What do you Think of the Penalties in These Three Cases of Unreported FBARs ?

Ty Warner

Ty Warner
Ty Warner, founder/owner of the Beanie Babies line, was sentenced in July 2015 for tax evasion.The panel of three U.S. District Court judges gave him 2 years of probation and 500 hours of community service. The sentencing guidelines ranged from 46 months up to a maximum of 57 months. He agreed to pay back taxes and interest of $16 million as well as a $53.5 million penalty (the full FBAR penalty of 50% of the balance of the highest account-$107,000,000). According to Melissa Harris (author of this article that appeared in the Chicago Tribune, July 15, 2015) Warner’s sentence was “a punishment that reduces evading millions in taxes to a speeding ticket,” and that the sentence “flies in the face of both reason and justice”.

Warner had an estimated net worth of $2.5 billion, and was the 209th richest American.   According to Janet Novak of Forbes:

He admitted that around Jan. 31, 1996, he flew to Zurich and deposited about $80 million at UBS AG, instructing that no account statements be sent to him in the U.S., and that he kept the account secret until November 2007. During that period he failed to report at least $24.4 million in interest income on the account to the Internal Revenue Service, evading at least $5.6 million in taxes. He also failed to file with the Treasury the required annual “FBAR” report on his foreign accounts

What beggars belief is that Mr. Warner never provided any explanation for:

  • why he opened the account
  • the origin of the funds
  • audits of his books & records show the funds did not come from his company
  • his personal domestic accounts showed no signs of the origin of the funds

In fact the evidence suggested that the funds may have been pre-tax payments of some sort. To this day, the extent of his willful tax evasion is in reality, unknown.

So why did Mr. Warner get off so lightly? Was it because his lawyer Mark Matthews used the Olenicoff Defense?
Was it because his creation, the Beanie Babies line of stuffed toys, was just too cute for anyone to believe he was guilty of such evasion?

Peter Henning a Wayne State University Law School Professor and co-author of ‘Securities Crimes ”said in an interview, “I don’t want to say anything goes,….Clearly you can’t consider race or wealth. But you are looking at character. That is something judges can take into account. The question is how much should it weigh into the decision?”

This is where Mr. Warner hit the jackpot. He received 70 letters of support from friends, employees and recipients of his charity, actions which had nothing to do with the charges and only someone with money could do.

U.S. District Judge Charles Kocoras (of the panel) based his sentence on:

…..a reading of 70 letters, Kocoras found that “Mr. Warner’s private acts of kindness, generosity and benevolence” were “overwhelming,” with many occurring before he was under investigation and, in Kocoras’ words, motivated by “the purest of intentions.” Most were done “quietly and privately.” The judge concluded: “Never have I had a defendant in any case — white-collar crime or otherwise — demonstrate the level of humanity and concern for the welfare of others as has Mr. Warner.”

So a man guilty of many years of tax evasion, who did not even account for the origin of the account nor any records of it, received an incredibly light sentence based upon support from his family, friends and beneficiaries of his kindness. Where is the law here?


Dan Horsky
horskyThe second case is that of retired university business professor Dan Horsky. He amassed a $220 million dollar fortune, hidden in secret foreign accounts. He was a citizen of the United States as well as Israel and the United Kingdom. He spent thirty years teaching at the University of Rochester in Rochester, New York.

According to the Justice Department report:

One investment in a business referred to as Company A, however, succeeded spectacularly. In 2000, Horsky transferred his investments into a nominee account in the name of “Horsky Holdings” at an offshore bank in Zurich, Switzerland (the “Swiss Bank”) to conceal his financial transactions and accounts from the IRS and the U.S. Treasury Department.

In 2008, Horsky received approximately $80 million in proceeds from selling Company A’s stock. Horsky filed a fraudulent 2008 tax return that underreported his income by more than $40 million and disclosed only approximately $7 million of his gain from the sale. The Swiss Bank opened multiple accounts for Horsky to assist him in concealing his assets: including one small account for which Horsky admitted that he was a U.S. citizen and resident and another much larger account for which he claimed he was an Israeli citizen and resident. Horsky took some of his gains from selling Company A’s stock and invested in Company B’s stock. By 2015, Horsky’s offshore holdings hidden from the IRS exceeded $220 million.

