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Comment by phunge | Hacker News Reader

I was personally bit by this (FBAR non-compliance). I worked abroad and was unknowingly violating it; found out about it from reading the news and hired a pro to extricate myself from the situation.

The bank account held five figures. The cost to come into compliance was low five figures. The potential penalties were easily high six figures. It was much larger than the either (a) my total earnings from 4 years abroad or (b) the maximum amount the account had ever held. I believe my tax guy was on the cheap end too.

I'm still angry about it; I feel like I was guilty of nothing more than ignorance. IMHO this is case of strict policies that were intended for rich tax evaders. And they're being retargetted at millions of expats & foreign nationals.

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You're right on all accounts except the intent of the policies. The polices were intended for people like you. They are popularly SOLD as being against "rich tax evaders", but government, always and everywhere, wants more and more control, and that's why the requirements apply to people with 5 figure bank accounts rather than 8.

Unless sufficient checks are in place, governments will grow their power and control every year, and this is one of the ways they do it.

The more laws you unknowingly violate the more vulnerable you are to capricious prosecution.

Aaron Swartz is a good example of this-- while he did break a legit law (arguably) the penalties and the illegitimate laws thrown at him were designed to give the prosecutors and the courts the power to effectively disappear anyone they want.

If you think FACTA is bad, look at money laundering. Moving money between your checking and savings and a third account is "money laundering" under the federal law.

I agree with your comments except the money laundering part. For money laundering, doesn't the source of the proceeds have to be illegal?

No.

It used to be an "ancillary" crime, but now it's simply illegal to move money while looking like you're trying to hide the source.

I believe you, actually, but can you provide a source? Thanks.

I think you're thinking of "structuring", not money laundering. Can you cite a US statute? Money laundering is 18 U.S.C. section 1956, for example.

Might be the case! Here was my impression though (based on what I read after the fact):

The laws were always on the books but rarely enforced. Only once the UBS thing broke did the IRS start cracking down. Then the OVDI happened, which presumes guilt (ie intentionally evading taxes) from the get go. So based on the timing, I always thought things got to the point they are because of swiss bank accounts and tax evaders. And I thought penalties were structured the way they were so the IRS could throw the book at those guys when they were caught.

You are not the only person angry. The IRS took me for a lot of money because my wife had mutual funds in the UK from a previous job earned before we ever entered the states. PFIC tax rules are meant to be a punishment and the OVDP penalties just add on top of that. All the gains gone and a chunk of the principle. We term this the IRS jackpot. Many people talk about this here: http://isaacbrocksociety.ca

You can help fund attacks against this stuff here:

http://www.adcs-adsc.ca/

and here stateside:

https://fatcalegalaction.com/

How could you not have known about this? I knew about this before I went abroad, soon after I graduated from university, and I'm not a sophisticated person about most tax issues.

Phunge, When you say you were bit by fbar penalty - Did you enter the OVDI program? OVDI was really meant only for those who willfully evaded taxes and needed criminal protection. However, till recently that was the only option in the book for negligent minnows as well as criminals. Now there is the streamlined program.

Did you not pay US taxes for five years?

Even if you renounce US citizenship, I think you still owe US taxes for 10 years afterwards.

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