Government Compassion on Display (FBAR)

In April I wrote a post entitled When Government Becomes a Predator. It dealt with a rather arcane subject, at least for most of us, called the Foreign Bank Accounts Report. As reported:

The Bank Secrecy Act became law in 1970 and implemented the Foreign Bank Accounts Report (FBAR) to monitor money laundering. The FBAR law required that US persons owning or having signing authority over foreign bank accounts report this information to the US Treasury Department. It was not much enforced for the obvious reason that a criminal does not willingly divulge incriminating information. During the first three decades of FBAR, there was widespread ignorance and disregard for the law.

Surprisingly, I received a lot of responses from people trapped by FBAR. Essentially, otherwise law-abiding citizens have been “criminalized” by the State and had their lives disrupted.

This email came in this week. To understand how this law (and probably thousands of other laws) produce unintended consequences and fear of government, you might want to read this:

Hello,

I was sent a link from the Canada section of the expat forums here: http://www.expatforum.com/expats/canada-expat-forum-expats-living-canada/. I was pleased to see your article. If you go to that link and look at the threads there you will see numerous stories like yours.

A friend of mine went down to the embassy today to find out about renouncing. He’s an older gentleman and he was told that the state dept. is none to happy about this situation. People who never would have thought of renouncing are doing so. They feel forced to. In my case it’s a choice between my Canadian husband and child and keeping my U.S. citizenship. For one thing in the U.S. press, the Wall St. Journal and “The Hill” publications we have been lumped in with drug lords and criminals. They have not made the distinction you did much as this law does not.

I have been a stay at home mother to a disabled kid. He was very sick growing up and I myself have lupus. My Canadian husband of 28 years supports us both, at his Canadian job with a Canadian company. He files taxes in Canada and claims me as dependent. I have called the IRS several times over the years to inquire of my obligations Every single time including this last time I was told I did not make enough to meet the requirement to file! No mention was ever made to me about FBAR. Not even this last April when my mother died and I called them to inquire about next years obligations due to an inheritance. I know I will have to report it and I was asking them questions regarding that. Again, I was told I still did not need to file for previous years but, for next year I would. Not one word about FBAR. The thing about FBAR is that for people like me, with a foreign spouse who is our sole income provider, I have to report HIS income.It’s for any account your name is on whether it’s your work that put the money in the account or not and whether or not the person who did put the money in there is American or foreign. When FATCA goes into place this is only going to get worse for our families. I know one woman in the U.K. with four children, also a stay at home mom, also has a child with disabilities *cerebral palsy* Her husband and children are British. To protect their meager savings she took her name off everything they own. Essentially she has made herself a pauper at age fifty with no access to any of their accounts and with her name not even on their home..she owed no tax to the IRS but, she is so afraid of the fines and penalties and future actions of her country against her family that is what she did. And what she did is not legal so now she is a criminal even though she owed no taxes! I wish the U.S. press would STOP telling Americans this is about taxes. It’s not a thing to do with owing taxes! The FBAR doesn’t even go to the same department as the IRS tax returns do.

Imagine if your spouse was not American but, by law you must turn them over to the IRS on any account that you have any signing rights on. Yes, I have the right to pay bills online from our account but, I made none of the money in it myself. This is causing the person who is the American in the house hold to be a burden to their family. Their are further implications. You were supposed to report any RESP which are savings accounts for your childs education. In Canada they are not taxable but, in the U.S. the are. For many parents no one had any idea these accounts were to be reported. Now because of fines and penalties for not filing this paper no one told us about those accounts can be wiped out. People are scared.

Many who have been considering renouncing like myself never would have thought to do so before this. And yes, it is a heart breaker but, I no longer trust my government won’t make further “laws” that would perhaps one day negatively penalize my son who already has it hard enough and who is not even American. If I am fined the ten thousand per year for not filing FBAR it will wipe us completely out. We will have nothing at all left. We cannot afford to pay it. People are having to go to very expensive tax attorneys, another expense they can ill afford for the most part. I have spoken with a seventy year old man, already retired. He was in the U.S. military and he owed no tax like ninety percent of us in Canada! Our taxes are higher here by far. This is no “tax haven” That man is so worried about his savings he is spending sleepless nights not knowing what to do about those penalties. If we don’t comply due to not being able to afford the penalty will we one day be stopped at the border? My father is seventy one years old and lives in Little Rock. If I needed to get to him quickly this would be another worry on top of everything else.

I have seen comments due to misinformation online that Americans think this about “tax cheating” No it isn’t! This isn’t taxes. In most all cases people like us owed no taxes to the U.S. since we get a tax credit on taxes already paid here which as I said are much, much higher. This is a money grab on a piece of paper *FBAR* that most of us never knew about because we were not told! I have seen other comments saying “Well, you “chose” to leave the U.S. so just suffer.” For the majority of people in Canada it was marrying someone who was not American that brought us here. My husbands parents were twenty years older than mine. He was the only child that lived near them. I simply could not ask him to move to the American south so far away from them when they were already up in their seventies! That’s how I got here and most of the people I’ve ever met who are American came because of a marriage. If we were looking for a tax haven it sure wouldn’t be Canada! Canada’s taxes are higher than the U.S.

I have had zero income of my own but, in my case even though I owed no taxes if I am given the penalty on the FBAR I will owe the treasury department 90,000 dollars. This will wipe out a family like mine. This whole thing has made me feel I need to apologize to my husband and son for my citizenship and for that alone I will never forgive them for doing this. If you go back and look at the statements they made when this went forward you’ll see the glee with which they said “Over seas tax cheats!” and neglected to tell the truth about who this is mostly “catching” failed to tell the truth that almost ninety percent of these people owed no taxes but, now would owe fines and penalties! It was a money grab and they do not care about us or our families. Now of course if we renounce to protect our family in the future we’ll be considered “traitors” I am ashamed my country is doing this to people.

Myself and one other woman on the forum both discussed how divorce had gone through our minds as an option. She is an older woman with a very long term marriage and so am I. However, if we divorced the IRS could not bothering our foreign spouses and children. So who do I divorce? My husband or my country? If I divorce my country will I still be able to visit my father, brother and sister there? These are the kinds of positions they are putting us in. Law abiding, people who never broke the law in their life and who are middle to lower income for the most part and who owed no taxes.

I cannot believe my country would do this to it’s own citizens and if it continues I will have no choice but, to renounce. I never took Canadian citizenship until this all started. I never wanted to really but, I took my test last week. To say this is wiping people out is true but, for the biggest part it is breaking their hearts.

Thanks again for writing the article, it’s too bad the MSM isn’t bothering to tell our story in an honest manner,

*not my real name as I do not tell this story under it anymore for obvious reasons*

Share/Save