Horsky willfully filed fraudulent federal income tax returns that failed to report his income from, and beneficial interest in and control over, his foreign financial accounts. In addition, Horsky failed to file Reports of Foreign Bank and Financial Accounts (FBARs) up and through 2011, and also filed fraudulent 2012 and 2013 FBARs. In total, in a 15-year tax evasion scheme, Horsky evaded more than $18 million in income and gift tax liabilities.

Professor Horsky’s willfulness was more involved than simply failing to report income. In 2011, He had another individual gain signature authority over the Zurich accounts. Horsky provided instructions to this individual. Then this individual was to relinquish his U.S. citizenship. In 2014, this operson filed a false 8854, did not disclose his net worth or his foreign assets and he falsely certified five years of compliance with all tax obligations.

Mr. Horskey’s sentence consisted of:

  • seven months in prison
  • one year of supervised release
  • fine of $250,000
  • $100 million penalty
  • over $13 million in taxes owed
    Again, the prison sentence was far below the maximum of five years. I guess committing an intensely willful crime which included outright fraud (and no letters attesting to his character), Professor Horsky failed to even receive one year of prison.

    An interesting observation of Eric Rasmussen at thetaxprof site : (Scroll down to “comments”)

    Interesting settlement. He’s paying just $13 million of the $18 million in taxes he owes, but $100 million more in penalties? Is this a whistleblower case? The IRS used to say the whistleblower gets a percentage only of the taxes recovered not the criminal violation penalties. They lost a big case on that in Tax Court. Is the idea going to reappear here?


    Milo & Lois Kentera

    NB: all printscreens in the Kentera account are from the Complaint filed August 13, 2016

    A more complete account of the Kentera’s situation is here
    The third case is that of Milo and Lois Kentera. This is much closer to the “minnow” level of FBAR “violation.” Even though this is not an expat case as the Kenteras live in the US, I am sure we all can identify with them.

    Milo Kentera was a pharmacist and inherited a Swiss bank account when his father died in 1984. At this time, the account was under $10,000 USD and remained so for twenty years. During that time, Milo added his wife Lois (a homemaker) to the account. Starting in 1984, he always advised his tax advisors/accountants of the account and he reported it on 1040 Schedule B. So far so good.

    In 2005, the account gained enough to be over the FBAR filing threshold. However, the accountant did not prepare or file an FBAR. In 2007, Milo received $257,112 (a portion of the sale of his parents’ property in Montenegro; his siblings received the other $371,536). He put this money into the Swiss account. A second accountant did not ask if any interest was earned on the account so that was omitted and again, no FBAR was filed. In 2010, yet another accountant failed to prepare or file an FBAR even though he/she included the interest and the account on Schedule B.

    balance of Kentera account
    Mr. Kentera came forward on his own, having heard of the OVDI on the radio.
    come forward on own Kentera
    By then the “2011 IRS Reign of FBAR Terror was going full throttle. Toward the deadline of the program, the Kenteras entered the 2011 OVDI program. They filed six years of FBARs for 2005-2010 (inclusive) and amended their returns to include the interest income from the account. The following printscreens show the amounts of money involved in terms of omitted tax income, balance of the account etc.
    changes income fbar kentera
    Nearly two years later, in August 2013, the IRS assessed a miscellaneous penalty of $90,092. The Kenteras then chose to opt out of OVDI. The agent who had their case then advised that they should receive non-willful FBAR penalties, which were as follows:

      Lois Kentera:

    • $500 for 2006;
    • $2,500 per year for 2007, 2008, 2009, and 2010,
    • for a total penalty of $10,500;


      Milo Kentera:

    • $500 for 2006;
    • $10,000 per year for 2007, 2008, 2009, and 2010,
    • for a total penalty of $40,500.

    The Kenteras were understandably upset and did not want to accept this fine of $60,000 either as they felt they had reasonable cause. Virginia la Torre Jeker defines what is involved in establishing reasonable cause when one has relied upon a tax adviser:

    “…various cases have noted that the taxpayer must prove three elements. First, the adviser must be a competent professional with sufficient expertise (for example, you cannot rely on an insurance agent for tax advice); second, the taxpayer must provide necessary and accurate information to the adviser; and finally, the taxpayer must rely in good faith on the adviser’s judgment.

    The Kenteras then filed a complaint in District Court alleging that the IRS had incorrectly calculated their penalties.
    The end result was unchanged; they still had to pay the penalties.

