# FBAR Penalties



## BenJG

Hi All,

I've spent the last week or so reading pretty much everything I can get my hands on regarding the FBAR and possible penalties, and was wondering whether anyone on this forum has filed late FBARs and actually had a civil penalty imposed? If so, how much? Did you also owe back taxes (income or self-employment)? I think it would be useful to collect this information, if only to see what the experience of people has been and whether there is a pattern to the IRS response.

BenJG


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## Bevdeforges

I've been filing US tax returns (including FBARs) for something like 20 years now, and have had some contact with the IRS office here in France. The laws are changing, but so far I have yet to hear of anyone being hit with fines for late FBARs (or even failure to file FBARs) where the accounts reported didn't reveal any significant amounts of unreported income.

I also know a number of people who "didn't know" they were supposed to have been filing US tax returns - for 20 years or more - and who simply filed a few years of back returns, showing that their income was mostly subject to the FEIE. They weren't assessed any fines or penalties, either. And, I have confirmed this treatment with the folks in the Paris IRS office (though this was a few years ago and it is possible that policies are changing with the new laws).

Where you are most likely to run into fines and penalties is if you suddenly appear on the IRS radar with a back- or current filing that indicates you have accounts producing significant amounts of hitherto unreported income.
Cheers,
Bev


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## BenJG

Thanks so much for this. What do you consider to be significant income? What sorts of earnings would you need to have to attract IRS interest?


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## Ladyhawk

The other part of this is whether you can convince the IRS that you had "reasonable cause " to not know about the FBARs and this is where the answer is "nobody knows". The IRS just recently "clarified" their position by producing guidelines that describe what they have always done, which is not bother with late-filing penalties for people who owe no taxes , but take a "we'll see" attitude for late FBAR filings.


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## pwdunn

BenJG said:


> Thanks so much for this. What do you consider to be significant income? What sorts of earnings would you need to have to attract IRS interest?


BevDeForges is the only person, who I know of, who claims to have known anything about FBAR before the year 2008. For the last twenty years, eh? That is the most remarkable thing I've heard in a long time, and I wonder what it is that you (Bev) do, that you ever heard of it: I've read hundreds of blogs and talked to a lot of people, not single person knew about FBAR. I've written dozens of blogs on FBAR (at The Righteous Investor and The Isaac Brock Society) and not one person ever said to me in the comments: "Oh I knew about that and filed those things for years." So frankly, I believe Bev, but she is by no means typical in this regard: compliance with tax filing requirements was a small percentage of US persons abroad, and compliance with FBAR requirements was an even smaller percentage of those who knew they had to file their taxes (so a fraction of a fraction). She says she has close contact with the IRS, but IRS personnel never told people about FBAR for years, until it became their purview in about 2004. I first learned about it in 2009 and I have had my Canadian accountants doing my US taxes for years. Now the IRS has made it so that my accountant must outsource my US taxes.

I think there is considerable risk, if the IRS decides to be "fair". Those in the OVDI program were assessed massive fines and they feel that they have been grossly mistreated, particularly if they could have gotten away with a Quiet disclosure. So I believe that the IRS is going to be fair; that is to say, the IRS is storing up the information and when they have the resources and they are finished whacking the OVDI people over the head, they will go after the largest fish amongst the Quiet disclosures. I have every reason to believe that that is what they will do. And when they get the FATCA information, they will go after those who have never filed FBAR.

Why do I think this? Because consider that the application of the FBAR law is at the discretion of the Secretary of the Treasury, Timothy Geithner, a known tax cheat. He can tell Canadians they are off the hook. He can say that RRSPs, TFSAs, RESPs, and RDSPs are off the hook. He can waive Canadian residents from having to file FBAR. _So why force Canadians to file? Because he is collecting information so that he can bash the wealthier folks over the head with FBAR penalities. I have no reason at all to doubt this assessment of the situation._ If someone always acts a certain way, you know, an abuser or a player, it is irrational to believe that the person is going to change overnight.

Personally, I will not expose my family to the capricious nature of the IRS and I have chosen to relinquish my US citizenship rather than fill out FBARs. The Canadian government has said they will not collect FBAR penalities and I cannot be extradited for an FBAR fine. So I will continue to bash and denigrate this evil government.


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## Ladyhawk

PetrosResearch said:


> I think there is considerable risk, if the IRS decides to be "fair". Those in the OVDI program were assessed massive fines and they feel that they have been grossly mistreated, particularly if they could have gotten away with a Quiet disclosure. So I believer that the IRS is going to be fair; that is to say, the IRS is storing up the information and when they have the resources and they are finished whacking the OVDI people over the head, they will go after the largest fish amongst the Quiet disclosures. I have every reason to believe that that is what they will do. And when they get the FATCA information, they will go after those who have never filed FBAR.
> 
> Why do I think this? Because consider that the application of the FBAR law is at the discretion of the Secretary of the Treasury, Timothy Geithner, a known tax cheat. He can tell Canadians they are off the hook. He can say that RRSPs, TFSAs, RESPs, and RDSPs are off the hook. He can waive Canadian residents from having to file FBAR. _So why force Canadians to file? Because he is collecting information so that he can bash the wealthier folks over the head with FBAR penalities. I have no reason at all to doubt this assessment of the situation._ If someone always acts a certain way, you know, an abuser or a player, it is irrational to believe that the person is going to change overnight.


