Dems Abroad, to House subcommittee hearing: 'substantial adjustments needed' to FBAR regs
- By staff writer
In what might be seen as a timely move on the part of the Democrats Abroad, given the extent to which FBARs have been in the news this past week, the organization submitted a seven-page document to the House Financial Services Subcommittee on Oversight and Investigations ahead of hearings scheduled for this past Wednesday (March 8), in which it urged House lawmakers to make "needed" and "substantial adjustments to FinCEN Form 114, the Report of Foreign Bank and Financial Accounts or 'FBAR'."
The Democrats Abroad document, which may be viewed and downloaded by clicking here, had been prepared by the Democrats Abroad's Taxation Task Force (DATTF) on behalf of the parent organization, according to Rebecca Lammers, DATTF chair. Lammers co-signed the document, alongside Democrats Abroad international chair, Candice Kerestan.
The hearing had been entitled "Holding the Biden Administration Accountable for Wasteful Spending and Regulatory Overreach", and Lammers and Kerestan addressed their document, which contained seven key policy recommendations, to House Financial Services Committee chairman Patrick McHenry, and House Financial Services Committee ranking member Maxine Waters.
Copies also went to eleven members of Congress, including House speaker Kevin McCarthy; Senate majority leader Charles Schumer; Senate Finance Committee chairman Ron Wyden; Senate Republican leader Mitch McConnell; and three members of the Americans Abroad Caucus.
The Democrats Abroad's sending of its FBAR-related policy recommendations submission came almost exactly one week after news broke of the U.S. Supreme Court's long-awaited landmark FBAR decision, which found that non-willful FBAR penalties should be based on the number of (annual) FBAR forms not filed, not the number of undeclared overseas bank accounts held by the taxpayer in question during a tax year.
As reported, that ruling, in a long-running legal battle by a Romanian/American named Alexandru Bittner v. United States, was published on Feb. 28.
The seven policy recommendations that the Democrats Abroad, via its Taxation Task Force, says are needed are as follows:
● Eliminate the FBAR filing requirement for non-resident U.S. citizens altogether, or exclude reporting requirements for accounts held by individuals in their country of
● [Minimum filing] thresholds should be customized to take into account “geographic risk.” The motivations and justifications for holding non-U.S. accounts differ greatly between resident and non-resident U.S. citizens.
If the reporting requirement for non-resident citizens is continued, then the threshold for them should be raised to US$200,000 (consistent with IRS Form 8938)
● Adjust FBAR reporting thresholds to US$70,000 [from the current US$10,000], to account for inflation in the 50 years since FBAR’s introduction; [follow this up by adding] annual inflation adjustments
● Improve the proportionality of penalties for FBAR violations, and clearly define willful vs. non-willful violations. The IRS National Taxpayer Advocate has also emphasized
● Restore paper FBAR filings, and improve e-Filing options
● Exclude accounts under a de minimis threshold, even when the reporting obligations are triggered based on aggregate foreign bank account balances
● For non-residents, exclude accounts where a U.S. person only has signature authority, but no financial interest
Lammers and Kerestan conclude their submission by noting that ordinary Americans abroad "require access to banking, investment, and pension products which may be 'foreign' to the U.S., but are just part of ordinary life in their country of residence.
"Redundant reporting of such accounts, and disproportionate enforcement against inadvertent noncompliance, create major unnecessary hurdles.
"Ultimately, Democrats Abroad supports changing to a residency-based tax system so that everyday Americans abroad are not burdened with complex reporting and double taxation.
"Until that time, we appreciate your reviewing our proposals above.
"The reforms we propose are intended to reduce paperwork burdens for both the public and FinCEN, to focus reporting on accounts large enough to pose a substantial risk if involved in financial crime, and to ensure that enforcement serves a public purpose."
The Democrats Abroad is the official organization representing Democratic Party members who live overseas, and enjoys state-level recognition by the Democratic National Committee.
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