Monthly Archives: April 2024

Why Treasury Should Exempt U.S. Citizens Resident Outside The United States From FBAR Filing

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OMB Control No: 1506-0009 / ICR Reference No: 202403-1506-001 / Federal Register: 2024-06697
Reports of Foreign Financial Accounts Regulations and FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR)

Prepared by John Richardson, JD – April 28, 2024

Here is a pdf version of the slides …

Exempting_Americans_Abroad_from_FBAR

An earlier post alerted people to the opportunity to submit comments (due April 29, 2024) about whether the FBAR rules should be applied to the local accounts of Americans abroad. What follows is my comment …

Outline:

Treasury should explain precisely what it is about the status of U.S. citizenship (regardless of residence or connection to the United States) that creates a presumption of tax evasion, terrorism and money laundering.

The time has come for Treasury to recognize the obvious injustice and stop requiring an FBAR to report the “local” bank accounts of Americans abroad to the Financial Crimes Division of U.S. Treasury!!

Part I – Introduction and Context- Understanding The April 29, 2024 Deadline For FBAR Commentary Submissions
Part II – Comment: Statement Of Purpose
Part III – Looking For Mr. FBAR – Where are the rules found?
Part IV – Understanding FBAR: “U.S. Persons” are required to file an FBAR. Who is a “U.S. Person”?
Part V – FBAR and U.S. Citizens: The World of Mr. FBAR in 1970 is NOT The World Of Mr. FBAR 2024
Part VI – Non-application of the FBAR rules to U.S. citizens who reside in U.S. territories
Part VII – The application of FBAR to non-citizens who do NOT live in U.S. territories
Part VIII – Conclusion: If ALL U.S. citizens (regardless of connection to the United States) are to be subject to the FBAR requirement …

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Monte Silver’s Lawsuit Opposing The Procedural Aspect of #GILTI Regs Lives On

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In summary – Monte Silver’s lawsuit against GILTI lives on!

On April 19, 2024 the U.S. Court Of Appeals released a decision which included:

Plaintiffs had objected before the district court that the Anti-Injunction Act did not apply in light of South Carolina v. Regan, 465 U.S. 367 (1984), because they had no other way to litigate their claims. The defendants argued that the Act barred the suit without exception. The district court, in its Memorandum Opinion, did not address these contentions. On appeal, plaintiffs renew their South Carolina argument. Defendants respond with an argument differing somewhat from their presentation to the district court. That South Carolina argument may require factual development.

We therefore vacate and remand the case for further proceedings consistent with this judgment, which also may encompass additional issues beyond those presented in this appeal. In so ruling, we express no opinion on whether the Anti-Injunction Act would apply regardless of South Carolina v. Regan.

In lawyer talk this means that Mr. Silver’s lawsuit against the GILTI regulations has been returned to the District Court for a reconsideration of the issues. This does NOT mean that Mr. Silver was successful in striking down the GILTI regs. It does mean that he was successful in opposing the “dismissal” of the lawsuit by the District Court.

To put it simply:

Monte lives on to fight another day!!

Summarizing in Twitter Speak:

Those who want more commentary, read on …

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Americans Abroad Have Until April 29, 2024 To Tell FinCEN Why They Should Be Exempt From FBAR

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Outline

To learn more about Mr. FBAR, I invite you to watch the following discussion with U.S. tax lawyer Virginia La Torre Jeker.

Part 1 – Introducing Mr. FBAR – Looking For Mr. FBAR
Part 2 – 2011 – Financial Crimes, FBAR and Americans Abroad – Perspective From The Isaac Brock Society
Part 3 – 2020 – Financial Crimes, FBAR and Americans Abroad – Comments From Americans Abroad And Treasury’s Answer
Part 4 – 2024 – Financial Crimes, FBAR and Americans Abroad – Americans abroad need to keep commenting
Part 5 – What should you include in your comment?
Appendix – Treasury’s 2021 response to the comments of Americans abroad

To cut to the chase:

Pursuant to 31 U.S. Code § 5314 the Treasury Secretary has the clear statutory authority to exempt Americans abroad from the FinCEN 114 AKA FBAR reporting requirements. The statutory language is:

(b)The Secretary may prescribe—
(1)a reasonable classification of persons subject to or exempt from a requirement under this section or a regulation under this section;

Therefore, it is important to make your views known to Treasury!