    It would appear obvious from the get go that the Kenteras did not belong in the OVDI program. However, “quiet disclosures”* were discouraged and Streamlined was not yet available (began Sept 1, 2012); the FactStatement 2011-13 came out during the first week of December. The Kenteras were put in a program they did not belong in; they clearly satisfied the three conditions for “reasonable cause” and most of all, they are an example of “those that are hurt the worst are the ones who try to come into compliance.”

    **it was not entirely clear at that time whether a “quiet disclosure” was simply filing going forward OR filing amended returns (presumably changed by FBAR accounts’ earnings). In any event, while the IRS insisted people enter the programs, there is no law that indicates one must do so.


    These three cases present some interesting observations about the treatment of those who had not filed FBARs.

    First of all, the first and second cases are Homelanders who had very large offshore accounts. Both took very deliberate steps to conceal the accounts. Mr. Holsky even went so far as to include fraudulent attempts as to ownership and citizenship of the person with signing authority for the account. Neither of them came forward on their own. Neither were able to enter the “amnesty” program, yet Mr. Warner received no jail time and Mr. Horsky received less than a year. The amounts of money involved for both are staggering to those of us who will never have anywhere near that kind of money.I can’t really evaluate their impact but I’d be willing to bet, that in proportion to their total wealth, both were able to absorb the loss without a major change in their style of living.

    In contrast, the Kenteras, also Homelanders, had a very modest account which they inherited. They always advised their accountants of its existence. Three professionals in the tax compliance community failed to prepare or file FBAR even though two of them did report the interest and existence of the account on Schedule B. They received very bad (I would say criminal) advice and went into OVDI coming out with an original penalty assessment of $90,092. So they opt out and the IRS agent then gives then a non-willful penalty totalling $60,000.

    Was it really necessary for Mr. Kentera to receive the maximum non-willful penalty for 4 years? It seems their honesty in pointing out the existence of the account counted for nothing. The fact remains that their situation clearly QUALIFIES FOR REASONABLE CAUSE. Yet the intent of Mr. Warner and even more so for Mr. Holsky, was clearly to conceal yet neither of them received anywhere near the maximum penalty; they did not come forward on their own and could not take part in the amnesty program.

    In the past (scroll down to “Statistics on Minnows in the OVDP”) we have seen demonstrations that the least wealthy pay the highest percentage of penalties, the comparison of the three cases cannot fail to boil your blood and make the average person seriously consider not becoming compliant due to obvious treatment of “minnows” as nothing short of appalling. Why does the IRS continually fail to see this? Is it really a surprise that 7 out of 8 million #Americansabroad have yet to become compliant in spite of Streamlined?
    Comparison Chart


Poll: Is it common for #Americansabroad to have a higher U.S. income tax bill than a comparably situated Homelander?

Reblogged from the Renounce U.S. Citizenship blog.

Imagine the following two people:

We are comparing “Homelander Ted” to “Expat Benedict Arnold”.

Assume that “Homelander Ted” lives and works in the Homeland and purchases in ONLY U.S. dollars. He would not consider using any other currency.

Assume the Expat Benedict Arnold” (having escaped from the Homeland) lives and works in Canada and purchases in ONLY Canadian dollars. He would NOT consider using any other currency.

Assume that each of “Homelander Ted” and “Expat Benedict Arnold” own a home in their respective countries of residence, have employment income, engage in personal finance which includes retirement planning. “Homelander Ted” commits “personal finance” ONLY in the Homeland. “Expat Benedict Arnold” commits “personal finance abroad”.

Assume that “Homelander Ted” and “Expat Benedict Arnold” have financial situations that are comparable in their respective countries of residence.

To be specific both of them:

1. Have a principal residence in that they have owned for more than two years and that was sold on November 30 of the year. Assume further that there was NO capital gain measured in local currency. Assume that the sale included a discharge of an existing mortgage and that interest was paid on the mortgage up to the November 30 sale. Assume further that they each carry a “casualty” insurance policy on the property.

2. Have employment income and have pensions provided under the terms of their respective employment contracts.

3. Have and use mutual funds as a retirement planning vehicle.

4. Have a 401(k) plan in the USA and an RRSP in Canada.

5. Have spouses and must consider whether to use the “married filing separately” or the “married” filing category. “Expat Benedict Arnold” is married to an “alien”.

