Final regulations on reporting by individuals of foreign financial assets to IRS

The Treasury Department and IRS yesterday released for publication in the Federal Register final regulations (T.D. 9706) concerning the requirement that individual taxpayers report to the IRS specified foreign financial assets for tax years beginning after March 18, 2010 (the date of enactment of the FATCA rules).

The final regulations provide guidance relating to the requirement that individuals attach a statement to their income tax return to provide required information regarding specified foreign financial assets in which they have an interest. Proposed regulations addressing the application of these rules to domestic entities remain in proposed form and will be finalized at a later date.

These regulations finalize regulations that were proposed in December 2011, and remove corresponding temporary regulations. Among the items addressed in the final regulations or in the preamble to the final regulations are measures concerning:

• The reporting requirements of dual resident taxpayers
• Individuals who are residents of the United States under non-immigrant visas
• Persons that do not owe U.S. tax for the tax year
• Reporting threshold amounts
• Employees who are seconded to work in the United States
• Clarifications of reporting requirements for certain assets, such as nonvested property under section 83, assets held by a disregarded entity, and jointly owned assets

The final regulations, which have an effective date of Dec. 12, adopt a recommendation that dual resident taxpayers who determine their U.S. tax liabilities as nonresident aliens and claim a treaty benefit are exempt from reporting on their tax returns specified foreign financial assets under tax code section 6038D.
Other provisions of the regulations, or the preamble, address short-term accounts, assets in an account maintained by a foreign financial institution, life insurance with a cash surrender value, assets held for investment or not used in the taxpayer’s business, certain hedging transactions, employment contracts, shares of foreign companies traded on public stock exchanges, investments in social security or social insurance programs, interests held in foreign trust, among other topics.

The final regulations declined to adopt requests made, in comments to the proposed regulations, to eliminate duplicate reporting related to Form 8938 and the requirement to report foreign financial accounts on FinCEN Form 114 (generally referred to as the “FBAR”). Also, the preamble to the final regulations notes that the IRS and Treasury Department are considering the proper treatment of virtual currency under section 6038D and request comments on this topic.

Great news.....IRS Is Big Loser in Government Funding Bill

Wall Street Journal, Funding Bill: The Losers:

House and Senate negotiators unveiled Tuesday evening a $1.1 trillion agreement to fund the U.S. government for the next fiscal year, and some federal government agencies, their staffs and the people they serve got some bad news. ...

The 3.1% reduction in the budget of the Internal Revenue Service — bringing its funding below its 2008 level — comes amid Republican outrage over allegations IRS officials targeted conservative political groups for extra scrutiny of their filings for non-profit status.

Mother Jones, Rich People Cheer As Republicans Cut IRS Budget, by Kevin Drum

Notorious Swiss whistleblowers

Christoph Meili was a Swiss security guard who saved Holocaust-era bank documents from the shredder at UBS bank in 1997.
Meili, who was then working for an outside security firm, gave the documents he saved to a Jewish organisation. The disclosure led to the Zurich authorities opening a judicial investigation against Meili on suspicion of violating banking secrecy.
Bradley Birkenfeld, a former Credit Suisse and UBS private banker, handed over confidential information to the United States authorities, starting a process that allowed them to prosecute several banks and tear down some of Switzerland’s secrecy walls.
Herve Falciani took data from his former employer, HSBC Switzerland, to several foreign governments. As a result, more charges have been laid at the doors of Swiss banks whilst Falciani holes out in Spain, which refuses to extradite him.
Rudolf Elmer worked for nearly two decades at Swiss private bank Julius Bär until he was sacked in 2002. He unsuccessfully attempted to pass on evidence of alleged malpractice of the bank to the media until finding a willing recipient in Wikileaks in 2007, that appeared on the campaigning group’s website.
In 2011, he passed on a second batch of information to Wikileaks, days before being convicted of violating Swiss banking secrecy laws. On December 10, 2014, Elmer will appear again before the same Zurich court to stand trial of a second breach of banking secrecy laws.
Other bankers have also passed on information (sometimes in exchange for financial rewards) in direct violation of Swiss laws. A few individuals have been jailed or fined for their activities, most recently former Credit Suisse employee Renzo Gadola who was given a suspended fine this summer for handing secret data to the Department of Justice in exchange for a lighter sentence in the US.

Elmer trial highlights whistleblowing dilemma

The Swiss whistleblowing debate has ratcheted up a few notches with the new trial of notorious former banker Rudolf Elmer, accused of violating banking secrecy as well as proposed new laws to prevent informants going to the media with their concerns.

Former Julius Bär employee Elmer could get up to three and half years behind bars if found guilty of illegally handing over client data to the Wikileaks campaigning website.In 2011, Elmer – dubbed the “Robin Hood” of Swiss banking by some media – was originally given a suspended fine for breaking bank secrecy laws. But days before that trial he defiantly, and publically, handed over more data to Wikileaks, leading to his further arrest and now the second court hearing.Elmer was not paid by Wikileaks, but has embarked on a crusade to expose what he claims are the immoral activities of some Swiss banks. His court cases are vehicles for drawing public attention to his message: that his former employer allegedly set up trust funds and other constructs to help people evade taxes and launder money.

The IRS Scandal, Day 579

Forbes:  Horrible Bosses, IRS Edition, by Robert W. Wood:

People joked about horrible bosses long before Horrible Bosses, Horrible Bosses 2, and The Office. I’m guessing that at least some employees over at the IRS may not be too impressed with their own leadership. I mean big issues, not relatively harmless but kitschy things like Star Trek, Gilligan’s Island or line dancing videos. Perhaps there may have been some mistakes from regular employees, but the bosses surely have the most explaining to do.

The news that the lost or destroyed Lois Lerner emails were actually not lost or destroyed, for one. Remember, when the IRS brass said they looked really hard, and spent $10 million (of taxpayer money!) trying to find those emails? After a year of investigation, they belatedly said they were lost, hard drives were recycled, etc. Anyhow, now they will be sorted, cataloged and released, which is good.

Some people are upset that money is being spent on a ‘witch hunt’ that reveals not even a smidgen of corruption. Others aren’t so sure. The Treasury Inspector General for Tax Administration has confirmed that, on top of the backed-up email horde, there are also nearly 2,500 documents relating to investigations of the improper disclosure of confidential taxpayer information by the IRS to the White House. ...

Lois Lerner–the former IRS official at the heart of Tea Party targeting–supposedly didn’t even direct them, though she remains silent. She was held in contempt of Congress for refusing to testify, but hasn’t been prosecuted. Yet after her long silence, in an exclusive interview with Politico she said did nothing wrong and considers herself the victim.She bristled at any suggestion she had anything to do with destroying emails, switching to texts, or letting her own political views influence her treatment of Tea Party “a__holes.”