I have a similar but slightly different take on this. I do not think this is necessarily a plan right now. But I do believe that all of this FBAR and FATCA information is being gathered for a larger purpose than immediate levy of penalties, rather that the data can be studied, just in case they need more money in the future, ie, to determine how much money is in the hands of US citizens outside the US, which can then be the basis for future policies should the US once again be as strapped for cash as they are now. Note that the information includes exactly where each of us is, and exactly where all of our money is located, complete with account numbers, and conveniently updated annually. 

And this is not going to be limited to "the wealthy". Inflation will move all of us into higher brackets if the triggering limits are never changed, and in any case, they clearly use a lot of imagination in defining "the wealthy" so every one thinks it won't be them, it will be those imaginary fat cats who sit on yachts sipping mint juleps and spending money that "belongs" to the government.
.


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## AmTaker

BenJG said:


> Thanks so much for this. What do you consider to be significant income? What sorts of earnings would you need to have to attract IRS interest?


I don't think you're likely to get a clear answer on this -- the IRS likely does not want people who owe below say $x in taxes to feel that they can get off without penalties and they likely want the freedom to pursue obvious tax cheats even if they can only prove small tax losses. Its the same for US domestic persons too, I suspect. 

That said, I doubt that anything that doesn't involve a substantial underpayment of tax defined around 5K per year would interest them barring other bad facts. FBAR penalties are not tax penalties, but I have not heard of such penalties being assessed unless there was tax due or some white collar crime involved (which actually would likely lead to tax due). 

My personal opinion is that long term expats staying outside the US who have not been filing tax returns for years and owe little tax because of foreign tax credits are reasonably safe from FBAR penalties (barring other bad facts).


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## Baird68

AmTaker said:


> I don't think you're likely to get a clear answer on this -- the IRS likely does not want people who owe below say $x in taxes to feel that they can get off without penalties and they likely want the freedom to pursue obvious tax cheats even if they can only prove small tax losses. Its the same for US domestic persons too, I suspect.
> 
> That said, I doubt that anything that doesn't involve a substantial underpayment of tax defined around 5K per year would interest them barring other bad facts. FBAR penalties are not tax penalties, but I have not heard of such penalties being assessed unless there was tax due or some white collar crime involved (which actually would likely lead to tax due).
> 
> My personal opinion is that long term expats staying outside the US who have not been filing tax returns for years and owe little tax because of foreign tax credits are reasonably safe from FBAR penalties (barring other bad facts).


AmTaker, you have basically stated what my accountant told me. 
On another note, I called a relative in the U.S. to ask her about FATCA and FBARs. She had never heard of either. She also didn't know that her bank makes her account information available to the IRS. However, she did tell me that the IRS is changes rules without notice which has caused her to owe thousands in back taxes this year. Her business activities and structure haven't changed, but in the eyes of the IRS, they have, and she is scrambling to find out why.


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## pwdunn

AmTaker said:


> I don't think you're likely to get a clear answer on this -- the IRS likely does not want people who owe below say $x in taxes to feel that they can get off without penalties and they likely want the freedom to pursue obvious tax cheats even if they can only prove small tax losses. Its the same for US domestic persons too, I suspect.
> 
> That said, I doubt that anything that doesn't involve a substantial underpayment of tax defined around 5K per year would interest them barring other bad facts. FBAR penalties are not tax penalties, but I have not heard of such penalties being assessed unless there was tax due or some white collar crime involved (which actually would likely lead to tax due).
> 
> My personal opinion is that long term expats staying outside the US who have not been filing tax returns for years and owe little tax because of foreign tax credits are reasonably safe from FBAR penalties (barring other bad facts).


Where did you get that definition of "substantial underpayment" at 5K?

This may be your opinion and it is shared by Baird's accountant. However, I would remind you that the fines assessed to people in the OVDI had no basis in the amount of taxes owed. Phil Hodgen has the story of a person who owed no taxes (even had a refund coming to him) and yet was being threatened with wilful FBAR fine (read all the stories at Hodgen: search term, "Voluntary disclosure story"). Now why would we think that the IRS is going to be more lenient outside an "amnesty" program than within? Why did the IRS do a bait and switch by changing FAQ 35, which essential said that the participants would not be fined at a level higher than they would punished if they did not enter the program. Or was it a bait and switch? May be they do plan to fine the rest of us quiet disclosures at a much higher rate than the 20%-25% in the 2009 and 2010 programs. That is what I believe.

Those who offer their account information to the IRS are Sheeple, just offering their neck to be slaughtered. If the IRS is to be trusted, let them first actually extend a pardon to the innocent folks in the OVDI, and then exempt non-tax havens like Canada from FBAR. Otherwise, they cannot be trusted with the information and those who volunteer it do so at their own risk.


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## AmTaker

PetrosResearch said:


> Where did you get that definition of "substantial underpayment" at 5K?
> 
> This may be your opinion and it is shared by Baird's accountant. However, I would remind you that the fines assessed to people in the OVDI had no basis in the amount of taxes owed. Phil Hodgen has the story of a person who owed no taxes (even had a refund coming to him) and yet was being threatened with wilful FBAR fine (read all the stories at Hodgen: search term, "Voluntary disclosure story"). Now why would we think that the IRS is going to be more lenient outside an "amnesty" program than within? Why did the IRS do a bait and switch by changing FAQ 35, which essential said that the participants would not be fined at a level higher than they would punished if they did not enter the program. Or was it a bait and switch? May be they do plan to fine the rest of us quiet disclosures at a much higher rate than the 20%-25% in the 2009 and 2010 programs. That is what I believe.
> 
> Those who offer their account information to the IRS are Sheeple, just offering their neck to be slaughtered. If the IRS is to be trusted, let them first actually extend a pardon to the innocent folks in the OVDI, and then exempt non-tax havens like Canada from FBAR. Otherwise, they cannot be trusted with the information and those who volunteer it do so at their own risk.


