The liability of a lawyer and the #FBAR Marriage

We live in FATCAesque times. FATCA is many things.

FATCA is the end of financial and human privacy.

FATCA is the means by which the U.S., by using it’s Trojan Horse soldiers (U.S. citizens abroad) intends to confiscate a portion of the GDP of other countries.

FATCA is, for lawyers and accountants the “gift that just keeps on giving”.

FATCA is responsible for the creation of new industries.

In short, FATCA is “a small step for man, but a large step for mankind”!

For, this the world owes Senator Carl Levin and President Barack Obama a great debt.

The United States and Eritrea are the only two countries in the world that impose taxation on their citizens who live abroad. That said, Eritrea imposes a tax of only 2% on its citizens abroad. The U.S. through PFIC and other forms of “so called taxation” use  this “so called taxation” to confiscate assets. Therefore, it is unfair and insulting to Eritrea to compare it to the United States.

Which brings me to the final point about FATCA which is:

FATCA is the mechanism that is designed to enforce citizenship-based taxation – the vehicle that is used to confiscate the GDP of “sovereign nations”.

For this reason, the taxation of U.S. citizens abroad is “on the radar” to an extent that it never has been before. U.S. citizens are dangerous, toxic and a potential “legal liability” for all kinds of professionals. This is particularly true in the legal and accounting industries (where it is getting increasingly difficult to find accountants to take U.S. clients).

Lawyers needs to be concerned. There are many areas of law where a lawyer must ask:

Are there extra and unforeseen consequences to the fact of having a U.S. client? The answer is of course, U.S. citizens are exceptional. But, there is one area where lawyers need to be very very concerned. This is the area of family law.

The marriage or divorce of a U.S. citizen creates special problems. If neither party to a marriage is a U.S. citizen, one can simply book the wedding. But, if one party to a marriage is a U.S. citizen and the other is not, we will call it an “FBAR Marriage”. Before getting into an “FBAR Marriage” you need to call a lawyer. The United States of America is exceptional. U.S. citizens are therefore exceptional. Therefore, your “FBAR Marriage” will have exceptional issues. In fact the “FBAR Marriage” is so exceptional that it has a heightened likelihood of ending in an “FBAR Divorce”.

Definition of an “FBAR Marriage” – A marriage where one spouse is a U.S. citizen and the other is not.

Definition of an “FBAR Divorce” – The end of the “FBAR Marriage”.

My point is a simple one:

Non-U.S. lawyers practicing in the area of matrimonial law really need to understand the principles of “American Exceptionalism” and how they apply to the “FBAR Marriage”.

As grows the awareness of U.S. citizenship-based taxation, so grows the potential liability for failure to understand the most fundamental taxation principle of U.S. citizenship.

My advice to those practicing matrimonial law:

Don’t take U.S. person clients. It will keep your insurance costs lower.

Those brave souls interested in this topic can get started with:

If you are not “one of US” then don’t marry one of those #Americansabroad; and

#Americans abroad denied child tax credit if child is not  a U.S. citizen

To be forewarned is to be forearmed!

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3 thoughts on “The liability of a lawyer and the #FBAR Marriage

  1. renounceuscitizenship Post author

    Fascinating Twitter discussion about the #FBARMarriage starting here:

    Marvin Van Horn ‏@FATCA_Fallout 9h
    #FATCA realities: Some practical advice for married couples where one is a U.S. Person: Separate all financial assets–NO joint accounts!
    Details

    Victoria Ferauge ‏@VictoriaFerauge 7h
    @FATCA_Fallout not sure i agree with u on this one….
    Details

    Marvin Van Horn ‏@FATCA_Fallout 7h
    @VictoriaFerauge Self preservation, but before you are caught out. It should be part of a prenuptial for Americans becoming unequally yoked
    Details

