The ACA said it has written to IRS commissioner Douglas Shulman to complain about the harsh penalties currently being levied on expat Americans for not filing so-called FBARs (Foreign Bank Account Reports).
Although a rule obliging American expats to report such accounts to the IRS “has existed for several decades, it was so seldom enforced that even tax preparers were unaware of this obligation,” ACA executive committee member Jackie Bugnion explained in the letter.
As a result, she went on, “normal hard-working Americans living and working outside of the United States are now being caught up in a punitive IRS policy which imposes penalties as high as 25% of the total amount in the bank account, even if the individual does not owe any taxes to the United States.”
Bugnion told Shulman that these law-abiding American expats “are being treated [by the IRS] like tax evaders and criminals, and their life savings are being confiscated through punitive penalties”.
The US State Department estimates some 6 million Americans are living and working abroad.
ACA noted in the letter that so many of the approximately one million dual national US-Canadian citizens are so worried by the situation that the US Ambassador to Canada, David Jacobson, recently indicated that the IRS was looking for a solution which would allow individuals living in Canada to come into the system in a less onerous way.
It quoted Jacobson as saying that the US “isn’t out to get honest grandmas who don’t owe anything to the Internal Revenue Service”.
However, MaryLouise Serrato, ACA executive director, stressed that the FBAR penalties are hitting expat Americans outside of Canada as well.
“ACA has collected heartbreaking testimonials from United States citizens living all over the world who have been adversely affected by this heavy-handed IRS policy.”
The ACA said it had sent copies of its letter to Commissioner Shulman to Nina Olson, national taxpayer advocate at the IRS, and to US Treasury Secretary Timothy Geithner.
To read ACA’s letter, click here.