1) I derive my 'substantial underpayment' definition from the IRC (its a little more convoluted that that), but that is the general gist. 
2) For me (without going into details), if a transaction I'm working on comes through I expect to make more money from a US derived contract (after US and Canadian tax) in a few months then I might have to pay in 5 years of non-willful penalties (I'm assuming 50K max). And this is not a one time thing either. I am not particularly concerned about any willful penalties or the idea of an absurd set of non-willful penalties since I believe the standards of proof for both are high --- and I'm perfectly willing to combat penalties in court. So no, I'm not particularly scared of the IRS. The question then might be -- who is more 'sheeplish'  ? I actually see the risk of any issues with the IRS as being lower than any business risks from this transaction.


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## pwdunn

AmTaker said:


> 1) I derive my 'substantial underpayment' definition from the IRC (its a little more convoluted that that), but that is the general gist.
> 2) For me (without going into details), if a transaction I'm working on comes through I expect to make more money from a US derived contract (after US and Canadian tax) in a few months then I might have to pay in 5 years of non-willful penalties (I'm assuming 50K max). And this is not a one time thing either. I am not particularly concerned about any willful penalties or the idea of an absurd set of non-willful penalties since I believe the standards of proof for both are high --- and I'm perfectly willing to combat penalties in court. So no, I'm not particularly scared of the IRS. The question then might be -- who is more 'sheeplish'  ? I actually see the risk of any issues with the IRS as being lower than any business risks from this transaction.


Ok, the particulars of your situation are veiled in a bit of hidden language about the business you conduct. And if you are dealing with large figures, perhaps you also have the money to pay lawyers to defend you.

But then I ask you, which court will you fight the penalties in? There is a Sixth amendment to the US Constitution:

In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the state and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the assistance of counsel for his defense.​
If I am living in Canada, open account in Canada, put money in the account, and the IRS assesses me a fine, where do I go to court here in Ontario to fight it?


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## pwdunn

AmTaker said:


> 1) I derive my 'substantial underpayment' definition from the IRC (its a little more convoluted that that), but that is the general gist.


Thanks. I found the rule.


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## Bevdeforges

FBAR reporting has been around for a LONG time - only it wasn't called FBAR. I only knew it as "that Treasury form you have to file separately from your tax returns."

Granted, 20 years ago when I first started filing them, they only asked you to check a box indicating the "range" of the account balance during the year. That changed a few years ago - I suppose when the other changes in legislation were happening and when they started calling this stuff FBAR.

And for a while, I didn't have to file them because, as a check signer on my employer's account, it was my US employer's responsibility to send in the information (along with my name as a check signer on the company account). I'd get a letter each year from my employer stating that they had sent the required information to the Treasury Dept. and I did NOT need to include the company accounts on my forms.



> I have a similar but slightly different take on this. I do not think this is necessarily a plan right now. But I do believe that all of this FBAR and FATCA information is being gathered for a larger purpose than immediate levy of penalties, rather that the data can be studied, just in case they need more money in the future, ie, to determine how much money is in the hands of US citizens outside the US, which can then be the basis for future policies should the US once again be as strapped for cash as they are now. Note that the information includes exactly where each of us is, and exactly where all of our money is located, complete with account numbers, and conveniently updated annually.


Honestly, Ladyhawke, you give the IRS credit for being much more organized and malicious in their intent than most folks I know. The way it's set up in US law is that Congress makes the law and then empowers the IRS to figure out how to carry out Congress' intentions. It's what one tax preparer friend of mine calls "the Congresscritters" you should be venting against. The IRS is more or less just the messenger.



> On another note, I called a relative in the U.S. to ask her about FATCA and FBARs. She had never heard of either. She also didn't know that her bank makes her account information available to the IRS. However, she did tell me that the IRS is changes rules without notice which has caused her to owe thousands in back taxes this year. Her business activities and structure haven't changed, but in the eyes of the IRS, they have, and she is scrambling to find out why.


Anyone in business in the US who doesn't know that the banks report account information to the IRS is incredibly naive or perhaps a little stupid. The banks generally require a US resident to supply their SS number, specifically so that earnings information can be reported to the IRS. That 1099 her bank sends her is just one of zillions the bank sends off to the IRS every January so the IRS can compare what she reports on her tax return against what the bank claims to have paid her during the year. If she employs anyone, she sends out W-2 forms each year to her employees, with copies to the IRS. 

FATCA is nothing but an incredibly ham-handed attempt to get out of foreign banks and financial institutions the same information the US Government already gets from US financial companies. What makes it such a mess is the US's insistence on taxing its non-resident citizens and the rather over-broad definition of citizenship the US seems to have adopted lately. (Though for that, I blame AARO and ACA and the other US expat groups who were gung-ho to be able to pass on US citizenship to their offspring born overseas. "Be careful what you wish for!")
Cheers,
Bev


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## pwdunn

*Mea culpa*

Hey folks: I got carried away with the rhetoric with the term "Sheeple". My apologies to those who might have taken that comment personally. The fact is that everyone has to decide between a list of very bad choices: (1) File FBAR and expose yourself to fines and being charged with criminal FBAR; (2) Ignore FBAR only to have the IRS fine you any way. Either way, we are all faced with determining which is the lesser of evils given our own individual situations.