6. Give their respective spouses a gift of $500,000 on January 1 of the year.



Assume further that each of “Homelander Ted” and “Expat Benedict Arnold” each prepare a U.S. tax return. Imagine that the Internal Revenue Code does NOT have (TAX MITIGATION PROVISIONS) either the Foreign Earned Income Exclusion (Internal Revenue Code S. 911) or the Foreign Tax Credits (Internal Revenue Code 901). Imagine further that there is no U.S. Tax Treaty that mitigates tax payable to the USA under these circumstances.

The question is how much tax “Expat Benedict Arnold” would be required to pay the U.S. Government if there were no TAX MITIGATION provisions.

How likely is that without the TAX MITIGATION PROVISIONS that the “Expat Benedict Arnold” would be required to pay HIGHER U.S. taxes than “Homelander Ted”. In other words:

Does the Internal Revenue Code:

First, impose higher taxes on “Expat Benedict Arnold” for the crime of committing “personal finance abroad“?

Second, mitigate those higher taxes through one of the TAX MITIGATION PROVISIONS described above?

Are U.S. Taxes (not including foreign taxes) actually higher for Americans abroad than for Homelanders?

Please consider the questions (without considering tax paid by “Expat Benedict Arnold” to Canada) in the following poll:

[polldaddy poll=9667186]

How does the U.S. tax bill of an American Abroad compare to the U.S. tax bill of a comparably situated Homelander?


The ACA RBT Proposal is a “carve out” within CBT


This post is based upon a comment made at the Isaac Brock Society concerning American Citizens Abroad’s new (Febrary 2017) proposal on replacing citizenship-based taxation with residency-based taxation.

See the bottom of the post for information on how you can join the discussion.
carve out
USCitizenAbroad says:

The ACA proposal is painful to read. But, it is an opportunity to dialogue with ACA and others who are engaged in the process of tax reform and its application to Americans abroad. I wonder if a separate site/Facebook group or something could be dedicated to the specific issue of “Tax Reform and Americans Abroad”. But, anyway …

The specifics of the proposal are a diversion from what I believe is the real issue. The real issue is the assumptions that ACA (and to be fair) the vast majority of Americans abroad bring to the table.

ACA proceeds from the operating assumption that American citizens are nothing but slaves to the U.S. Government and the IRS. ACA has absolutely bowed down to the United States of America and acknowledged the absolute servitude of Americans to Congress and the IRS. ACA has done this NOTWITHSTANDING THE FACT that most Americans abroad do not (and apparently will not) file U.S. taxes, FBAR and the other components that have stripped Americans of their liberties. (Donald Trump would probably say that those who do not file are “smart”. Why? Because the rules of U.S. style CBT are so punitive that in most cases it is safer to not file at all. Well, assuming you can even understand what is asked of you.)

Because ACA begins by accepting the principle of slavery, they then begin by asking for a “carve out” for certain slaves. These are slaves who have been particularly good and compliant slaves. The principle of “carve out for exceptional slaves” was last seen in the FATCA same country exemption proposal.

Understand the following two points:

1. FATCA SCE was a proposal that was absolutely in support of FATCA, but asked for an exemption for ONLY those Americans abroad who could demonstrate compliance with their tax slavery.

2. The current proposal (RBT not) ABSOLUTELY ACCEPTS CBT AS THE OPERATING PRINCIPLE, but asks for an exemption for those who have been particularly compliant with CBT. Because of the emphasis on “compliance, compliance, compliance” there is NO relief for Accidental Americans (and similarly situated people). The proposal makes NO mention of dual citizens and to what extent dual citizenship should play a role. As the Titanic is going down, ACA is proposes to save “tax compliant” (the good slaves) Americans from going down.

To be clear (as the “Change you can believe in” guy used to say):

This is NOT a proposal for residence-based taxation. This is a proposal for “taxation-based citizenship” with an exemption for certain groups of people. Therefore, under NO CIRCUMSTANCES should this be referred to as an RBT proposal. This is a proposal to worship at the altar of taxation-based citizenship, but exempt the “high priests” from the burdens.

That said, as a practical matter, if you can fit yourself into the one of “taxation-based citizenship” exemptions, it does provide benefits. But, as @Eric notes, this proposal will institutionalize “taxation-based citizenship”.

More, on the specifics later.


The document is here
Discussions are happening at Brock and
at the ACA Facebook page
ACA is soliciting everyone’s questions and comments and ADCT encourages ALL expatriates, their families and friends (especially if living in the Homeland) to read the proposal and to provide feedback

info@americansabroad.org and/or


The Beyond the Border Action Plan + the U.S. National Defense Act-A Disaster Waiting to Happen?