In the midst of all this, many Americans could use a little reassurance on key points:

• We Want To Be Dealt With Fairly ...
• We Don’t Want Others To Get Away with Anything ...
• We Want Our Private Information Kept Private ...
• We Want IRS Employees To Be Policed ...
• We Don’t Want More Complex Tax Laws ...

Since the IRS is made up of humans, sometimes the IRS is unreasonable or wrong. Richard Nixon supposedly asked the IRS to audit his political enemies. There has been no proof yet that President Obama tried to influence the IRS in the Tea Party targeting scandal. But it’s not unreasonable to want to get to the bottom of it once and for all. ...

The IRS has a very hard job to do, and in general, does it well and fairly. But that is precisely why this is so important. We need fairness and faith in the tax system restored. We shouldn’t need a Freedom of Information Act lawsuit to get it.

Swiss Bank Drops Out of IRS Tax Compliance Program

Reversing earlier moves taken this summer and fall, a major international bank is ending its cooperation with the Internal Revenue Service’s efforts to prevent investors from investing money in foreign countries with more amenable tax structures and policies, such as Ireland or Switzerland.
During a Zurich speech, Barclays bank executive Francesco Grosoli announced that the firm’s Swiss operations had “recently exited the program,” after evaluating its legal options. Grosoli declined to reveal additional details, but said that the bank had decided to end compliance with the U.S. extra-territorial enforcement actions at some point within the last “three or four months.”

Renouncing vs. Naturalizing or quality vs. quantity !

The number of individuals who wish to come to the U.S. to become citizens is far in excess of the number who are renouncing their citizenship.  According to the USCIS, there are about 700,000 individuals annually who become naturalized citizens.  In the year 2008, there were more than 1 million naturalized citizens.  See table:
Compare these numbers to just about 3,000 annually of individual who are renouncing their citizenship.
Of course, everyone has their own story and reasons for either coming or going, but in relative terms, those who find it desirous to renounce citizenship (at least in absolute numbers and relative terms) represent a small speck (less than 1/2 of 1 percent), compared to those who are becoming naturalized citizens.
Finally, for anyone who wishes to become a naturalized citizen, they must be aware they cannot “reverse” the decision without having potentially adverse U.S. tax consequences.

 

Lackluster Tools For International Collection

I have written and mentioned it before that only 5 treaties provide for assistance in collecting tax judgments against U.S. citizens living abroad..... Canada, France, Holland, Denmark and Sweden.
I’m referring to the ability of the US to collect tax claims against its own citizens who happen to be living in one of these 5 countries. Because these treaties are bilateral, the reverse is also true: partner countries may collect tax claims against their own citizens who happen to be living in the United States. Which means the US has no collection treaties with 190 countries !
The IRS filing a notice of federal tax lien with the foreign taxing authority as is typical in a domestic collections case, or using foreign courts to collect U.S. taxes would not work. These collection devices are useless when it comes to the cross-border collection of taxes.
 One technique that has been getting a lot of attention lately – not to mention gathering up steam – is the “Customs Hold" in connection with TECS data sharing. The procedure for detaining such taxpayers is so simple that it could happen to virtually anyone. First, the revenue officer prepares Form 6668, TECS Entry Request, to have a Customs Hold placed on a delinquent taxpayer. The completed form is sent to the group manager for approval, which consists of nothing more than a signature. After signing it, the group manager emails it to the TECS Coordinator. The TECS Coordinator adds the taxpayer’s name into TECS. Finally, DHS notifies the IRS whenever the taxpayer attempts to reenter the United States. Taxpayers are (theoretically) informed with a Letter 4106, Letter Advising Taxpayer of Department of Homeland Security Notification, that an international revenue officer has notified the DHS “that the taxpayer has outstanding tax liabilities.”

This procedure allows  for brief detainment of the person by a Customs and Border Protection Officer for the purpose of gathering his or her “contact information” (i.e., “where he will be staying while in the United States”). Nothing more. Nothing less. In other words, while it is supposed to be a tool for collecting taxes from delinquent taxpayers, it offers no ironclad guarantee that the person being detained will actually pay the tax. Holding individuals as they seek to return to the United States only works as a collection device if the experience itself was so emotionally traumatic as to convince them to pay. At a primitive level, it only works if it instills the fear of God in the taxpayer.
While it might potentially cause the person some alarm, it’s hard to imagine that it will have the desired effect of inspiring taxpayers to take out their checkbooks and write out a check to Uncle Sam. And before we can even get to that point, do not forget that the person has to attempt to reenter the United States. Suffice to say, it would be a cold day in hell before someone who receives Letter 4106 steps foot back in the United States again.
 According to recent statistics, there are approximately 1,700 taxpayers on the TECS with approximately $ 1.6 billion in delinquent tax assessments. This includes assessments of approximately $ 1.1 billion exclusively owed by international taxpayers.

Lol...H&R Block CEO Asks IRS To Make it Harder to Self-Prepare Tax Returns

Last month, William Cobb, the President and CEO of H&R Block, wrote to the Commissioner asking that the IRS implement changes to tax forms to make it more difficult for taxpayers to prepare their own returns claiming the earned income tax credit (EITC). The cynical response to this is that Cobb wants more taxpayers to come to the paid preparer behemoth. After all, Cobb’s main role is to increase profitability for the company.

As most readers know, the EITC is and has been for some time one of the principal ways the federal government incentivizes lower-wage work and reduces poverty, especially among children. Its administrative costs are relatively low, and the credit has generally received bipartisan support. Despite the EITC’s success, its error rates have drawn attention from those who criticize the credit (or wish to discredit the IRS or transfer programs generally; more on EITC errors and reasons for bashing IRS for its EITC administration in an earlier post EITC: Do Attitudes on Redistribution Fuel a Particular Focus on Errors). Despite the criticism, the EITC error rate is relatively low compared to other segments of the tax gap, such as small business underreporting of income (which costs the fisc way more than misclaimed EITC), and I suspect that many of the EITC errors are more in the way of foot faults with a wrong parent or relative claiming a child whom the relative has some connection with. Alternatively, in some instances what is reported as an EITC error may in fact be the result of correspondence audits that taxpayers are ill-equipped to meaningfully engage even when the claimed credit was proper (To that end see a 2010 article by former clinician Kate Leifeld in the Maine Law Review discussing a 2007 Taxpayer Advocate Service study on the impact of representation on low-income taxpayers subject to audit).

From the 106 Requests of Swiss Entities to participate in a DOJ settlement program now only 96 remain

Update : 10 Swiss Banks that requested the US Department of Justice’s non-prosecution program have now withdrawn from it because they have decided they did not systematically break US tax laws.

Give up green card, make an election to file a joint tax return

Today's question comes from Ann:

I'm a green card holder for over 9 years already (starting from year 2006 date count) and I want to expatriate on 2015 because my husband (American citizen) and I plan to move to my country (country removed) by 2015.