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## byline

Bevdeforges said:


> (Though for that, I blame AARO and ACA and the other US expat groups who were gung-ho to be able to pass on US citizenship to their offspring born overseas. "Be careful what you wish for!")


What are AARO and ACA?


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## Canadian Guy

PetrosResearch said:


> But then I ask you, which court will you fight the penalties in? There is a Sixth amendment to the US Constitution:
> 
> In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the state and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the assistance of counsel for his defense.​
> If I am living in Canada, open account in Canada, put money in the account, and the IRS assesses me a fine, where do I go to court here in Ontario to fight it?


Then it should only be possible to try a person for a crime committed on US territory, also there should be no fear of extradition from Canada to the US. I had wondered about the possibility of extradition especially since the "crime" would have happened in Canada.


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## AmTaker

PetrosResearch said:


> But then I ask you, which court will you fight the penalties in? There is a Sixth amendment to the US Constitution:
> 
> In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the state and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the assistance of counsel for his defense.​
> If I am living in Canada, open account in Canada, put money in the account, and the IRS assesses me a fine, where do I go to court here in Ontario to fight it?


I think (from some research I've done --- I'm not a lawyer:

1) For tax penalties, one would have to go to US tax court, which is based in Washington DC. Frankly, the amount of penalties due would be pretty small for most expats in high tax countries. Maybe 2-3 open years, 20% of the tax due + interest. 
2) For FBAR penalties, the situation is reversed: I believe the IRS/DoJ would have to go to US Federal court and sue someone for the money involved. For the willful penalties, they have a pretty high barrier to cross, and even for the non-willful penalties, the person sued could claim reasonable cause. I doubt most cases would go that far actually, there would likely be some sort of settlement/compromise reached to avoid litigation -- for expats at least. 

For collection, the only way the IRS could collect FBAR penalties would be from assets in the US. For tax penalties, I suppose they could petition the CRA, at which point one could presumably challenge the judgement in Canadian courts. 

The Sixth amendment only holds for criminal cases, which I'm not concerned about. And really, I think very few people need be concerned about that. Besides, I think the venue is set to be somewhere in the US for criminal tax cases -- wherever the form was supposed to be received.


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## Bevdeforges

byline said:


> What are AARO and ACA?


AARO = Association of Americans Resident Overseas

ACA = American Citizens Abroad

Both are big US expat organizations that have lobbied long and hard for such things as voting rights for US citizens living abroad and the ability to pass on US citizenship to children born overseas with one or more US parents. 
Cheers,
Bev


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## Guest

PetrosResearch said:


> If I am living in Canada, open account in Canada, put money in the account, and the IRS assesses me a fine, where do I go to court here in Ontario to fight it?


As I keep saying, I'm no lawyer. But my reading of the Canada-US Tax Treaty's somewhat turgid prose (see here Convention Between Canada and the United States of America*With Respect to Taxes on Income and on Capital) is as follows:

The only way the US can collect on any alleged tax liabilities they claim against a Canadian resident is via the Government of Canada (in practice, Canada Revenue Agency).

The treaty says that neither state can require the other state to collect and report information or conduct administrative actions that are contrary to the laws and normal administrative practice in that country.

The treaty also says that alleged US tax liaibilities incurred at the time that the person was a Canadian citizen living in Canada (no matter what other citizenship that person had or didn't have) are not enforceable in Canada. (The treaty wording is general and it cuts the other way too, Canada can't collect liabilities against US citizens living in the US at the time of the alleged liability.) Yes I did a double-take on that one and didn't trust my reading of it, until Flaherty and the Financial Post both confirmed it in print, in October.

Anyone who has claims against them under the treaty has the right to appeal against the claims. The treaty says that appeals must be held in the country of residence of the appelant. It further says the tribunal will consist of a representative of Canada and one of the US. If they can't agree, then the two representatives pick a binding arbitrator who decides the thing.

My argument would be that Article 11d of the Canadian Charter of Rights and Freedoms guarantees me in criminal and penal matters (would that apply to taxes? to penalties? no idea but this might be crucial) that I have a fair and public hearing before an independent tribunal, in which I am presumed innocent until proved guilty. I would further argue that in taxation matters, particularly those in which citizenship is at question, no tribunal consisting of an American representative nor any arbitrator appointed upon the approval of an American representative is going to be impartial. I'd want a hearing before a Canadian federal court judge, and I'd want (in relinquishment cases especially) a judge who is NOT a "dual citizen" of the US or any other country for that matter.

Would I get what I want? Is my interpretation correct? I guess we won't know until someone tries to test these arguments in court, or until someone can find a good CANADIAN lawyer who can confidently give a definitive answer to these questions (good luck with that, with any lawyer anywhere, in my experience). 

That's my take on the question you raise, but who knows if I'm right, close to right, or way off the mark?