Earlier today I noticed a tweet that brought this on-going development to mind:

While this particular area may not directly impact expatriates resident outside of North America, it represents another area where information-sharing trumps privacy. In the case of Canada and the United States, an entirely new situation, shared policing on the opposite country’s soil, makes an awful lot of us more angry and nervous at being so vulnerable to the heavy-handed approach of the U.S. when it takes to protecting (enforcing) its interests.

The tweet references this article which defines new pre-clearance procedures at airports and outlines the following items of concern:

  • Canadian permanent residents could find themselves in the same straits as some U.S. green card holders in the first days of President Donald Trump’s travel ban.
  • Canadians who may change their minds about entering the U.S. can be held for further questioning by U.S. agents (in Canada)
  • U.S. agents can strip-search Canadians (in Canada)
  • U.S. officers are allowed to carry sidearms while on duty in Canada, if they’re working in an environment where Canada Border Services Agency

The United States has already passed legislation and Canada has before the parliament Bill C-23

Any Canadian would likely be outraged at the idea of U.S. officers having power over them on Canadian soil. Particularly because Canadian sensibilities are very different from the heavy law-and-order approach of the United States. One might wonder, how on earth did we get here?


The current approach can be traced back to an initiative known as the Security and Prosperity Partnership of North America.

The stated goals of the SPP were cooperation and information sharing, improving productivity, reducing the costs of trade, enhancing the joint stewardship of the environment, facilitating agricultural trade while creating a safer and more reliable food supply, and protecting people from disease.

With the commencement of NAFTA in the mid-1990’s, one might wonder why on earth another initiative was necessary; the events of 9/11 in the United States prompted “the war on terror” which drew Canada in whether we want/like it or not.

An interesting perspective From NAFTA to the SPP

The North American Free Trade Agreement (NAFTA), which went into effect in 1994, was designed to enhance the access of transnational capital from the United States to cheap Mexican labor and Canadian natural resources. The SPP deepens these relations and harnesses the so-called war on terror to an expanded U.S.-Mexican-Canadian trade agenda and a lopsided energy grab to secure U.S. access to dwindling continental oil and gas reserves.

As its name implies, the SPP has two basic parts: the Security Agenda and the Prosperity Agenda. Both are rooted in the United States’ deteriorating global position, particularly its increased competition for access to global oil and gas reserves and worsening trade balance with China.

The Council of Canadians had serious concerns about the manner in which former Prime Minister Stephen Harper tried to push the SPP forward. The Shiprider Program a maritime security law which would deputize U.S. officers “in every part of Canada” during integrated operations is the model for the bill we have today. It was Council of Canadians website covering the Shiprider program that alerted me to the fact that the Canadian government seemed hell-bent on compromising our border.

In August 2009, the SPP website was updated to say: “The Security and Prosperity Partnership of North America (SPP) is no longer an active initiative. As part of SPP, an annual trilateral summit was held between the leaders of the three countries. Following the cancellation of the SPP initiative in 2009, the summits continued as the North American Leaders’ Summit.

Shifting from the Security and Prosperity Partnership of North America

On February 4, 2011, Canadian Prime Minister Stephen Harper and U.S. President Barack Obama announced a new security and prosperity initiative with plans to “pursue a perimeter approach to security in ways that support economic competitiveness, job creation, and prosperity”.
On March 13, 2011, the Canadian government announced it was beginning a five-week consultation process “with all levels of government and with communities, non-governmental organizations and the private sector, as well as with our citizens on the implementation of the shared vision for perimeter security and economic competitiveness”.

I can no longer find the news articles I read at the time which accused the Harper government of controlling who discussed the issues involved in the Border Action Plan with the public being notably excluded. Best I could find was a comment:

November 15, 2012 at 4:52 pm

about “pulling a fast one” this is exactly what they did with regard to the Shiprider program and the Beyond the Border Plan. They even hid it in another bill and the NDP was demanding they do it as standalone legislation. The Council of Canadians was really incensed about this. Emphases are mine:

Council of Canadians on trade, issues, security:

The Beyond the Border working group, made up of senior foreign affairs and public safety bureaucrats, has already finished consulting business and corporate lobby groups – with only token outreach to labour groups.

IOW, the public isn’t even mentioned as having taken part, though I do think I read somewhere on the site, a long time ago, that there was a minimal outreach for public input.

