U.S. citizen employees and FBAR requirements

Yesterday I wrote a post describing why FBAR and FATCA will make U.S. born children unadoptable. After all, they carry with them U.S. tax filing and reporting obligations. The general toxicity of U.S. citizenship is such that non-U.S. citizens will NOT wish to risk financial involvement with U.S. citizens. Here is another example.

The risk of foreign companies employing U.S. citizens outside the U.S.

This is an example of how and why it is becoming harder and harder for U.S. citizens to maintain employment outside the U.S. It was  a topic of discussion at the “Overseas Americans Week” which was recently held in Washington, DC.  A number of position papers were delivered. One of the most interesting was delivered by Mr. Jonathan Lachowitz, who is a financial planner, for U.S. citizens living overseas. I recommend the complete paper to you, but the following paragraphs are of particular interest:

“3. Next is the FBAR, Foreign Bank account Report. As part of these regulations we require
American citizens who have signatory power over their employer’s foreign bank accounts to
fill out FBARs even when the taxpayer has no beneficial interest in the accounts. What does
this mean? Any American working in the finance, treasury or senior role requires them to
disclose private information about their employer to the IRS. And “breaking a foreign law” is
not a reasonable defense in the eyes of the IRS for completing this form. So the IRS
encourages Americans to break foreign laws to comply with the FBAR rules which are
“information only.”  What’s happening is US citizens are having to choose between their
career and their citizenship. Overseas employers don’t want to hire Americans in most
financial or senior roles when they understand this requirement. The FBAR itself is really a
mess, but this one small part, which again leads to no increase in tax revenue, is leading to
American unemployment overseas and a decrease in exports. Why? Companies are finding
that doing business with America and Americans has too many financial risks. The US has
become a scary place to do business.

4. The FBAR penalty structure was put in place to give the Federal government another weapon
to fight international drug cartels and money laundering. No one I know in the overseas
American community supports tax evasion (or any other crime) and when used properly this
is an effective weapon against financial criminal activity, but before 2008 there were less
than 10 FBAR penalties assessed per year from my knowledge. Since about 2008, the FBAR
regime combined with the Voluntary Disclosure programs is causing great damage to people
whose worst crime in most cases was not being well informed about the American tax code.
This is an important factor in many Americans overseas being 1) Denied business
opportunities, 2) Denied employment opportunities 3) Getting pressure from non American
spouses and/or employers to consider renouncing their citizenship. Why can’t we have the
same penalties for Americans living overseas as for those who live in the US? Just a level
playing field, not a draconian penalty structure, reporting that is “information only” and from
2011 required in multiple places and that puts many overseas Americans in conflicts with
their employers. Complying with all of the FBAR rules requires many Americans to break
the laws of the countries they live in. This is unjust.

For the world outside the U.S., involvement with U.S. citizens carries with it extreme risk.

U.S. citizenship is the most toxic citizenship in the world. Renounce U.S. citizenship and rejoice!

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