Are FBAR Penalties Authorized By Law?

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IRS regulations tell us this: § 1010.350 Reports of foreign financial accounts.

(a) In general. Each United States person having a financial interest in, or signature or other authority over, a bank, securities, or other financial account in a foreign country shall report such relationship to the Commissioner of Internal Revenue for each year in which such relationship exists and shall provide such information as shall be specified in a reporting form prescribed under 31 U.S.C. 5314 to be filed by such persons. The form prescribed under section 5314 is the Report of Foreign Bank and Financial Accounts (TD–F 90–22.1), or any successor form.

See https://www.law.cornell.edu/cfr/text/31/1010.350

Yet when we look at the law we get this:

31 U.S. Code § 5314 - Records and reports on foreign financial agency transactions

(a) Considering the need to avoid impeding or controlling the export or import of monetary instruments and the need to avoid burdening unreasonably a person making a transaction with a foreign financial agency, the Secretary of the Treasury shall require a resident or citizen of the United States or a person in, and doing business in, the United States, to keep records, file reports, or keep records and file reports, when the resident, citizen, or person makes a transaction or maintains a relation for any person with a foreign financial agency. The records and reports shall contain the following information in the way and to the extent the Secretary prescribes:

(1) the identity and address of participants in a transaction or relationship.

(2) the legal capacity in which a participant is acting.

(3) the identity of real parties in interest.

(4) a description of the transaction.

See https://www.law.cornell.edu/uscode/text/31/5314

FBAR attorney Anthony Parent makes this observation:

31 USC 5314 regulates the import and export of monetary instrument transactions involving foreign financial agents.

With that being true, can 31 USC 5314 be applied to create an FBAR filing obligation when:

• A foreign bank account can not be imported or exported.

• A foreign bank account is NOT a monetary instrument per the Bank Secrecy Act .

(Title 31)

• A foreign financial agent is a person, not a financial institution as defined by the Bank Secrecy Act.

The question then become is Treasury aware of this glaring defect? The answer and the likely smoking gun the proposed Tax Simplification for Americans Abroad Act which will amend Title 31 to comport with the Regulations. If the IRS already had the power to require an FBAR and assert FBAR penalties, these amendments wouldn't be needed. Yet there they are.

Read pages 5-6 yourself here:

https://beyer.house.gov/uploadedfiles/americans_abroad.pdf

The second question is how could this be? How could we have over 10 years of erroneous and catastrophic FBAR penalties and litigation and no one has seen this argument before?

The answer is that those in Washington DC wants as much power as possible and will only relent when faced with extreme humiliation. Republicans and Democrats play an unending good cop-bad cop concerto in order to subtly but surely destroy the freedom and liberty of Americans in order to benefit themselves.

And second the tax industry really wants the FBAR to exist as it creates a lot of billable hours and an easy-to-control client who is afraid of losing everything.

Parent & Parent LLP

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