Council of Canadians Aug 29, 2012

“The Council of Canadians is warning the Harper government its short-lived public consultation on the proposed perimeter security and regulatory harmonization pacts with the United States is not a carte blanche to sign a deal that threatens the privacy, civil liberties and health of people living in Canada. The prevalence of input from business lobbyists in the two reports will only lead once again to Canada-U.S. border deal that benefits CEOs before the general working public, says the grassroots social justice organization.”

I have made a point of this regarding the IGA in my draft for sending to Finance Dept etc.

From the Council of Canadians:

Information will be shared responsibly and in accordance with the Canadian Charter of Rights and Freedoms and Canadian privacy laws.

Unfortunately there will be no involvement from the Privacy Commissioner of Canada in the development of those principles.

Sound familiar? I have yet to look into what specific privacy laws would apply here but I am willing to bet NO ONE would imagine that the Canadian Charter of Rights & Freedoms contains sections that would allow Canadians & permanent residents denied entry into Canada, or be strip-searched by U.S. officers on Canadian soil. The reality is that so far, our Charter does not protect us from our own government changing laws so it can hand over information previously protected by PIPEDA to the IRS (via CRA). It is almost comical to hear the Charter referenced with regard to protecting us from the Americans.

While there was a lot of discussion regarding U.S. officers being exempt from Canadian law and operating under U.S. law prior to the recent announcement, I have yet to see anything addressing this.

I also was curious if Mexico has any similar agreement with the U.S.; recent developments since the election of President Trump would suggest not but it appears there was something in the works back in the early 2000’s.


How the Beyond the Border Action Plan becomes a lot more threatening for Canadians; Expatriates overseas are also under siege from the U.S. National Defense Act

As you all likely are aware, the Isaac Brock Society was started later in 2011. One of our earliest authors, renounceuscitizenship, on his own blog, had an interesting post covering this as well as some even more frightening possibilities.

reposted from renounceuscitizenship blog
Border Pact puts Canadians under new U.S. National Defense Act


Senator Rand Paul Speaks about the real war – The U.S. Government vs. The U.S. Constitution

If you value your liberty – watch Senator Paul!

I have read about two different legislative developments in the last couple of days. The first is the U.S. National Defense Act. The second is the new Canada U.S. security agreement. These are interesting developments.
First – The U.S. Defense Act

A couple of days ago I saw a link in the comments section of the Globe and Mail to an article about a new U.S. National Defense Act. The article describes an Orwellian situation. The author of the article commented that:

“The ACLU’s Washington legislative office explains:

The Senate is gearing up for a vote on Monday or Tuesday that goes to the very heart of who we are as Americans. The Senate will be voting on a bill that will direct American military resources not at an enemy shooting at our military in a war zone, but at American citizens and other civilians far from any battlefield — even people in the United States itself.


The Senate is going to vote on whether Congress will give this president—and every future president — the power to order the military to pick up and imprison without charge or trial civilians anywhere in the world.


The power is so broad that even U.S. citizens could be swept up by the military and the military could be used far from any battlefield, even within the United States itself. The worldwide indefinite detention without charge or trial provision is in S. 1867, the National Defense Authorization Act bill, which will be on the Senate floor on Monday.


I know it sounds incredible. New powers to use the military worldwide, even within the United States? Hasn’t anyone told the Senate that Osama bin Laden is dead, that the president is pulling all of the combat troops out of Iraq and trying to figure out how to get combat troops out of Afghanistan too? And American citizens and people picked up on American or Canadian or British streets being sent to military prisons indefinitely without even being charged with a crime. Really? Does anyone think this is a good idea? And why now?


In support of this harmful bill, Sen. Lindsey Graham (R-S.C.) explained that the bill will “basically say in law for the first time that the homeland is part of the battlefield” and people can be imprisoned without charge or trial “American citizen or not.” Another supporter, Sen. Kelly Ayotte (R-N.H.) also declared that the bill is needed because “America is part of the battlefield.”


The senators pushing the indefinite detention proposal have made their goals very clear that they want an okay for a worldwide military battlefield, that even extends to your hometown.”