The tricky part for me to handle this matter is the IRS filing status. I want to expatriate next year 2015 hopefully from my green card residency, but my husband will remain as an American citizen. How will I fill up the IRS tax form filing status? Will it be "married filing jointly" or "married filing separately"?

I'm planning to choose or opt for "married filing jointly" because of tax savings advantage on my part considering I only earn around $12,000 in a year and also my husband and I have been filing joint income tax returns from the start of our marriage in the United States. I need your advice or suggestions on this matter on what to do, so I can start planning now and the next year to avoid any hassles when the time is near.

KISS - an alternative to citizenship based taxation which is a recipe for inequitable treatment of Americans abroad

As far as I know no comprehensive effort has ever been undertaken to determine the total revenue impact of CBT, including revenue lost to the tremendous disincentives and opportunity costs it imposes upon American businessmen. The argument put forth for CBT is that all Americans should be taxed the same, yet the multiple instances of double taxation of Americans abroad demonstrate exactly the opposite. The fundamental justification for taxation is that it funds taxpayer services. CBT contradicts this principle, as the pension, healthcare, education, and infrastructure costs that overseas Americans engender are paid for by foreign governments and the taxpayers themselves. Conversely, the imposition of a "sui generis" extraterritorial tax regime manifests a decision on the part of the US to unilaterally grant itself the right to extract from the economy of every other country a scarce and strategic economic source : cash.
Even tough the US recognizes the first right of taxation to be with the country of residence, CBT systematically penalizes Americans abroad. It does not take into consideration the total tax burden imposed on individuals by their country of residence (SS, net wealth and indirect taxes like VAT, excise taxes etc...) . Would it be such a stupid idea if we change the current CBT (citizenship based taxation) into a fee based system for the approx. 7 million expats who live and work outside the US.
How about an annual fee of $100 per USP and only the duty to file a NRA tax return if and when US sourced income exists. This would be a win-win situation for everybody. This would save the IRS and Treasury 90% of their current compliance budget with regards to FEIE and FTC audits and tax return processings BUT it would generate imediatedly a revenue stream of $700,000,000 annually (7mio X $100) with little cost associated .
On the other side the approx. 7 mio expats would not have to spend $1,2 or 3,000 annually on tax preparation fees and would not need a CPA or tax lawyer anymore and more importantly could use and benefit from the tax system (retirement planing) of their current country of residence.

No wonder that CBT is here to stay ... a conversation with Jack Townsend - a tax lawyer and professor who teaches some University of Houston Tax Fraud Classes

There is a very strong disconnect between how Americans -even the ones that have the intelligence and experience to know better- in the homeland think are the rights and responsibilities of a U.S. citizen abroad and the reality !

I can't think of one person I've talked to in the homeland who wasn't 100% convinced that the Marines would show up to help him if he and other Americans got into trouble outside the U.S.
The fee business really sets them back on their heels - they had no idea. And once they've wrapped their minds around how it really works, I sometimes get this response, "It's not the problem of the US government if you go gallivanting off to dangerous places and it shouldn't be their responsibility to bail you out." Okey-dokey. Fair enough. Nice to know we are on our own. But then everyone needs to stop using this as an argument for why expats should be paying taxes twice. Winston Churchill once said "A country which tries to tax itself out of debt is like a man standing in a bucket and trying to lift himself up by the handles." Take a look at the following conversation with Jack Townsend of  Townsend & Jones, L.L.P 

FATCA....the threat of forcing many Americans out of the shadows and into the offices of accountants licensed to do U.S. taxes.

As we know these so called "sweeping laws" have many consequences. Their impact is inevitably more far-reaching than lawmakers imagine. They snare the unwitting, and inflict often heavy collateral damage. FATCA is aimed at finding unreported income by taking a peek at virtually every account held by U.S. citizens, anywhere in the world. It’s like dragging a massive net along the ocean floor to catch a handful of shrimp.
With demand brisk and supply of experts limited, some individuals report being charged as much as $4,000 a year to do relatively straightforward U.S. taxes – filings that would typically cost less than $1,000 in the United States. An individual who hasn’t filed for years can easily face tens of thousands of dollars in accounting fees to "come clean" (whatever that is supposed to mean), even if they owe no U.S. taxes.
Given that roughly 7 million Americans live outside the United States, FATCA is an accountant’s wet dream.

What individuals are U.S. taxpayers? Who is a U.S. citizen?
There are individuals that the U.S. government would define as “U.S. citizens” who:

• do NOT agree that they are U.S. citizens because they have performed a “relinquishing act” under applicable U.S. laws;
• do NOT even know that they may be U.S. citizens because they have never lived in the United States
• are citizens and residents of countries that do NOT allow multiple citizenships

To put it another way: one’s status as a U.S. citizen is NOT always clear.

As Bruce Springsteen would say, that’s the result of being “Born In The USA”.........