In early November Jim Flaherty on behalf of Canada signed an OECD convention www.oecd.org/dataoecd/63/49/48980598.pdf which may or may not override the Canada-US Tax Treaty. I've written to Flaherty asking for clarification on this point, mentioning that he's made public assurances that FBAR penalties and other US tax liaibilites are not enforceable in Canada against persons who were Canadian citizens (dual or not) when the alleged liabilities were incurred. If he's just thrown that assurance under a bus by signing the OECD treaty, he is honour-bound (assuming there are still federal Tories who have a conception of the meaning of the word honour) to clarify or retract the assurances he's made in public and in writing to citizens and to at least one MP (Denise Savoie). I have yet to get a reply, other than a robo-acknowledgement of receipt, and I wrote the email more than a month ago.


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## pwdunn

AmTaker said:


> I think (from some research I've done --- I'm not a lawyer:
> 
> 1) For tax penalties, one would have to go to US tax court, which is based in Washington DC. Frankly, the amount of penalties due would be pretty small for most expats in high tax countries. Maybe 2-3 open years, 20% of the tax due + interest.
> 2) For FBAR penalties, the situation is reversed: I believe the IRS/DoJ would have to go to US Federal court and sue someone for the money involved. For the willful penalties, they have a pretty high barrier to cross, and even for the non-willful penalties, the person sued could claim reasonable cause. I doubt most cases would go that far actually, there would likely be some sort of settlement/compromise reached to avoid litigation -- for expats at least.
> 
> For collection, the only way the IRS could collect FBAR penalties would be from assets in the US. For tax penalties, I suppose they could petition the CRA, at which point one could presumably challenge the judgement in Canadian courts.
> 
> The Sixth amendment only holds for criminal cases, which I'm not concerned about. And really, I think very few people need be concerned about that. Besides, I think the venue is set to be somewhere in the US for criminal tax cases -- wherever the form was supposed to be received.


I think you are basically right on all the particulars, and it agrees with what I've learned on the subject.

The right to trial by jury applies to cases of over $20 (Seventh Amendment). When I read the handout by the IRS, they made sure to let me know that criminal charges could apply if I failed to file my FBARs. So while you may not be concerned about criminal FBAR, I am. I was threatened with it. So I am concerned about it.

My reason for bringing up the Sixth Amendment is that I could open a bank account here in Ontario, then fail to report it. Everything happens here in Canada. Then, I am charged with crimes in the US, civil or criminal FBAR penalties. How do I fight this? My right to trial by jury is essentially nullified if I am tried in Washington, because I would not be able to find an impartial jury there. I think, however, that you would be hard pressed to find 12 Ontarians who would find me guilty of criminal or civil FBAR violations--as my behavior differs not in the slightest from what they each have done: they have opened up bank accounts, they have invested their retirement money, they never thought it necessary to let Tim Geithner know what was in their accounts. In the the Declaration of Independence, one of the complaints against King George was:

For transporting us beyond Seas to be tried for pretended offences​
I am taking issue with you that you could fight an FBAR penalty in court, particularly if you are transported to Washington for the trial. Even with a jury, that jury would be made up of Washingtonians--a town whose very livelihood depends on the Federal Government. I don't see how you or I could get a fair trial there. I don't think any normal person would ever be convicted of an FBAR crime here in Canada.


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## pwdunn

Canadian Guy said:


> Then it should only be possible to try a person for a crime committed on US territory, also there should be no fear of extradition from Canada to the US. I had wondered about the possibility of extradition especially since the "crime" would have happened in Canada.


FBAR violations do not make the list of extraditable offenses: See the the Canada - United States extradition treaty:

Treaty on extradition between the Government of Canada and the Government of the United States of America

My lawyer said that a person cannot be extradited for tax owing. Here is the complete list:

Schedule

1. Murder; assault with intent to commit murder.

2. Manslaughter.

3. Wounding; maiming; or assault occasioning bodily harm.

4. Unlawful throwing or application of any corrosive substances at or upon the person of another.

5. Rape; indecent assault.

6. Unlawful sexual acts with or upon children under the age specified by the laws of both the requesting and requested States.

7. Willful nonsupport or willful abandonment of a minor when such minor is or is likely to be injured or his life is or is likely to be endangered.

8. Kidnapping; child stealing; abduction; false imprisonment.

9. Robbery; assault with intent to steal.

10. Burglary; housebreaking.

11. Larceny, theft or embezzlement.

12. Obtaining property, money or valuable securities by false pretenses or by threat of force or by defrauding the public or any person by deceit or falsehood or other fraudulent means, whether such deceit or falsehood or any fraudulent means would or would not amount to a false pretense.

13. Bribery, including soliciting, offering and accepting.

14. Extortion.

15. Receiving any money, valuable securities or other property knowing the same to have been unlawfully obtained.

16. Fraud by a banker, agent, or by a director or officer of any company.

17. Offenses against the laws relating to counterfeiting or forgery.

18. Perjury in any proceeding whatsoever.

19. Making a false affidavit or statutory declaration for any extrajudicial purpose.

20. Arson.

21. Any act done with intent to endanger the safety of any person travelling upon a railway, or in any aircraft or vessel or other means of transportation.

22. Piracy, by statute or by law of nations; mutiny or revolt on board a vessel against the authority of the captain or commander of such vessel.

23. Any unlawful seizure or exercise of control of an aircraft, by force or violence or threat of force or violence, or by any other form of intimidation, on board such aircraft.

[Page 20]
24. Willful injury to property.

25. Offenses against the bankruptcy laws,

26. Offenses against the laws relating to the traffic in, production, manufacture, or importation of narcotic drugs, Cannabis sativa L., hallucinogenic drugs, amphetamines, barbiturates, cocaine and its derivatives.

