ACA Requests Change in FBAR Requirements
In a letter addressed to the Internal Revenue Service, ACA has requested that the stingent and impossible rules for reporting certain foreign bank accounts be diminished or abolished.
For many Americans living abroad, the rules, as they are outlined in the "FBAR" instructions, put them in an impossible situation with respect to reporting requirements and their legitimate activities as treasurers or trustees of foreign bank accounts.
--------------------Text of letter--------------------Internal Revenue Service
Attn: CC:PA:LPD:PR (Notice 2009-62)
P.O. Box 7604
Ben Franklin Station
Washington, D.C. 20044
Financial Crimes Enforcement Network
Department of the Treasury
P.O. Box 39
Vienna, VA 22183
RE : Notice 2009-62
October 1, 2009
American Citizens Abroad (ACA) is a non-profit, non-partisan, volunteer association, active for over 30 years, whose mission is to defend the rights of Americans living overseas. We are writing to you on behalf of the overseas American community (5.5 million citizens, by recent State Department estimate), concerning the request of the Department of the Treasury Department for comments on certain issues effecting a person’s FBAR filing obligation.
A person with no financial interest in a foreign financial account but with signature authority over the foreign financial account
ACA definitely recommends that these individuals be relieved of filing an FBAR for the account for several reasons:
First, the purpose of the FBAR reporting is to trace financial assets owned by American citizens and other individuals subject to U.S. taxation. By extending the filing requirements to accounts in which one does not have a financial interest but only signature authority, the Department of the Treasury creates an immense administrative burden for itself and for the citizens subject to this filing. For what purpose?
Second, specifically with regard to Americans working and residing overseas, the vast majority work for foreign companies or institutions, not American companies. Foreign employers have all right to consider their corporate banking relationships as confidential and to prohibit any employee from transmitting any information on such accounts to the U.S. government. The American citizen employed by that company simply cannot comply with the Treasury FBAR requirement in order to maintain his/her employment. The American citizen may also simply by professional responsibility to the employer refuse to comply with the FBAR filing requirement.
Third, Americans overseas represent the United States in an unofficial but very significant way. They are active in many voluntary, community and social service activities. If assuming responsible positions in such community organizations requires the American overseas to file an FBAR with Treasury related to the organization’s bank accounts, Americans will retreat from community activity.
Fourth, related to the specific request of the Treasury, concerning those accounts where an individual has been advised that an FBAR has been filed with respect to a foreign financial account for which that person has signature authority (presumably foreign bank accounts of American corporations), it is absurd that Treasury require another FBAR from the individual with that signature authority. This only adds to the administrative burden of everyone.
Interest in a foreign entity (corporation, partnership, trust, or estate)
If the American citizen has a minority position in a foreign entity, he/she may not have access to the information required by the FBAR reporting. Having the FBAR reporting requirement (with the threats of all of the extremely severe penalties for non-reporting) will have for impact to restrain Americans from taking an interest in corporations and partnerships; the foreign partners will refuse to be subject to reporting to the U.S. Treasury. This cuts off Americans from collaborative relationships with foreigners which can be most productive for the U.S. economy.
Foreign commingled fund
Your reference focuses on funds such as mutual funds. If the fund is already reporting bank accounts to the U.S. Treasury, it makes no sense for individuals to have to report as well – and it implies a nearly impossible administrative burden on the individual.
There is another “commingled” fund which affects overseas Americans in particular. A third of Americans living abroad are married to foreigners. Many have joint bank accounts. By requiring the FBAR reporting of the account because an American has a financial interest, the Treasury Department is creating havoc in certain families. The foreign spouse often simply refuses that the account information be transmitted to the U.S. Treasury. The only way for the American to comply is to completely separate accounts from those of his/her spouse. This may be rather difficult when an account involves a mortgage on a house that is jointly owned by the spouses.
The current extension of the FBAR reporting requirement beyond the legal limits of the United States is creating a great deal of bad will overseas for the United States and is probably leading to perverse decision making which is not in the interest of the nation. ACA strongly encourages you to provide FBAR reporting relief in the cases mentioned above.
Marylouise Serrato Jacqueline Bugnion
Executive Director Director
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