One thing sticks out here and that is denial ....
Centuries ago France helped americans become independant to the english empire because they were fed up with paying 14% taxes on their income at the time to England....please explain to me what has changed or is different in 2014 ??
At the end of the day the only thing that people have and that countries have is their “moral capital”. The USA is rapidly eroding the “moral capital” that it has remaining.
Most Homeland Americans don’t believe that the USA would attempt to levy taxes on (1) somebody who doesn’t live in the USA on (2) income not earned in the USA. Most Homeland Americans would regard this as “unjust”.
They would regard it as “unjust” because Boris Johnson - the major of London like many others” doesn’t live in the USA and didn’t choose where he was born .
Finally, if Homeland Americans knew or understand how compliance with U.S. tax laws outside the U.S. destroyed people’s lives (i’ts really a form of “Life Control”), they would regard it is inhumane.
Yes,  what the U.S. calls “citizenship-based taxation” (making it sound patriotic and reasonable) is actually “place of birth or naturalization taxation”. As Bruce Springsteen would say, that’s the result of being “Born In The USA”.
In fact for those who were “Born In The USA” but who live outside the USA, US tax policies are:
“Unjust, they are inhumane, people didn’t choose where they were born.”
That’s the America of today. Does America care? No.
Does America care that it doesn’t care? No. (and this is the real moral crisis.)
In any event, FATCA is being used by the USA to enforce US extra-territorial taxation outside the borders of the USA. Taxation of “non-US income” on people who “don’t live in the US”, assumes that the USA has a “property right” in people. Why? Well, because they were born on U.S. soil. ? …. This is a moral issue. 
It’s really very simple: citizenship-based taxation is America’s Apartheid system. It is repugnant, immoral and indefensible. Since CBT is so clearly irredeemable, there is really nothing to talk about, unless your intellectual curiosity exists in a profoundly amoral vacuum.
CBT discriminates against a particular group of people on the basis of their place of birth – a characteristic as immutable as the colour of their skin. It labels them, tracks them, intimidates them, criminalizes them and forces them into virtual prisons from which escape is nearly impossible. Worse, the architects of CBT are now co-opting the rest of the world to implement this discriminatory regime for them. It is astonishing and disheartening how quickly and easily this is unfolding.
Far too many countries, cowed by the 30% withholding stick that the U.S. threatens to beat them with, like the FBAR and OVDP sticks they already beat their CBT victims with, simply refuse to challenge America on fundamental moral grounds and it is wrong.
The U.S. does not deserve a free pass on CBT and FATCA any more than the old South African government deserved a free pass for its heinous apartheid policies. Yet several ostensibly modern and enlightened nations have rationalized their acquiescence to FATCA by publicly exclaiming that America has the inherent right to tax its citizens in whatever manner it chooses. Well, in a just world it does not, for CBT represents a clear denial of basic human rights and dignity.
Yes, the global hypocrisy is staggering, especially from countries like Canada. Last year, the Conservative government expelled the consul-general for Eritrea for that regime’s tax extortion efforts against its expats in Canada. Just last week, the same government enthusiastically ushered-in America’s FATCA laws to override our country’s own Charter of rights and freedoms, discriminating on the basis of national origin, gutting federal banking privacy laws and setting the stage for a massive legal challenge which will be fought in the Supreme Court.
Beneath all the technocratic language about forms, compliance, jurisdictions and enforcement, there is a fundamental truth: these American policies are morally unjust and the world must not condone them any longer. FATCA will be a global disaster unless it is stopped now.
It is indeed time for the world to say no to the U.S. practice of citizenship-based taxation and to force it to adopt residency-based taxation like the rest of the world. If not, then the world better find a more deserving reserve currency in a hurry – the United States has abused its position of trust for far too long and it needs to be reminded that it is just one nation in a community of nations. The breathtaking audacity of FATCA is simply a bridge too far.”
For America the attempt to impose taxation on people who don’t reside in the USA because they were “Born In The USA” is evidence of an aspect of “moral bankruptcy”.
The America of today is:
- Financially bankrupt
- Spiritually bankrupt
- Morally bankrupt
And ….
It doesn’t care that it doesn’t care!
Both the USA and South Africa have punitive (as did the Nazis and the Soviets) Exit Taxes. But there is one way that the USA’s Exit Tax is different.Whereas South Africa (and the other two countries I mentioned) imposed Exit Taxes when people physically left the country, the USA imposes an Exit Tax if one renounces US citizenship regardless of whether one physically leaves the USA or not. Think of it:
The USA imposes an “Exit Tax” on many middle class people who do not live in the USA if they don’t want to be an American citizen anymore!

The IRS Scandal, Day 566

Washington Examiner:  2,500 New Documents ID'd in White House-IRS Taxpayer Harassment Cases:

In a shocking revelation, the Treasury Inspector General has identified some 2,500 documents that “potentially” show taxpayer information held by the Internal Revenue Service being shared with President Obama’s White House.

The discovery was revealed to the group Cause of Action, which has sued for access to any of the documents. It charges that the IRS and White House have harassed taxpayers.

In an email from the Justice Department’s tax office, an official revealed the high number of documents, suggesting that the White House was hip deep in probes of taxpayers, likely including conservatives and Tea Party groups associated with the IRS scandal.

WSJ Expat’s guide to U.S. expats’ personal finance issues, from tax and currency conundrums to college- and retirement-savings dilemmas, and much in between.

http://blogs.wsj.com/expat/2014/11/24/expat-finance-tax-guide/

Meanwhile a class of taxpayers that you would think should be nailed pretty easily defrauds the IRS to a tune of $1bn a year.

Tax refund fraud associated with prisoner Social Security Numbers remains a significant problem for tax administration, according to a report by the Treasury Inspector General for Tax Administration (TIGTA).
TIGTA's report is the third in a series of audits it has conducted since 2010 that have documented alarming growth in prisoner tax refund fraud.  The number of fraudulent tax returns filed using a prisoner's Social Security Number that were identified by the Internal Revenue Service (IRS) increased from approximately 37,000 tax returns in Calendar Year 2007 to more than 137,000 tax returns in Calendar Year 2012.  The refunds claimed on these tax returns increased from $166 million to $1 billion.

Compliance is a form of taxation...double compliance, therefore double taxation.

Boris Johnson pays all his UK taxes, but the US wants to tax him more for taxes the UK does not have. He pays tax once to England on income but then the US wants to tax that same income in a different way and then it becomes double taxation.
This broad definition of double taxation is much more realistic than the narrow Treasury department definition that works something like this: The US has a new Net Investment Income Tax. Some call it Obamacare tax. If you are in the income leagues of Boris Johnson and even considerably lower you may attract this. Here is how it is not double taxation according to the Treasury Department definition: The US has this 3.8% tax (would not apply to Boris Johnson’s home sale in 2009 as that was before the introduction of the tax), and the UK does not have a Net Investment Income Tax/Obamacare Tax. Therefore the US rate of 3.8% flows on top of all other taxes in full and is not double taxation because the income is not subject to a UK Net Investment Income Tax. This is an example of how the tax treaties the US defined “prevents” double taxation. The reality: the taxes flow straight on top and according to the tax treaty there would be no credit allowed for the US tax paid on Net Investment Income Tax for UK source investments against UK tax liabilities.
Maybe another way to think of it is if there is no credit for US taxes paid against UK taxes for UK source assets/income for those tax resident in the UK then it is double taxation.
The whole tax situation is very complex. There are many including it may appear most politicians who when they hear “tax” they shut down and do not want to comprehend any further. Then when there are two tax systems overlayed on each each other it gets more unfathomable. This is part of the reason politicians around the world have been duped by the treaty language of “preventing double taxation” and think helicopter view – prevents double taxation great, I’ll vote for it! Yet not preventing double taxation for those impacted.
Whether Boris complies or not, his action (or inaction) would be a reasonable response to a law imposed on him by an immoral nation. Whichever route he takes, he’ll be accused of not acting with moral guidance.

Green card abandonment and treaty election overlap question

A long-term U.S. resident, who is a U.K. citizen and in not a U.S. citizen, plans to deliver his "green card" - along with Form I-407 - to the U.S. Embassy in London on January 4, 2016. January 1, 2016 is a Friday so Monday, January 4, 2016 is the first business day for the embassy in 2016. His expatriation date would, therefore be January 4, 2016 and he would file a dual-status return for 2016.

However, if the taxpayer files a Forms 1040NR for 2016 with an election under the US-UK income tax treaty to be treated as a U.K. resident, the election would be retroactive to January 1, 2016 and a dual-status return would not be required.

Is the expatriation date January 1, 2016 under the Form 1040NR treaty election rather than January 4, 2016 based on the delivery date of the "green card" to the U.S. Embassy in London?

