American citizens who fail to report foreign bank accounts under the "FBAR" program are subject to horrific penalties of up to half the balance of the accounts, per year. These penalties apply even for technical and unintentional violations. Phil Hodgen, a tax attorney specializing in international work, received an e-mail outlining the predictable, if unintended, consequences:
I am amazed however, at the number of normal Americans with normal jobs abroad who have never heard of the FBAR witch hunt and have no intention of participating. In addition, the fairly consistent message by Americans who have spent more than a few years abroad is that the benefits of holding the little blue book are hard to quantify and pale in comparison to the nightmare of compliance with the oppressive American tax regime. Over 12 days in [New Country], I heard the words “renouncing my citizenship” over 20 times.
I am aghast that our government would continue to force intelligent Americans, who otherwise fully intend to move back to the US for their retirement – if not before – to this conclusion.
We'll see if the tax policymakers come to their senses before their next foot-fault crackdown. That's not the way to bet.
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