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    Victoria Ferauge
    ‏@VictoriaFerauge
    @FATCA_Fallout will have the effect of seriously harming women. Can explain more via email. I would NOT do it.
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    10:38 AM – 5 Oct 13
    Marvin Van Horn ‏@FATCA_Fallout 6h
    @VictoriaFerauge Well, then ur foreign spouse has to be willing to turn over his financial account data to the #IRS. #FATCA Martial stress!
    Details
    AtticusinCanada ‏@AtticusinCanada 6h
    @VictoriaFerauge @FATCA_Fallout And that’s why I had to relinquish. I could not make myself a pauper.
    Details
    Marvin Van Horn ‏@FATCA_Fallout 6h
    @VictoriaFerauge New marriage Vow. I, named male, do swear to disclose all my joint account information to the #IRS as required by #FATCA 🙂
    Details
    Marvin Van Horn ‏@FATCA_Fallout 5h
    @VictoriaFerauge I think I understand ur point, but which is the greater harm? #FATCA martial strife, Spouse #IRS disclosure, or renouncing?
    Details
    Lynne Swanson ‏@LynneBlaze 5h
    @FATCA_Fallout @VictoriaFerauge Women, especially stay at home mothers or wives, will be hit hardest by that advice.
    Details
    Dani Küttel ‏@SwissTechie 5h
    @FATCA_Fallout @VictoriaFerauge I separated the accounts and then renounced. In 2 years, the accounts will be merged again.
    Details
    Victoria Ferauge ‏@VictoriaFerauge 4h
    @AtticusinCanada @VictoriaFerauge @FATCA_Fallout Yes I would have done the same. If it comes to that I will renounce too.
    Details

    Reply
  2. badger

    I don’t agree with this advice from:
    http://blogs.angloinfo.com/us-tax/2013/10/30/fatca-fear-and-terror-caused-by-america-fatca-express-leaves-the-station-coming-soon-to-your-hometown/#comment-4307
    “Virginia La Torre Jeker J.D., says:
    October 31st, 2013 at 08:44

    “Thank you for your comments Atticus. There are many that share your views. If, despite the pushback and criticisms that are voiced, FATCA is here to stay (and I think it is), it’s very simple — we all have to learn to live with it. Perhaps a helpful point to dual nationality couples – keep separate accounts. The non-US spouse can have his / her own acct over which the US spouse has no signature or equivalent authority. A joint account can be maintained for convenience, if necessary, but it can be kept minimally funded — perhaps under $10K per year to avoid FBAR.”

    I don’t agree that it is at all ‘simple’ and have no intention of ‘learning to live with it’. And how can one keep separate accounts forever? At some point, one spouse will predecease the other, or perhaps become disabled with dementia, etc. What about the FBAR effects on Powers of Attorney and future planning? What about things like selling a large joint asset like a house? Or receiving survivor benefits or life insurance. It is anything but simple. FATCA and FBARs and US extraterritorial taxation hurts the whole family and prevents ALL of them – including the non-US members from making everyday financial plans like the other citizens and residents around them can do. And for what? If one can renounce/relinquish, that is the only way to a normal life if one has inherited the US taxable taint.

    The US is fostering the conditions for poverty, conflict and abuse in relationships and families which are ‘mixed’ – have one US spouse and a non-US one. The US has a lot to answer for.

    Reply
    1. renounceuscitizenship Post author

      Badger:

      Thanks for alerting me to Virginia La Torre Jeker’s blog post. Her posts are always well worth reading and considering.

      Some thoughts on this post and the comments to it:

      1. Virginia opines:
      “Lastly, personally, for people who are compliant with their tax returns and FBARs, I don’t think FATCA should cause anyone to jump out the window.”

      She is right. They won’t “jump” out the window, but they will walk to their nearest U.S. consulate and renounce U.S. citizenship. The reality is that being “U.S. tax compliant” is too expensive, too difficult, too anxiety provoking, too time consuming, and a huge restriction on what you can do with your life. The simple truth is that Americans Abroad who obey the U.S. laws that apply to them are slaves. They can’t invest. They can’t form corporations. They can’t have business partners. They can’t save. They can’t marry. Their life opportunities are restricted. In other words to make the decision to be U.S. tax compliant is to enter into a lifetime of servitude. So, why would people do it? Various reasons, but U.S. tax compliance creates many problems for people. Interestingly a primary reason for Americans abroad to become tax compliant “streamlined program”, etc. is to set the stage to renounce.