The short answer is that January 1, 2016 is the first day of the rest of your client’s life.  You do not prepare a dual status tax return for 2016.

Don’t forget, even children must file the so-called FBAR and Form 8938 if it is required!

New FBAR instructions were added on June 11 2014 to emphasize this.  The filing requirement for minors is clarified on Page 6 by adding the following text:
Responsibility for Child’s FBAR
Generally, a child is responsible for filing his or her own FBAR report. If a child cannot file his or her own FBAR for any reason, such as age, the child’s parent, guardian, or other legally responsible person must file it for the child.
Signing the child’s FBAR
If the child cannot sign his or her FBAR, a parent or guardian must electronically sign the child’s FBAR. In item 45 Filer Title enter “Parent/Guardian filing for child”
Also if certain monetary thresholds are met and the child is required to file a tax return, the child may also be required to file Form 8938 – Statement of Specified Foreign Financial Assets.  This Form is completely separate and distinct from the FBAR. It is not replaced by the FBAR.

Dreams of Compliance Condors or the “Wonderful World of Forms, Threats and Penalties”

Form People (also known as "compliance condors" or "compliance vultures") are mostly honest and hardworking, but they live in a special world -- a world in which forms are sacred. This is completely normal from the perspective of the Compliance Condor unfortunately they lack perspective. In fact, for most of them, the completion of forms or the act of formication is the fundamental obligation of citizenship (or at least U.S. citizenship). Furthermore, very few of them see the system of taxes, forms as penalties as being immoral. They just see it as normal.
One could say that the Compliance Condors work “within the system”. But, the truth is that the Compliance Condors “Are The System”. They make it work. They shape the law. They shape the expectation of the law. Once one Condor begins filing a specific form (example 3520 for the TFSA) the other Condors are sure to follow. Because Condors are “Inside The Form” looking only at the Form, they can’t imagine what it means to be “Outside The Form” looking in. They can’t see the immorality, the injustice, the waste of human resource and the dehumanizing of the individual. In fact the Compliance Condors “aid and abet” each of these things – they take pride in doing it. But, there’s much more.
In the “Form Industry” there is a hierarchy of forms. Those who are most experienced assist with the most complex forms. Imagine the day in the life of a Compliance Condor when he/she reaches the point where he is assigned a 5471 or an 8621. After all, those who are most junior would start with an FBAR or perhaps a schedule B. The value of a Compliance Condor is a function of the forms to which he is entrusted. His sense of “self worth” is defined by the form that he is assigned.
A Compliance Condor would start the day by looking in the mirror and saying:
“In forms we trust”.
The most dedicated Condors dream of Forms. But, they do more than dream about Forms. Because their identity is a function of their forms, many of them go further than dreaming about forms. Those who are most dedicated actually dream about being specific line numbers on different forms . In social settings they confide about their dreams to other Condors. In the industry, these are known as “Form Dreams” .
So, yes when the Compliance Condors write about FATCA, FBAR and other sacred instruments of confiscation, they are being sincere. They believe they are being helpful. They are NOT being dishonest and above all else, they are simply writing about the world they way they see it and the way they experience it.
And that Dr. Reader is exactly the problem!
P.S. Avoid “Form Crime” – The Compliance Condors will love you!

U.S. citizenship renunciation-relinquishment and lawful permanent residency abandonment.

There has not been any detailed discussion of the number of LPRs who leave the U.S. annually.  The data provided by the U.S. Citizenship and Immigration Services reflects about 16 times more LPRs formally abandon their lawful permanent residency status by filing Form I-407 compared to U.S. citizens who renounce. The chart here shows a comparison for the years 2000 through 5/2013 of the total (i) USCs who have renounced compared to (ii) LPRs who have formally abandoned that status.
 http://www.dhs.gov/sites/default/files/publications/ois_lpr_pe_2012.pdf

Boris Johnson, accidental American, says he will NOT pay the US tax on the sale of his home in the UK!

Until the US comes to value it’s citizens abroad, no gesture in the world is going to make an iota of difference. I believe for expats, big change is not quite ripe for happening. More people need to renounce. BoJo’s rebellion would certainly help, and to really drive their point home, ACA should have said Boris is morally right in flouting what they refer to as an immoral US law.
Boris Johnson becoming compliant then renouncing would sent the most effective message to the American public and lawmakers, that some people would pay anything not to be American under current law as it stands. Otherwise he’s just a ‘scofflaw’ to most.

The following is a direct report from this article, and reflects the typical feeling and response of a dual national United States citizen who has spent virtually no time living in the United States, yet is required to pay taxes. This is largely a policy question and many have argued law must change; see, Co-author. “Tax Simplification: The Need for Consistent Tax Treatment of All Individuals (Citizens, Lawful Permanent Residents and Non-Citizens Regardless of Immigration Status) Residing Overseas, Including the Repeal of U.S. Citizenship Based Taxation,” by Patrick W. Martin and Professor Reuven Avi-Yonah, September 2013.-
 http://thedianerehmshow.org/au...
Directly from article-
The prospective Conservative Parliamentary candidate, who was born in New York and holds a US passport, revealed his dispute with the US Treasury during an American radio phone-in while he was publicising his new book, The Churchill Factor.
His claims came after he was asked about renouncing his US citizenship, which the caller said was “very hard”, on National Public Radio.
Mr Johnson said: “I have to confess to you, that you’re right, it is a very – it is very hard, but I will say this, the great United States of America does have some pretty tough rules, you know.
“You may not believe this but if you’re an American citizen, America exercises this incredible doctrine of global taxation, so that even though tax rates in the UK are far higher and I’m Mayor of London, I pay all my tax in the UK and so I pay a much higher proportion of my income in tax than I would if I lived in America.
“The United States comes after me, would you believe it, for the – for capital gains tax on the sale of your first residence which is not taxable in Britain, but they’re trying to hit me with some bill, can you believe it?”
Presenter Susan Page then pressed him whether he would pay the bill, to which he said: “I think it’s outrageous.
“Well, I’m – no is the answer. Why should I? I haven’t lived in the United States for, you know, well, since I was five years old.
“I could but I pay – I pay the lion’s share of my tax, I pay my taxes to the full in the United Kingdom where I live and work.”

How the IRS “Non-Filer Program” Affects USCs and LPRs Residing Outside the U.S.

U.S. citizens who have spent most all of their lives outside the U.S. are often times shocked to learn about the scope of the U.S. citizenship based taxation system.  In recent years, due to the aggressive pursuit of the IRS and Tax Division of the Department of Justice, there has become a keen focus on assets and accounts located outside the U.S.
Most recently in August of this year, the IRS has articulated its position for U.S. citizens and lawful permanent residents residing outside the U.S. in a document titled – “New Filing Compliance Procedures for Non-Resident U.S. Taxpayers“
The IRS has had for years a specific program for “non-filers”; i.e., those persons who do not file U.S. income tax returns.  The program is detailed in the Internal Revenue Manual, set out below.

