Case before the U.S. Supreme Court demonstrates lack of U.S. government knowledge about U.S. citizens living and working overseas

ACA has been following the Bittner v. United States court case where oral arguments were presented to the U.S. Supreme Court this past November. The case involves the assessment of penalties for Foreign Bank Account Report (FBAR) filings. The Center for Taxpayer Rights, headed by Nina Olson who served as the IRS Taxpayer Advocate for eighteen years, posted a summary of the case and their thoughts on the oral arguments: Bittner v. US: Will the Supreme Court uphold a regressive penalty on foreign financial accounts? – CENTER FOR TAXPAYER RIGHTS (taxpayer-rights.org).

ACA notes that the arguments and testimony presented to the U.S. Supreme Court by the Department of Justice (DOJ), representing the U.S. government in the case, reinforces the extent to which the U.S. government and its agencies are mis-informed about the community of U.S. citizens living and working overseas and the critical importance of putting data and research such as ACA's on an official record with the government through hearings. (ACA/DEG Analysis of Revenue Effects of Residence-based Taxation - 04-28-2022 : American Citizens Abroad, Inc. in Washington, DC (americansabroad.org).

When questioned by the Supreme Court as to FBAR compliance, DOJ’s representative, Mr. Guarnieri, responded, 'Sure. We don't have precise figures or data about the current rates of compliance with -- with the foreign account reporting obligation, so I can't tell the Court what percentage of Americans living abroad actually have a reportable foreign account, meaning they have accounts outside the United States that have an aggregate balance that exceeds $10,000. I know that's actually a significant amount of money for many Americans. So you're talking about the small slice of people who have that much money in their aggregate accounts and those accounts are abroad.' (See: https://www.supremecourt.gov/oral_arguments/argument_transcripts/2022/21-1195_n7ip.pdf pg. 70, line 16)

Through ACA's advocacy work and our research projects fielded in 2017 and 2022, ACA knows that FBAR filings affect a large percentage of the estimated 5.2 million (4 million civilian and 1.2 million military) U.S. citizens living and working overseas.[1] The importance of getting ACA’s data into the hands of the DOJ, the IRS, the U.S. Treasury Department and the House and Senate tax-writing Committees cannot be overstated as it is key in accurately defining the problems and issues affecting the community.

ACA's advocacy and knowledge on the filing habits and demographic makeup of the community are mirrored in Mr. Geyser's, representing the petitioner (Bittner), closing remarks. 'He (Bittner) misunderstood United States tax law, which I think a lot of people do. And when you're dealing with -- my friend says too it's very unusual to have foreign accounts with $10,000 or more. Again, not for people living abroad. Any U.S. resident or U.S. citizen living abroad is subject to these requirements. For those U.S. citizens, this isn't a foreign bank account, this is your bank account or it could be your investment account or your retirement account or your safety deposit box or your checking account. And you need to find an accountant in wherever you're living that's knowledgeable in U.S. Bank Secrecy Act law that knows you need to -- need to file an FBAR. To even know to ask that question is pretty extraordinary when accountants in the U.S., as the Center For Taxpayer Rights pointed out, were -- in the United States accounts were unaware of these requirements dating back about a decade ago.' (See: https://www.supremecourt.gov/oral_arguments/argument_transcripts/2022/21-1195_n7ip.pdf pg. 83, line 8)

IRS guidance for FBAR filing can be found here: Report of Foreign Bank and Financial Accounts (FBAR) | Internal Revenue Service (irs.gov)

With the start of the new year ACA will be scheduling meetings with the new Congress. As a result of the midterm elections, the House Ways & Means Committee, where tax legislation begins, will now be led by the Republicans. ACA will be relaunching a new write-in campaign calling for hearings targeted at the new leadership and new composition of the Committee. Be on the lookout for the campaign and be sure to participate. We will continue to monitor the case before the Supreme Court and provide updates, however, it is clear that more education in Congress is needed. To hear and read the complete arguments before the Supreme Court in this case see: https://www.supremecourt.gov/oral_arguments/audio/2022/21-1195

In the meantime, consider making a donation to ACA so we can keep up with our advocacy on Capitol Hill. ACA is the only organization headquartered in Washington, DC representing the community of U.S. citizens living and working overseas.

[1] https://www.americansabroad.org/articles/aca-deg-analysis-of-revenue-effects-of-residence-based-taxation/

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