03 15-Nov-2017 »
Nobody is going to persecute you for having a few dollars in a foreign account... unless the U.S. D.J. wants you for some other reason.  Then it will come up and be used in a prosecution.  That's the way justice in America works.  They have something on everyone and save it for a rainy day.  Keep your noses clean!

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Re: US Congress Made All Expats Criminals
« Reply #11 on: 16:30 15-Nov-2017 »
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Nobody is going to persecute you for having a few dollars in a foreign account... unless the U.S. D.J. wants you for some other reason.  Then it will come up and be used in a prosecution.  That's the way justice in America works.  They have something on everyone and save it for a rainy day.  Keep your noses clean!

1 - Did you file your FATCA and FBAR forms? 
2 - And did you file them on time every year?

I do this every year, but someone like me has specialized knowledge.  I'm not worried for myself; I am writing my opinions very openly about this subject under my own name and open email address.   

It's the people who don't have access to lawyers or information that I worry about who are just trying to lead normal law-abiding lives who I don't want to see broad-sided.

I don't want to see people put into the meat grinder -- as thousands already have --because they were unaware of the law or listened to someone that has no idea what he is talking about.

I don't think you'll answer those two questions, above, because you don't believe your own advice.  Better go and look at how many people get jacked under these laws before you start telling people there is no risk unless you have done something wrong to begin with.

"Imagine owing up to $600,000 in penalties on, say, a $20,000 bank account simply because you didn't report it to the IRS." -- CNN
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"Imagine this: Your kids were born in Sweden, have Swedish citizenship, speak Swedish, and grew up in Sweden. But still, the U.S. government insists they're Americans -- and Uncle Sam wants to collect taxes. Sound far-fetched? This is the reality for Sarah Gaisler, an American who gave birth to her three sons in Sweden -- and many other expats with children born outside the U.S."  -- CNN
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Yeah David, I am sure these 3 little kids were guilty of something.  Go watch the video with the distraught parents. 

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Re: US Congress Made All Expats Criminals
« Reply #12 on: 19:09 15-Nov-2017 »
A Useful and Quick Summary.

To help people ask appropriate questions of their accountants and lawyers of choice.  Don't construe any of this as professional advice to you.

FATCA, Form 8938: Statement of Specified Foreign Financial Assets

Depending on the amount of the aggregate value of their assets, US individuals are required to file Form 8938 with their Form 1040 tax returns. Generally, American expats should file this form if the aggregate value of their assets is higher than USD 50,000.

* See the photo I provided as to type of items covered and not covered under Form 8938.

FBAR (FinCEN Form 114):

Not filed with the IRS. It must be filed directly with the office of Financial Crimes Enforcement Network (FinCEN).

Taxpayers with an interest in, or signature or other authority over, foreign financial accounts whose aggregate value exceeded $10,000 at any time during must report themselves.

Neither FATCA nor FBAR include additional taxes you must pay - they simply exist as reporting requirements, with massive financial and criminal penalties for failure to report, regardless of negligence or carelessness.  (So don't worry that I posted this here, there is no willfulness requirement, or proof of actual knowledge of the law, for the penalties to kick in.). The reason I put "massive financial and criminal penalties" in the color red is they are so massive and ugly, to discuss them fully would distract from this quick summary.  They are really, really, really, bad.

What can I do about this?

There are about 10 million U.S. Expats.  Support the groups that are trying to have these laws repealed or modified. VOTE.  Groups like this are trying to fix the problem; consider supporting them:

American Citizens Abroad, Inc.
11140 Rockville Pike
Suite 100-162
Rockville, MD 20852  USA
+1-540-628-2426
info@americansabroad.org

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Who is responsible for FATCA and FBAR?

- FATCA: Introduced by Max Baucus (D-Montana); Charles Rangel (D-NY); signed into law by Obama 2010.  The full range of the house and senate that voted for this, not just the Stalinists above, should be voted out.  If you are expat, consider your vote appropriately; educate yourself.

- FBAR existed prior to 9/11 but became a walking Frankenstein after 9/11.

Are any politicians fighting these laws?

- In 2017, bills to repeal FATCA were introduced in Congress: Senator Rand Paul (R-KY) introduced S. 869 in the Senate and Representative Mark Meadows (R-NC) introduced H.R. 2054 in the House of Representatives.

- On January 24, 2014, the Republican National Committee passed a resolution calling for the repeal of FATCA.

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Re: US Congress Made All Expats Criminals
« Reply #13 on: 19:11 15-Nov-2017 »
I see an element of conspiracy theorizing here (or more accurately, its kissing cousin, the persecution complex).

Is there really some wicked plot afoot to abuse expatriates?  Well, believe that if it makes you feel big!

A reality of life for expatriates from Western countries, is that in most host countries expats are a tiny minority whose political and economic importance is very very far down the scale.

And usually they are also a tiny minority of their home country's population.

Simply, not that all-fired important.

But that's the beauty of a persecution complex.  If men in dark suits and sunglasses are following me around, and the FBI is reading my mind using a laser beam, then I must be important!
____________________________________

The flip side of this coin, of course, is that if an expat community really isn't very important ...

... then if they get crushed under various bureaucratic boot-heels, nobody's going to lift a finger to help.

Most expats are where they are because they want to be, not because somebody forced them at gunpoint.

You pays your money, and you takes your choice.
____________________________________

Thanks to Reggie, for the useful info posted above!

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Re: US Congress Made All Expats Criminals
« Reply #14 on: 19:28 15-Nov-2017 »


Did I lie about something?

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When I was considering staying in Ukraine (not in prospect now), I intended to go to a highly experienced tax accountant I know.  I expected I would have to pay him at least $1000 per year to manage all those filings.  And though there were times I thought it would be convenient to have a bank account in Ukraine, this mess deterred me.

So if it's okay with you, I would like to help people understand these laws so nothing bad happens to them or their families.  It's not a matter of "convenience" for some expats here; they have families to support; some are retired; most don't want a massive headache involving the U.S. government or IRS.  I'm not doing this because I make any money from it; I don't want to see people who are living their dreams wake up to a nightmare because they missed some critical info.