27. Use of the mails or other means of communication in connection with schemes devised or intended to deceive or defraud the public or for the purpose of obtaining money or property by false pretenses.

28. Offenses against federal laws relating to the sale or purchase of securities.

29. Making or having in possession any explosive substance with intent to endanger life, or to cause severe damage to property.

30. Obstructing the course of justice in a judicial proceeding, existing or proposed, by:

a) dissuading or attempting to dissuade a pet-son by threats, bribes, or other corrupt means from giving evidence;

b) influencing or attempting to influence by threat, bribes, or other corrupt means a person in his conduct as a juror; or

c) accepting a bribe or other corrupt consideration to abstain from giving evidence or to do or to refrain from doing anything as a juror.​


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## byline

Bevdeforges said:


> AARO = Association of Americans Resident Overseas
> 
> ACA = American Citizens Abroad
> 
> Both are big US expat organizations that have lobbied long and hard for such things as voting rights for US citizens living abroad and the ability to pass on US citizenship to children born overseas with one or more US parents.
> Cheers,
> Bev


Thanks! It's too bad the process of passing on citizenship to one's children now appears to be "automatic"; I would have assumed that having the "ability" to pass on U.S. citizenship implies choice, meaning that a U.S. citizen would opt in to the process for his/her children, rather than children being forced to opt out because they are automatically deemed U.S. citizens, but don't identify with the U.S. and have no desire to be connected with it (especially when it comes to the IRS).


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## AmTaker

PetrosResearch said:


> The right to trial by jury applies to cases of over $20 (Seventh Amendment). When I read the handout by the IRS, they made sure to let me know that criminal charges could apply if I failed to file my FBARs. So while you may not be concerned about criminal FBAR, I am. I was threatened with it. So I am concerned about it.
> 
> 
> 
> I am taking issue with you that you could fight an FBAR penalty in court, particularly if you are transported to Washington for the trial. Even with a jury, that jury would be made up of Washingtonians--a town whose very livelihood depends on the Federal Government. I don't see how you or I could get a fair trial there. I don't think any normal person would ever be convicted of an FBAR crime here in Canada.


I think the 7th Amendment applies only to cases under 'common law', and I doubt very much FBAR penalties are under common law. In one civil case last year (against a US resident), a judge made the decision (dismissing the charges as he did not think the government had proved willfulness -- the case was rather complex since the man was a big time tax evader, but his not filing the FBAR was likely non-willful). I don't think a jury was involved at all. 

I think most expats have a greater chance of winning the lottery than of being prosecuted criminally, so I'm not considering that seriously.


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## pwdunn

AmTaker said:


> I think the 7th Amendment applies only to cases under 'common law', and I doubt very much FBAR penalties are under common law. In one civil case last year (against a US resident), a judge made the decision (dismissing the charges as he did not think the government had proved willfulness -- the case was rather complex since the man was a big time tax evader, but his not filing the FBAR was likely non-willful). I don't think a jury was involved at all.
> 
> I think most expats have a greater chance of winning the lottery than of being prosecuted criminally, so I'm not considering that seriously.


Suppose someone like me decided to defy the FBAR filing requirement. And I did so on a very public forum like this one. I was a US citizen until 28 February, and since that time, I am still deciding what forms I will fill out, which ones I won't. I am thinking that it is best not to do the FBAR, because it violates a whole host of rights, and besides, I will not put my Canadian family at risk to a capricious, confiscatory IRS. I've already given my reasons why I think the IRS must not be trusted--how can they be more forgiving to quiet disclosures than they were to the OVDI amnesty victims? That wouldn't be fair. So don't you think that someone like me risks criminal charges? I mean they know about an RRSP and now they know that I know that I'm supposed to file FBAR, and I've missed my deadline for this year, oops, yet again. I think the chances of criminal prosecution are much higher than you are letting on. The modus operandi of the IRS is to hit a few wilful obstinate people like me as hard as they can to serve as an example to the others. Hence, Irwin Schiff and Wesley Snipes rot in prison. I used to think they would charge a person with criminal FBAR unless they were multi-zillionaire until I saw someone a lot closer to my level of wealth indicted for criminal FBAR.

This is why I am taking this battle to the internet. I am one of the few people writing in my real name. Indeed, other than lawyers, I know of only one other person whose real name can be easily obtained, though I'm pretty sure with some hacking skills and subpoenas, a determined rat or government person could figure out who most of the rest of us are.

I wonder why you think that criminal charges are so unlikely for those of us, US persons living in Canada? How can you be so sure?


Also, the Seventh Amendment says:

In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.​
If this does not include civil trials, such as FBAR if a person disputed a fine, then what does it include? Because I can think of no other sort of case where it would be necessary to put it in the first 10 amendments of the constitution, which were specific limitations upon the Federal Government, only to be extended to the States via the 14th Amendment. If not civil FBAR case, then what would be included? And please also consider that the Fifth Amendment says that a person must not be deprived of life, liberty or property without due process, which I would assume means that a person has a right to a trial by jury if the amount of penalty assigned by the Federal government exceeds $20. At least, this seems to me the intention of the Constitution.


