JOHN RICHARDSON

Prologue – Before The Supreme Court – The Background To The Toth FBAR Case

This Is Post 7 in a series of posts describing the statutory and regulatory history of Mr. FBAR.

These posts are organized on the page “The Little Red FBAR Book“.*

Historically the strength of America has been found in its moral authority. As President Clinton once said:

“People are more impressed by the power of our example rather than the example of our power…”

The FBAR penalty imposed on Ms. Toth is an example of the legal power to impose penalty and NOT an example of the restraint on power and the application of law in a just way. I have heard it said that when a person (and by extension country) loses its character it has lost everything.

The Story Of Monica Toth – Three Perspectives

Perspective 1: The story of Ms. Toth’s encounter with Mr. FBAR as described by Justice Gorsuch in his dissent:

In the 1930s, Monica Toth’s father fled his home in Germany to escape the swell of violent antisemitism. Eventually, he found his way to South America, where he made a new life with his young family and went on to enjoy a successful business career in Buenos Aires. But perhaps owing to his early formative experiences, Ms. Toth’s father always kept a reserve of funds in a Swiss bank account. Shortly before his death, he gave Ms. Toth several million dollars, also in a Swiss bank account. He encouraged his daughter to keep the money there—just in case.

Ms. Toth, now in her eighties and an American citizen, followed her father’s advice. For several years, however, she failed to report her foreign bank account to the federal government as the law requires. 31 U. S. C. §5314. Ms. Toth insists this was an innocent mistake. She says she did not know of the reporting obligation. And when she learned of it, she says, she completed the necessary disclosures. The Internal Revenue Service saw things differently.
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JOHN RICHARDSON - Dual Citizenship From Birth

Prologue

It is clear that the US extraterritorial tax regime, which imposes taxation on the non-US source income of US citizens living outside the United States, is an outrageous violation of the sovereignty of other nations. It is also an extreme injustice inflicted on US citizens living outside the United States. The US has successfully exported the extraterritorial tax regime to the world through a combination of (1) The US Internal Revenue Code (2) the FATCA IGAs (hunting down US citizens) and (3) the saving clause in US tax treaties (Country X agrees that the US can impose tax on any individual who has been identified as a US citizen and is tax resident of Country X). To understand the interplay between (1), (2) and (3) above see the following article I wrote for the American Expat Finance News Journal.

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Americans Abroad And Taxes

Note From TaxConnections CEO: After following John Richardson’s nearly 200 Blog Posts on our site, I can tell you John dug deep in his research to provide answers that lawyers would charge one thousand dollars an hour to give you. John Richardson knows what is happening to Americans Abroad and has the prescience to know what is about to happen to those now residing in America.

I asked John if I could post these questions and answers and also if he would help us pull together a selected group of the nearly 200 posts into an eBook we could give you all. It is coming soon! In the meantime, follow his well-researched and expert counsel. John Richardson is the best of the best!

Kat Jennings, CEO TaxConnections

1.What do I need to report as a U.S. taxpayer who renounces citizenship?

Renunciation of US citizenship triggers a reporting frenzy. Information regarding the rules governing information reporting when one relinquishes U.S. citizenship are found in the Internal Revenue Code 6039G. Read this article:

www.taxconnections.com/taxblog/individuals-treasury-the-state-department-and-irc-6039g-who-has-to-report-what-when-an-individual-renounces-u-s-citizenship

2. What are the U.S. Treasury’s Final Regulations on GILTI?

The U.S. Treasury final regulations (at least prior to the Biden administration) allow taxpayers to exclude certain high-taxed income of a controlled foreign corporation from their Global Intangible Low Taxed Income(GILTI) computation on an elective basis. Read this article:

https://www.taxconnections.com/taxblog/treasury-final-regulations-confirm-that-foreign-income-subject-to-high-foreign-tax-be-excluded-from-definition-of-gilti/

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