4.19.17  Non-Filer Program

• 4.19.17.1   Non-Filer Program
• 4.19.17.2   Non-Filer Strategy
• 4.19.17.3   Non-Filer Processing
• 4.19.17.4   Non-Filer Penalties
• 4.19.17.5   Undelivered Mail
• 4.19.17.6   Taxpayer Replies
• 4.19.17.7   Closures – Non Examined

Voluntary Disclosures by Homelanders who were Non-Filers

Practitioners often struggle with the issue of whether a taxpayer can avoid a criminal tax investigation by making a disclosure to the IRS. A "voluntary disclosure" generally involves the process of contacting the IRS in some manner and voluntarily reporting previously undisclosed income (or false deductions) through an amended return or the filing of a delinquent return. A taxpayer's timely, voluntary disclosure of a significant unreported tax liability is an important factor to the IRS in considering whether the matter should be referred to the U.S. Department of Justice for criminal prosecution. Properly resolving this issue can mean the difference between a taxpayer being criminally excused of a tax crime or being convicted on the basis of admissions derived from the voluntary disclosure itself.

Certainly, the IRS has a somewhat limited capacity to perform criminal investigations. However, a significant amount of time is not required to criminally investigate and prosecute a non-filer, particularly one who files delinquent or amended returns following an IRS inquiry. Without adequate representation, the perceived light at the other end of the voluntary disclosure tunnel . . . may be the IRS train coming straight at the taxpayer!

FOIA request on OVDP

Lets start with "non-willful" and "reasonable cause" are two different concepts.
It goes like this : If the evidence tends to show NW, then the examiner should shift the focus of the investigation to RC. The examiner should use the NW FBAR penalty mitigation guidelines only where there is no RC and should not assert NW FBAR penalties if he finds RC for the violation and the taxpayer files correct FBARs.
First test would be
a) NW criterias:
1. only signature authority over the "foreign" bank account
2. did not participate in an abusive tax avoidance scheme
3. tax compliance
4. relied upon the advice of a CPA
5. full compliance after notification of FBAR reporting requirements
6. "Foreign" account disclosed to return preparer
7. person owns the account in his name
8. business reason for the "foreign" account
9. family or business connection to the foreign country
10. no previously-filed FBARs
11. no illegal income in the "foreign" account
afterwards 2nd test with regards to
b) RC criterias :
1. person opened the account for a legitimate purpose (lived in the foreign country at the time)
2. person did not use the account for tax evasion
3. person relied on the advice of a qualified CPA
4. person complied with the tax laws of the country of residence by reporting all taxable income and paying the correct amount of tax
5. person reported all income from the undisclosed "foreign account" (not possible for NF)
6. person has only a De minimus US tax deficiency as a result of the undisclosed "foreign account"
7. person filed promptly delinquent FBARs after becoming aware of his obligation and timely subsequent FBARs.

Prepare for an Offshore IRS Audit

Don’t be a snitch! Never volunteer information in an IRS audit and this goes double in an offshore IRS audit. The agent is NOT your friend. He’s there to find errors and extract a penalty for those mistakes. While you must always be honest, only answer questions that are asked. Never volunteer new information or expand on a subject beyond the question. You might think you are helping, but you’re just making things worse.

The same goes for documents. Never give more paper than is requested. You might think it shows good faith, and you’d be wrong again. More documentation just gives them more ammunition. More chances to find an error or a discrepancy.

Review your bank statements. Go through your bank statements and understand each and every deposit. Those that are income should be identified as such. Those that are nontaxable, such as loans and gifts, should have supporting documents. The first line of attack in an offshore IRS audit is the bank statement, so be ready to prove up all nontaxable items.

At the same time, identify and find documentation for all business expenses. If you deducted it, have an invoice or receipt ready to go. Never be caught off guard when the agent asks, “What’s this payment for?” Have an answer with proof ready.

Remember that, so long as you are a U.S. citizen, the IRS has a right to audit your offshore company and international business activities. Therefore, you must maintain records of income and expenses for offshore transactions just as you would for a U.S. based business.

Warren Buffett is again showing President Obama how to use the U.S. tax code to his advantage.

Buffett Seen Saving More than $1 Billion in Taxes with P&G Swap

For the third time in a year, the billionaire chairman of Berkshire Hathaway Inc. has structured a deal in which he buys businesses in exchange for stock that has appreciated. The transactions, called cash-rich split-offs, allow him to avoid capital gains taxes that would be incurred if he sold the shares in the open market.
Berkshire announced Thursday that it would turn over about $4.7 billion in Procter & Gamble Co. stock in exchange for P&G’s Duracell battery business, which will be infused with about $1.7 billion in cash.
Since Buffett’s cost basis on the shares was about $336 million, and corporate capital gains are typically taxed at 35 percent, structuring the deal in this way could save Berkshire more than $1 billion. P&G also stands to reduce its tax liability on the sale.
“Cutting out the 35 percent capital gains allows them to do this at a price that’s more attractive for Berkshire,” said Richard Cook, co-founder of Cook & Bynum Capital Management LLC, which holds shares in Buffett’s company. “If they did it in an open auction, P&G would probably wind up in a similar position, and Berkshire wouldn’t have participated.”
The Duracell deal mirrors two of Buffett’s transactions this year. In February, Berkshire handed over a holding in Phillips 66 in exchange for its pipeline-flow-improver business. He later swapped a stake in Graham Holdings Co. for cash, a Miami television station and Berkshire stock that Graham held. Graham is the former publisher of the Washington Post.
Berkshire highlighted the attractive nature of the deals in its latest quarterly report to the U.S. Securities and Exchange Commission.

The 2015 filing season will be the worst filing season in over 25 years when even 1040 income tax returns disappeared...........

The IRS National Taxpayer Advocate Nina Olson predicts:

“…..The filing season is going to be the worst filing season since I’ve been the national taxpayer advocate; I’d love to be proved wrong, but I think it will rival the 1985 filing season when returns disappeared,” she told the audience of tax practitioners, according to Forbes…..”

And for those outside the US who try to be ‘compliant’?

“……It will be even worse for those filing outside the US. “If they are overseas, who are they going to call? There is not toll free number,” Olson noted……” 

 http://rt.com/usa/202991-irs-warns-tax-season-delays/

So much for all those ‘services’ and ‘rights’ US extraterritorial tax apologists like to cite to justify US taxation forced on the rest of the world based on accidental US birthplace or parentage. Some of those making those claims include US homelanders who’ve left the homeland nest temporarily in order to come up here and strike it rich in the goldfields of crossborder taxation – mining the local assets of many expats being extorted by the US. According to some of these homeland opportunists recently; “… US citizens are afforded many privileges and have access to benefits that non-citizens do not enjoy, including protection abroad, consular services, the right to vote, and easy access to the US job market…. “.