      In addition, it is NOT an easy thing for Americans abroad to come into compliance. What are they supposed to do? There is no simple mechanism to do so. There is no way that does not guarantee penalties. Furthermore coming into compliance has the potential (for responsible savers, mutual funds, etc.) to bankrupt them because of the strange U.S. rules known only to tax professionals WHO SPECIALIZE IN INTERNATIONAL TAX. For these reasons, I don’t see a herd of of Americans abroad stampeding to the tax compliance guillotine (while paying fees to their tax professionals to help them).

      2. Virginia’s advice to those unlucky enough to be married to American:

      “Perhaps a helpful point to dual nationality couples – keep separate accounts. The non-US spouse can have his / her own acct over which the US spouse has no signature or equivalent authority. A joint account can be maintained for convenience, if necessary, but it can be kept minimally funded — perhaps under $10K per year to avoid FBAR.”

      This is very good advice. But, it will cause problems in many marriages. Fortunately this is a problem that won’t be relevant much longer for the simple reason that:

      The dumbest thing any non-American could do is marry an American.

      So, this problem will soon be a thing of the past.

      3. Is FATCA here to stay? It depends on what you mean. It will probably remain U.S. law. That said, the cost to the U.S. will be so high that it will aid in the destruction of the U.S. So, as wrote on a tweet:

      which referenced a Robert Wood Forbes article (What’s FATCA? Global Banking Meets NSA But Reports To IRS http://www.forbes.com/sites/robertwood/2013/10/31/whats-fatca-global-banking-meets-nsa-but-reports-to-irs/).

      Here is part of one comment to that article:

      “If FATCA is here to stay, then the United States is sure to go. FATCA is misunderstood. It has nothing whatsoever to do with taxes or tax evasion. That is just the pretext. It’s really about two things:

      1. Capital controls – making it hard for Americans to leave the United States and keep their money outside the United States.

      Consequence: There is is a tidal wave of Americans renouncing their citizenship that is just beginning. The renunciations are just beginning.

      2. Grabbing the financial data of other countries – this will of course make businesses, countries and people want to avoid the United States. The NSA (you were right to link the NSA with FATCA in your title) is taking the data of other countries without their knowing. FATCA is essentially a forced disclosure of banking and financial data. Who would want anything to do with the United States? How could anybody or any country feel anything but negative toward the United States?

      Consequence: Strong pressure for an alternative financial system. You will see a move away from the U.S. dollar. China is already making noise about wanting to diminish the status of the dollar as the world reserve currency. You will see a decline in immigration to the United States. (This will be exacerbated by the IRS treatment of immigrants in the voluntary disclosure programs.)

      FATCA has put the United States in a permanent state of hostility with the rest of the world. But, of course the geniuses in Washington can’t see this. They are simply “too heavenly to be of any earthly use”. Their “U.S. centric view of the world” has made it impossible for them to see beyond the U.S. borders.

      So, yes FATCA may be here to stay. But the real cost of FATCA is to the prestige, power and influence of the United States. Someday there will be a FATCA Museum in Washington, that the tourists to America can visit

      I am sure that your post will generate a large number of comments on more specific aspects of this (IGAs, obligations imposed on domestic banks, etc). But, for those who are interested I recommend the sites:

      http://www.repealfatca.com
      http://www.isaacbrocksociety.ca

      I’m sure that the FATCANatics in Washington and the Tax Compliance Industry would laugh at this prediction. But, it’s important to remember that:

      People always overestimate what can be accomplished in 1 year and underestimate what can be accomplished in ten years.

      FATCA will be seen as the greatest wound ever received by the United States – and a self-inflicted wound at that.

      I guess it just more “change we can believe in.”

      Reply

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