Had trouble opening a local bank account way out here in Panama’s Azuero? Thank Congress and your very own IRS. FATCA (the Foreign Account Tax Compliance Act) was drafted to prevent good US citizens from committing tax evasion in foreign parts. To this end, US law-makers have made it so much work for foreign banks to comply that many of them just say, “to H___ with it” and won’t open accounts for Americanos.
It gets worse. We’re just starting a new year, right? That means tax time is almost upon us. There are some pretty strenuous reporting requirements for said Americanos with foreign accounts. There is a form known as FBAR. Did someone drafting the FATCA law have a warped sense of humor? FBAR sounds very much like the short form of “foobar,” which is a lovely euphemism for a very smelly mess.
Frankly, the FBAR reporting penalties sound like something Vlad the Impaler might have cackled up.
If you don’t report CORRECTLY and on time, YOU VILL be punished. Got some interest income? Declare it on your 1040 but foobar your FBAR and you’re liable. Ten grand, baby. Didn’t know you were supposed to FBAR? ZAP. Ignorance of the law is no excuse. Overlook one of the CDs you roll over every quarter? Naughty. And wow! That ONE thing is FOUR mistakes (four quarters, get it?). There’s a really ‘kewl’ point system too, in case you were saving under the influence. Just THREE mistakes / points and you’re up for jail time as well as that nasty, nasty fine. Do not take your CD past ‘Go,’ big boy.
Think I’m exaggerating? Want it from the H&R horse’s mouth? Here: let the experts fill you in.