On June 12, 2011, Kenneth Roth, Executive Director of Human Rights Watch, has written Senator Carl Levin and Senator John McCain, expressing concern about this new National Defense Act. I recommend reading the complete letter, but it includes:

“One especially troubling provision of the House bill expands the military targeting and detention powers of the president well beyond what is authorized by the current Authorization for the Use of Military Force (AUMF). The AUMF was enacted following the 9/11 attacks to permit the US to target and detain persons connected to the attacks or who harbored those responsible. The proposed provision allows for the military targeting of undefined forces “associated” with al Qaeda and the Taliban, as well as those deemed to be “substantially supporting” those forces, with no connection to 9/11. The provision is both overbroad and unnecessary. The military has not asked for more authority and the administration has said it does not need it. Of particular concern is the absence of careful congressional deliberation and debate on the issue, as occurred with prior AUMFs. Such an expansion should not be taken lightly when the consequence is the power to summarily kill suspects or to detain them indefinitely without trial. Should Congress wish to expand the president’s power to use military force it should do so in a bill intended specifically for that purpose, not by inserting a provision into a bill considered essential for other reasons.

I suspect that, once again, (as was the case with FATCA) Congress has not read the law they are voting on!

Second – The U.S. Canada Border Agreement,

The Government of Canada AKA “Harper Government” has been negotiating a new border agreement with the U.S. The Toronto Star ran an article noting that under the agreement:

“Armed U.S. police officers will for the first time be allowed to operate in Canada along with the RCMP as part of far-reaching changes in Canadian-American border operations to be unveiled next week by Prime Minister Stephen Harper and President Barack Obama.”

I wondered whether this would mean that armed IRS agents would eventually come to Canada.

Third – Interaction Between The National Defense Act and the Canada U.S. Border Agreement

What is the possible interaction between the U.S. National Defense Act and the new Canada U.S. border security agreement? What would the implications be? Turns out that somebody has already thought about this. Have a look:

http://www.agoracosmopolitan.com/news/canadian_sovereignty/2011/11/29/2021.html (NB: this link is no longer working)

“The U.S. Senate is moving to enact a law that would allow military troops to march on U.S. soil and arrest American citizens with no due process, no trial, no legal representation and no protection under the Bill of Rights. Americans could be thrown in secret military prisons, interrogated, tortured and held indefinitely without ever being charged with a crime.

It’s all part of the new “National Defense Authorization Act” (S.1867) which features a section called the “worldwide indefinite detention without charge or trial” provision.

By joining the so-called Security Perimeter, Canadians will be also subject to America’s National Defense Authorization Act (S.1867).

The U.S. Senate is apparently rushing to get the National Defense Authorization Act (S.1867) passed to coincide with the official singing of the Security Perimeter.

In order for Canadians to get better access to Target, Canadians will be giving up all their rights to a Totalitarian State South of the Border.

Canadians will loose their rights and freedom if the apparent ‘archons’ associated with the Security Perimeter officially consolidate. U.S. troops through NORTHCOM will have open access to round-up Canadians protesting the Tar Sands, or Canadians doing anything which undermines the ability of elites to pursue insatiable profit and power. Do we, as Canadians, want to give up all our rights and freedoms in order to have easier access to Target?”

Dear Prime Minister Harper and President Obama – please, say it isn’t so!


Borders are becoming more and more difficult what with Canada’s ETA, the U.S.’s ESTA #FATCA etc….Is it really worth it to give up so much in the name of “security?”

Hopefully we will not see the worse-case scenario of people being detained, being strip-searched and the like. While I don’t see this border issue as an issue for expats with regard to #CBT, I have always wondered whether it would go further in terms of enforcement. Only time will tell.

P.S.- What do you think the U.S. is doing with all the video/film from the protests at the U.S. Consulate in Toronto in the last month?
C’mon, we’ve all seen the cameras……….

Part 2: Be careful what you “Fix For” – Mr. Kentera meets Mr. #FBAR in the “Twilight Zone”

cross-posted from citizenshipsolutions.ca

by John Richardson

Introduction …

This post is one more of a collection of FBAR
on this blog. The most recent FBAR posts are here and here.

The “unfiled FBAR” continues to be a problem for certain Homeland
Americans with “offshore accounts” and all Americans abroad, who
continue to “commit personal finance abroad”.

The above tweet references a recent post which discussed how to
fix past compliance problems“. The introduction

Continue reading “Part 2: Be careful what you “Fix For” – Mr. Kentera meets Mr. #FBAR in the “Twilight Zone””

US Taxation of the Australian Superannuation? – No, #DontMessWithTheSuper!

cross posted from citizenshipsolutions.ca

I recently engaged in a discussion with people who are worried that they might be “U.S. Persons” living in Australia. Their primary concern (and understandably so) is the possible U.S. taxation of their Australian Superannuations. For many, the “Super” is considered to be their most important retirement planning asset.