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## Bevdeforges

byline said:


> Thanks! It's too bad the process of passing on citizenship to one's children now appears to be "automatic"; I would have assumed that having the "ability" to pass on U.S. citizenship implies choice, meaning that a U.S. citizen would opt in to the process for his/her children, rather than children being forced to opt out because they are automatically deemed U.S. citizens, but don't identify with the U.S. and have no desire to be connected with it (especially when it comes to the IRS).


This is the sad thing about this whole fiasco. I happen to know the woman who founded AARO and a few of the other organizations that lobbied so hard for the change in the citizenship laws back in the 1970s. She was working under the noblest of motivations - and even worked on the law that now allows grandparents to pass on their US citizenship if a child's parents don't have the necessary time resident in the US to do so on their own. I wonder if they would apply that quirk of the law automatically - or even how they would know to do so.

But practically speaking, I don't think they're actually doing to bother people living abroad unless it's crystal clear that they are US citizens and they have financial holdings significant enough to suggest possible tax implications.
Cheers,
Bev


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## Ladyhawk

Bevdeforges said:


> Honestly, Ladyhawke, you give the IRS credit for being much more organized and malicious in their intent than most folks I know. The way it's set up in US law is that Congress makes the law and then empowers the IRS to figure out how to carry out Congress' intentions. It's what one tax preparer friend of mine calls "the Congresscritters" you should be venting against. The IRS is more or less just the messenger.


Bev, I didn’t say it was the IRS behind this and I am perfectly well aware that Congress makes the laws and decides tax policy. In this case the FATCA legislation is the brainchild of Democratic Senator Carl Levin who is making a career of hunting down tax “evaders”, ie inventing new sources of tax revenue to pay for his government’s spending programs. His ideas empowered the IRS to implement FATCA. He thinks it will pull in 100 billion dollars in new revenue from offshore US citizens who use tax havens to hide income from the IRS. But the fact is that the legislation makes little distinction between tax evaders and the millions of honest expats who are living their lives in other countries honestly. 

By your own admission you have been US tax compliant for 20 years. You are disconnected from the shock and fear experienced by thousands of expats who have only recently discovered that they are in arrears on tax filing and that the IRS is using punitive methods to enforce compliance, not to mention the distress of people who did not even know they were classified as US citizens until now. Levin's attitude toward us is clearly that we are guilty until proven innocent. 
Levin Unveils Bill to Crack Down on Offshore Havens, Strengthen FATCA| BNA Software

This attitude is similar to the way the Democrats are demonizing the "wealthy" who are not paying their "fair share" of taxes, which seems to be defined only as "more than they are paying now". Clearly new measures will be implemented to increase the flow of taxpayer money into government coffers, and we have every reason to believe that without representation in Congress, we are a constituency that can be taxed and fined with impunity.

It is a distraction to level responsibility at AARO and ACA. The problem isn't US citizenship, it is the tax measures set by self-righteous Congresscritters who regard the income of US citizens as a limitless resource that belongs to the government.
.


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## Peg

Granting citizenship is not the issue to me. Requirement to file IRS returns and FBARs when someone has never set foot in the US is the problem!

When I was born in the US to Canadian parents I apparently received Canadian citizenship. My guess is that there are a lot of US citizens who are Accidental Canadians but since they are not required to bare their financial soul to a country in which they have never lived it is not an issue.


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## Peg

Ladyhawk said:


> The problem isn't US citizenship, it is the tax measures set by self-righteous Congresscritters who regard the income of US citizens as a limitless resource that belongs to the government.
> .


:clap2:

:canada:


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## pwdunn

Ladyhawk said:


> Bev, I didn’t say it was the IRS behind this and I am perfectly well aware that Congress makes the laws and decides tax policy.
> .


I might add to Ladyhawk's comments that the Secretary of Treasury has broad discretionary powers when it comes to FBAR (see this post and comments). He may exempt entire countries and also determine that certain people, such as US persons resident abroad, do not need to file at all. Furthermore, the Bank Secrecy Act defines those who need to file the FBAR as "Each person subject to the jurisdiction of the United States" without defining it, thus giving the Secretary the power to define who is subject to the jurisdication of the United States (so Phil Hodgen); and he has chosen to define this as the same as "United States persons" as under the tax code. Why? Why not just residents of the United States? Arguably it should exclude all dual citizens who are living in the countries of their second nationality, as while in that country, they are subject to the jurisdiction of that country.

So the IRS doesn't get a pass here. It is requiring us to do useless paperwork that will never catch a single criminal. And it could all be over tomorrow if the Secretary decided.


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## Ladyhawk

Bevdeforges said:


> Honestly, Ladyhawke, you give the IRS credit for being much more organized and malicious in their intent than most folks I know. The way it's set up in US law is that Congress makes the law and then empowers the IRS to figure out how to carry out Congress' intentions. It's what one tax preparer friend of mine calls "the Congresscritters" you should be venting against. The IRS is more or less just the messenger.


As an addendum to my previous post and as a direct reply to this statement, an article on the Isaac Brock Society links to data that demonstrates that indeed the IRS can and does propose new regulations that would have the force of law and create new and onerous reporting requirements on citizens and on US banks:

The IRS Run Amok « International Liberty

and in one case the IRS proposed putting foreign tax law above American tax law and making US banks collect taxes for foreign banks:

Reckless IRS Regulation Would Put Foreign Tax Law over American Tax Law and Drive Investment out of the United States « International Liberty

So it makes me think that perhaps the terms "organized" and "malicious" would be appropriate to apply to the IRS.