Treasury has provided another opportunity (the last one was in 2020) for Americans abroad to comment directly on the FinCEN 114 AKA FBAR requirement. I strongly recommend that Americans abroad take this opportunity to comment on the appropriateness of FBAR being required for the local bank comments of Americans abroad.

The site requesting comments is here..

A direct link to the place where you comment is here:

https://www.reginfo.gov/public/do/PRA/icrPublicCommentRequest?ref_nbr=202403-1506-001&fbclid=IwAR3onw_sIYUYJUPs7FE2peIqHvstLp6GWznHz_ES3wC3a3V9HS7YFcZJB94_aem_AZ4juvxyHvLGAFVzYZYrCQ13We1R4LDFI_ajzrZ1EVldNPEGw2Z8jNAb397dlqBeaGzAxjXeEySvXWDbPMjth6tv

Update April 16, 2024 – Understanding the context of the comment request

I just received the following note from a reader of this post – “Someone out there”:

The Paperwork Reduction Act mandates that agencies engaging in information collection must seek approval every 3rd year from the Office of Management and Budget to extend the collection for an additional 3 years. The agency must demonstrate that the information collection is necessary, has utility and that the burden is minimal. Here’s an overview of the process: https://pra.digital.gov/clearance-process/

The first comment period (step 2 in the renewal process) was initiated in October of last year and Treasury received 40+ comments). Now the process is at step 4. Treasury has read the comments from October and has summarized them into their supporting statement which has now been submitted to OBM. The current supporting statement as well as the October public comments can be found here: https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=202403-1506-001

Comments during the current 30 day period are sent directly to OBM for consideration. If for whatever reason OBM finds the information collection to be unnecessary, it has the authority to take a few actions: approve, disapprove, file comment, or return the ICR to the agency if it fails to meet the procedural requirements. The OBM can even instruct the agency to undergo “rulemaking” which means that Treasury would have to propose new FBAR rules which could eventually make its way into the regulations.

The statutes for this PRA approval process is found in 44 U.S. Code § 3507 and 44 U.S. Code § 3508 but the key subsection is 3507(h).

So any comments submitted during this 30 day period should be aimed at convincing the OBM that Treasury’s supporting statement is inadequate or that FBAR is unnecessary, doesn’t provide utility, is a burden and that the OBM should instruct Treasury to propose new rules that would modify the FBAR regulations.

Those who are interested in learning more, read on … Otherwise please go directly to the comment page.

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FATCA Is Not the Answer

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Reposted from SEATNow.org.

On February 26, 2024, Tax Notes Federal published an article entitled “Taxing Fat Cats Abroad.”

The article defended the Foreign Account Tax Compliance Act (FATCA) as an “automatic exchange of information used to track down and tax accounts held by wealthy U.S. citizens living abroad.”

The article contained many errors and misinterpretations.

SEAT co-founders John Richardson, Karen Alpert, and Laura Snyder submitted a response to the article, entitled “FATCA Is Not the Answer.”

Their response, published on March 18, 2024, can be accessed via SSRN at this link.

The response explains:

1. The considerable differences between FATCA and CRS. They include FATCA’s lack of reciprocity and the United States’ refusal to join CRS;

2. The inequalities inherent in the U.S. tax system with respect to Americans living outside the United States and their discriminatory treatment;

3. The irrelevance of FATCA with respect to Farhy v. Commissioner and Bittner v. United States;

4. The unjust stigmatization of Farhy, Bittner, and all Americans living outside the United States;

5. Inconsistencies between the article’s defense of citizenship-based taxation and the “single tax principle” advocated by professor Reuven Avi-Yonah;

6. The failure of the article, in its theorectical defense of citizenship-based taxation, to contend with the real system in place today and its myriad intractable problems;

7. The lack of any connection between taxation and voting rights;

8. The importance of the 14th Amendment for the equal protection of the rights of Americans living outside the United States; and

9. That the 16th Amendment is not — and it should not be used as — a license to channel violations of constitutional and human rights through the tax code.

John Richardson – Follow me on X.com