In a FATCA world, where possible “USness” is now an issue, one must consider whether U.S. tax laws, effectively disable a group of Australians from effective retirement planning. But, hey! Even Americans should have the right to plan for retirement? Shouldn’t they?

There have been a number of recent articles attempting to understand the possible U.S. taxability of the Australian Super. I don’t know whether this is good or bad.

Most of these articles (what would you expect?) attempt to analyze the issue from the perspective of U.S. law – specifically the Internal Revenue Code. Rightly or wrongly, this approach assumes that the USA has the right to impose taxation on the retirement plans created by other nations. I don’t believe that this should be assumed!

In any event, what follows is a presentation that I created to discuss this issue. It is NOT intended to be a legal analysis. (If you want trouble, call up a lawyer!) It is intended to be a “contextual” and “common sense” analysis. Sooner or later, all laws (if they are to survive) must move towards “common sense”.

My message to residents of Australia is this:

Your Superannuation is far too important to be left in the hands of the tax professionals!

You will find “my thoughts” by clicking on the

Australia Superannuation For Dummies

Feel free to leave “your thoughts” as comments to this post.

John Richardson

FATCA is NOT about PROTECTING America’s Tax Base

images (1)

FATCA is NOT about PROTECTING America’s Tax Base.FATCA is about EXPANDING America’s Tax Base into the Economies of Other Nations

Yesterday an article made the rounds with an interesting idea;


In 5 years I have never heard anyone come forward with this attitude. In spite of having no desire to go back myself, I do appreciate that somebody is finally showing some concern for us. It’s refreshing!

But they didn’t give up their citizenship because they all of a sudden became un-American; no, they did it because of a law that has turned living and/or working abroad into an expensive, onerous, bureaucratic nightmare for the ordinary American citizen.

FATCA and its ridiculous system has ensnared law-abiding American expats into a constant battle with the IRS, all over the day-to-day activities all citizens engage in.

A well-known citizenship lawyer clarifies that after years of confusion about tax, penalties, IRS programs and information reporting forms, to add insult to injury, FATCA is not even about tax! Read John’s interesting observation; it is our governments who did not understand what they signed by implementing the IGA’s and they need to reverse this before each country loses too much capital due to unfair citizenship taxation.

A comment from FATCA needs to go but unfortunately the FATCA refugees are never coming back

John Richardson:

Thanks for drawing attention to #FATCA and #Americansabroad.

It has become clear that FATCA is is NOT about identifying American residents who engage in tax evasion. In other words;

FATCA is NOT about PROTECTING America’s tax base.


FATCA is about EXPANDING America’s tax base into the economies of other nations.

The United States believes that any person “Born In The USA” (and therefore a U.S. citizen) is required to pay taxes to the United States REGARDLESS OF WHERE THEY LIVE IN THE WORLD AND REGARDLESS OF WHERE THEIR INCOME IS EARNED. This requirement exists with respect to income earned outside the United States.

Think of it: the mere fact of a U.S. birthplace obligates somebody to pay taxes to the IRS for life! Somebody “Born In The USA”, who may have left the United States as a child, has a lifetime tax obligation to the United States.

The United States is currently expanding it’s tax base into other nations. It does so by hunting for people who (1) were born in the United States and (2) live in other nations. How is “FATCA Hunt” taking place? How does “FATCA Hunt” actually work?

In practical terms, the USA is forcing non-U.S. banks to “hunt” for people with a U.S. place of birth. Once identified their existence is reported to the IRS. The vast majority of people identified are actually citizens and residents of other nations. For example, on or about September 30, 2016 the existence of approximately 315,000 Canadian bank/brokerage accounts of (mostly) Canadian citizen/residents were reported to the IRS. Why? Because the account holder had a U.S. place of birth or were otherwise under suspicion of having a “U.S. connection”. Most of these reported do NOT consider themselves to be U.S. citizens at all.

Citizens of some European countries (example France) are not able to maintain bank and financial accounts because of a U.S. place of birth.

So, yes people are severing any possible ties to America. Believe me, if you were being “hunted” because of a U.S. place of birth, you would do the same thing! If severing that “U.S. tie” includes “renouncing U.S. citizenship” (which it often does), this is perfectly understandable.