Yes sure. But can they get the IRS on the phone? The Taxpayer Advocate says not.

And we have a firsthand account of a consular official in Canada stating that certain ‘consular services’ and exercising the right of a US citizen to renounce – sought by those in Canada are of ‘low priority’ and are going to stay that way – even when those US citizens pay 2350. USD for the privilege of the ‘service’ that is their legal right. Many can’t ever vote in the US from Canada because they have never lived in the US, never lived there long enough, or didn’t have a US parent who would have qualified. Over half the US states do not allow absentee registration and voting from abroad without a minimum period of US residency – even some of those who may have had a US parent who at some point resided in a US state, are subject to rules about the voting eligibility or residency of the US parent http://www.fvap.gov/citizen-voter/reside .

And as for ‘protection abroad’? Oh yeah, that must be the US drones and US Homeland security enforcers all set to operate on Canadian soil – but demanding to be exempt from Canadian laws http://www.huffingtonpost.ca/2013/07/30/border-security-us-police-legal-exemptions_n_3678240.html . We need protection from them, not protection by them.

Previously Unreleased IRS Guidelines for FBAR Audits

• Offshore Voluntary Disclosure Workshop Houston,TX 09/11
• Offshore Voluntary Disclosure Workshop Chicago, IL 09/12
• FBAR Report of Foreign Bank and Financial Accounts
• Offshore Voluntary Disclosure Program Quick Start Guide
• Voluntary Disclosure Program(VDP) Job Aid use in Interpreting XXX Statements April 2010
• E-trak VDP Voluntary Disclosure Database Access Via Form 5081
• International Technical Training(Instructor Guide)
• International Technical Training(Participant Guide)
• Recorded Session: Basic Structures Part 1: Basic Structures Used to Conceal Beneficial Ownership of Foreign Financial Accounts and Other Assets
• Recorded Session: Basic Structures Part 2: Pre-Audit, Investigative Techniques & Statutes
• Recorded Session: Basic Structures Part 3: Interviewing and International Penalties
• IIC e-Town Hall Tax Compliance Officers Updates and Technical Issues
• Recorded Session: Overview of Subpart F Income
• Recorded Session: Application of Treaties

Not only is the Department of Justice getting desperate with finding and convicting alleged guilty Swiss Bankers - now a New York Federal Prosecutor is joining the race

New York federal prosecutors said on Thursday that they indicted a former Rahn & Bodmer Co. executive for allegedly helping some of the Swiss bank’s clients hide hundreds of millions of dollars in assets from the Internal Revenue Service.
Martin Dunki allegedly conspired with his clients for more than a decade to help them evade taxes, creating a series of sham foundations chartered in foreign countries and following the announced federal investigation into UBS AG, used his clients assets to buy gold to further conceal the activities.

Martin Dunki, who retired from the bank in 2012, was charged with one count of conspiracy in an indictment filed in federal court in New York. The bank was not named in court papers, but was described as purporting to be the oldest private bank in Zurich, a description that Rahn & Bodmer uses on its website.
"Martin Dunki went to great lengths to help his U.S. taxpayer clients secret away millions of dollars in Swiss bank accounts," Manhattan U.S. Attorney Preet Bharara said in a statement.
Dunki, 66, who lives in Switzerland, has not been arrested and has no known lawyer, according to U.S. prosecutors.
Camellia Plc, where Dunki is a non-executive director, did not reply to emails seeking comment from the defendant.
Rahn & Bodmer, which was established in 1750 and has 12 billion Swiss francs ($12.45 billion) under management, confirmed in September 2013 that it was under investigation. It did not respond to a request for comment on Thursday after normal business hours.

Earlier this month, Raoul Weil, who once led UBS AG's global wealth management unit, was acquitted on charges of conspiring to help Americans hide $20 billion in offshore accounts.
U.S. prosecutors said Dunki led a similar conspiracy at Rahn & Bodmer from 1995 to 2012, helping Americans hide hundreds of millions of dollars in undeclared accounts. One taxpayer hid nearly $300 million with Dunki's help, prosecutors said.
Starting in 1999, Dunki, Zurich-based lawyer Edgar Paltzer and an unidentified lawyer in Santa Barbara, California, began working together to manage undeclared accounts at Rahn & Bodmer, prosecutors said.
Paltzer, a dual U.S.-Swiss citizen, pleaded guilty in August 2013 to conspiracy and agreed to cooperate with U.S. authorities.
"Mr. Paltzer continues to cooperate with the U.S. Attorney's office," said Thomas Ostrander, a lawyer with the firm Duane Morris who represents Paltzer, without commenting on the substance of Thursday's indictment.

FBAR doc. dump

http://www.bragertaxlaw.com/files/lbI_doc_3.pdf

Expats : application of the mandatory health insurance requirement

The Affordable Care Act (also known as Obamacare, will be referred to as ACA in the remaining of this post) mandates that everybody buys health insurance. I’m not sure exact as to what happened, possibly congress assumed the law only applied to US residents but never actually spelled it out in the law. By anybody, I mean anybody, IRC 500A refers to an “applicable individual”, which is any individual except those who are not required to have health insurance by virtue of IRC 5000A(d)(2) thru (4) – it seems that a swiss citizen living in Switzerland would be exempt from the mandate under “(3) Individuals not lawfully present” but this paragraph specifically excludes US citizens.

The IRS Scandal, Day 553

Tax Preparer Pleads Guilty to Running Ponzi Scheme

A tax preparer in the Bronx, N.Y., has pleaded guilty to operating a $4.8 million Ponzi scheme and faces up to 11 years in prison.
Robert H. "Bob" Van Zandt pleaded guilty Monday to a 33-count indictment lodged against him, including securities fraud and grand larceny. In exchange for his plea, Justice Martin Marcus agreed to sentence Van Zandt to between three and two-thirds to 11 years in prison.
Securities fraud is a serious crime which my office will prosecute to the fullest extent of the law," New York State Attorney General Eric Schneiderman said in a statement Tuesday. “Mr. Van Zandt stole his victims’ life savings, forcing some of them to re-enter the workplace after their retirement and others to rely on government assistance to survive. The perpetrators of this and other Ponzi schemes will face justice.”
see also :   oops....forex investors may face a $1 billion loss as trading site Secure Investment vanishes. http://bloom.bg/1GS3qdG

The Impact of FATCA and why it turns bank tellers at foreign institutions into unpaid IRS agents

Some new meme needs to overtake Schumer's and Levin's and Bill Nelson's and Barbara Boxer's smearing of US persons abroad. The message should not be to tell the World that all expats, immigrants and green card holders are all Tax Evaders. Go find them ! Go FATCA them ! Go FBAR them !
As the administration and friends were looking for someone else to fund both their deficit and their new domestic jobs bills (such as 2010 HR 2847 Jobs for Mainstreet Act), they looked around for new ways to get money from people they didn’t like. However, they needed to get it from people who couldn’t fight back. They also needed to make sure that no one else would come in and defend those people. FATCA is founded in a U.S. tax code that attacks small business and lavishes tax holidays on the wealthy (tax inversions, for example). It came about because America is the only large economy which taxes its citizens on their worldwide income. The US is the only country that forces our citizens abroad, including those who are residents of another country, to pay tax at home.