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## Guest

PetrosResearch said:


> FBAR violations do not make the list of extraditable offenses: See the the Canada - United States extradition treaty:
> 
> Treaty on extradition between the Government of Canada and the Government of the United States of America
> 
> My lawyer said that a person cannot be extradited for tax owing. Here is the complete list:
> 
> Schedule
> 
> 1. Murder; assault with intent to commit murder.
> 
> 2. Manslaughter.
> 
> 3. Wounding; maiming; or assault occasioning bodily harm.
> 
> 4. Unlawful throwing or application of any corrosive substances at or upon the person of another.
> 
> 5. Rape; indecent assault.
> 
> 6. Unlawful sexual acts with or upon children under the age specified by the laws of both the requesting and requested States.
> 
> 7. Willful nonsupport or willful abandonment of a minor when such minor is or is likely to be injured or his life is or is likely to be endangered.
> 
> 8. Kidnapping; child stealing; abduction; false imprisonment.
> 
> 9. Robbery; assault with intent to steal.
> 
> 10. Burglary; housebreaking.
> 
> 11. Larceny, theft or embezzlement.
> 
> 12. Obtaining property, money or valuable securities by false pretenses or by threat of force or by defrauding the public or any person by deceit or falsehood or other fraudulent means, whether such deceit or falsehood or any fraudulent means would or would not amount to a false pretense.
> 
> 13. Bribery, including soliciting, offering and accepting.
> 
> 14. Extortion.
> 
> 15. Receiving any money, valuable securities or other property knowing the same to have been unlawfully obtained.
> 
> 16. Fraud by a banker, agent, or by a director or officer of any company.
> 
> 17. Offenses against the laws relating to counterfeiting or forgery.
> 
> 18. Perjury in any proceeding whatsoever.
> 
> 19. Making a false affidavit or statutory declaration for any extrajudicial purpose.
> 
> 20. Arson.
> 
> 21. Any act done with intent to endanger the safety of any person travelling upon a railway, or in any aircraft or vessel or other means of transportation.
> 
> 22. Piracy, by statute or by law of nations; mutiny or revolt on board a vessel against the authority of the captain or commander of such vessel.
> 
> 23. Any unlawful seizure or exercise of control of an aircraft, by force or violence or threat of force or violence, or by any other form of intimidation, on board such aircraft.
> 
> [Page 20]
> 24. Willful injury to property.
> 
> 25. Offenses against the bankruptcy laws,
> 
> 26. Offenses against the laws relating to the traffic in, production, manufacture, or importation of narcotic drugs, Cannabis sativa L., hallucinogenic drugs, amphetamines, barbiturates, cocaine and its derivatives.
> 
> 27. Use of the mails or other means of communication in connection with schemes devised or intended to deceive or defraud the public or for the purpose of obtaining money or property by false pretenses.
> 
> 28. Offenses against federal laws relating to the sale or purchase of securities.
> 
> 29. Making or having in possession any explosive substance with intent to endanger life, or to cause severe damage to property.
> 
> 30. Obstructing the course of justice in a judicial proceeding, existing or proposed, by:
> 
> a) dissuading or attempting to dissuade a pet-son by threats, bribes, or other corrupt means from giving evidence;
> 
> b) influencing or attempting to influence by threat, bribes, or other corrupt means a person in his conduct as a juror; or
> 
> c) accepting a bribe or other corrupt consideration to abstain from giving evidence or to do or to refrain from doing anything as a juror.​


Re extortion: maybe it's time Canada tried to extradite the US Secretary of Treasury for that.


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## AmTaker

Ladyhawk said:


> A]
> 
> and in one case the IRS proposed putting foreign tax law above American tax law and making US banks collect taxes for foreign banks:
> 
> Reckless IRS Regulation Would Put Foreign Tax Law over American Tax Law and Drive Investment out of the United States « International Liberty
> 
> .


Its really terrible the way the IRS is actually allowing foreign tax law to override American law. They should insist that American tax and other laws are the only laws that count worldwide -- foreign treaties and laws be damned. !!


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## Ladyhawk

AmTaker said:


> Its really terrible the way the IRS is actually allowing foreign tax law to override American law. They should insist that American tax and other laws are the only laws that count worldwide -- foreign treaties and laws be damned. !!


Yes it seems anomalous they would allow foreign law to dominate US banks and at the same time assert the dominance of US law on foreign banks. The left hand doesn't seem to know what the right is doing. But they both have the same effect - driving foreign investment out of the US economy.


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## JHarmon

*FBAR Processing*

One bit I'd like to share re: FBARs...

Whilst with family in the US over the holidays I decided to phone the hotline they list if one would like to see if their FBARs have been filed (after 90 days)--You know, one of many IRS numbers that are supposed to give critical answers...as long as one phones from the US. Since I sent mine in early September, I was curious to know what was going on.

The person on the other end was friendly enough, and stated that they were still processing the August ones and to check back in January.


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## Guest

JHarmon said:


> One bit I'd like to share re: FBARs...
> 
> Whilst with family in the US over the holidays I decided to phone the hotline they list if one would like to see if their FBARs have been filed (after 90 days)--You know, one of many IRS numbers that are supposed to give critical answers...as long as one phones from the US. Since I sent mine in early September, I was curious to know what was going on.
> 
> The person on the other end was friendly enough, and stated that they were still processing the August ones and to check back in January.


Thanks JHarmon! I sent mine in mid-December, so it's good to have an idea when they will actually be processed.


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