“What is the largest segment of US citizens that can’t fight back? There are 7.6 million US citizens living outside the USA, and we make it difficult for them to vote–as difficult as we can, that is”.

Into this system comes FATCA. It basically turns bank tellers at foreign institutions in to unpaid IRS agents. The first impact of FATCA is to require all foreign banks to determine which of its clients are U.S. persons and to report all of their transactions to the IRS.

TAXPAT : punishing people for leaving, instead of rewarding people for staying.

It’s official. Obama has achieved the ominous distinction of becoming the first U.S. president to have had more than 10,000 very wealthy taxpayers renounce their U.S. citizenship under his watch.
1. 10-year expatriation tax (1996) (H.R. 3103 – 104th)
2. American Jobs Creation Act (2004) (H.R. 4520 – 108th)
3. US Exit tax (2008)
Think about it. If each law they pass is progressively more punitive, what message is that sending? It’s telling the people at whom those laws are aimed (the rich), that you should get out, before it gets worse.
According to the combined “Quarterly Publication of Individuals, Who Have Chosen To Expatriate” reports published in the Federal Register, since Obama assumed office the exact number of so-called, “covered expatriates,” on September 30, 2014, was 10,413.
It is important to emphasize that these lists represent only wealthy expatriates. Under covered expatriate is is any expatriate who had a net worth of at least $2,000,000 (in current dollars) on the date of expatriation or had incurred a tax liability of net $157,000 per year (based on 2014 dollars and adjusted annually) in each of the 5 years prior to expatriation. The IRS reports that the top 1% of income earners pay income tax at an average rate of 23.5%. So using that tax rate, an individual with such a tax liability would have to earn in the vicinity of $668,000 per year or roughly double the income floor to be in the top 1% of income earners.
When the rich leave, it causes a disproportionate loss of tax revenue, that must be made up by those of us who remain. Since the rich are most often job creators, it also means that many of the jobs that they create will move offshore, as well. According to the latest IRS Collections Data, the top 1% of income earners pay 35.06% of all personal income tax collected in the USA. Based on that figure, if all of the top 1% of income earners were to leave the USA, the government would have to increase taxes on the rest of us by roughly 54%, just to stay even and that’s before considering the lost jobs that would go along with it. Look back up at the chart at the top of this page and consider that these numbers represent just those wealthy expats in the top 1%, who formally renounced. Then consider that many more, such as Tina Turner, lose their citizenship through “relinquishment,” which is not recorded on these lists. There are also others, who choose the "PT"  route, who just effectively drop off the financial radar of the USA, without renouncing. It’s only reasonable to assume that other forms of expatriation are increasing at rates similar to formal renunciations. So, at the rate formal renunciations of this income group are increasing, this could be just the beginnings of an economic disaster.
Expats don’t see themselves as fleeing the USA, but rather, as fleeing a government that has become hostile to the the principles upon which this nation was founded. They’re fleeing an IRS that makes up its own rules as it goes along. They’re fleeing a government that has forgotten due process. The only thing that will stop this flight of wealth is a return to a smaller, responsible, representative government that doesn’t punish success.
 http://fairtax.org/

Wow, finally somebody who nearly correctly reports the facts !

FBAR Penalties
This past year the government brought a case against Carl R. Zwerner of Miami for willful failure to file foreign bank account reports. The penalties were originally assessed at 4x50% willful penalty or 3 times the value of the undisclosed account that Mr. Zwerner held offshore. The case was taken to trial, and the jury found for the government for about 150% (3x50% willful penalty) of the value of the account. The jury was also asked to decide whether the FBAR penalties were constitutional under the Eighth Amendment. On the eve of a hearing on the issue, the case was settled and Mr. Zwerner agreed to pay 100% (2x50% willful penalty) of the value of the account.
The case shows that the government won't be a "shrinking violet" in bringing similar judicial action, said Michel.
The case will likely raise government concerns about the Constitution argument, because in light of existing case law it is hard to imagine that a similar case wouldn't raise judges' eyebrows when a penalty exceeds the value of the taxpayer's assets, said Michel.
http://www.capdale.com/scott-michel-comments-on-us-strengthening-international-tax-enforcement-efforts

Do you need to put up with the consequences of unknowledgeable CPAs ?

CPA’s and other professional tax return preparers are bound to the IRS Code Of Professional Responsibility commonly called Circular 230 which if a tax preparer violates could lead to big penalties and sanctions for that tax preparer. Internal Revenue Code § 6694(a) provides that if any part of an understatement of a taxpayer’s liability is due to an “unrealistic position” taken on his return, any income tax return preparer who knew (or reasonably should have known) of this position is subject to a penalty of $250. If the understatement is due to a reckless or intentional disregard of rules or regulations the penalty is $1,000 per occurrence.
The tax preparer’s employer, firm or entity also is subject to the penalty if it knew, or reasonably should have known, of the conduct giving rise to the penalty.

USCs and LPRs Who Are Having Their Non-U.S. Accounts Closed: Is it hype or is it real?

1.  Wall Street Journal: Expats Left Frustrated as Banks Cut Services Abroad Americans Overseas Struggle With Implications of Crackdown on Money Laundering and Tax Evasion (11 Sept 2014)
2.  Wall Street Journal – Opinion (Colleen Graffy): How to Lose Friends, Citizens and Influence; The U.S. Foreign Account Tax Compliance Act seeks to co-opt foreign banks as long-arm enforcement
3.  Association of Americans Resident Overseas: Americans Abroad are Denied Access to Banking and Investment Opportunities
4.  Time Magazine: Swiss Banks Tell American Expats to Empty Their Accounts
5.  The Huffington Post (Aug 2014) – Expatriate Tax Sense or Broad-Brush Overreach: The U.S. Foreign Account Tax Compliance Act (FATCA)
6.  The New York Times (April 2013) Overseas Finances Can Trip Up Americans Abroad
7.   American Citizens Abroad which compiles various news accounts of accounts being closed.  

For good practical advice about maintaining or opening foreign accounts, I recommend you read:

American Citizens Abroad: Maintaining Bank Accounts in the United States While You Are Living Abroad – Recommended steps for overseas Americans to follow  if a U.S. bank refuses either to open an account or to maintain an account because of the client’s foreign address