America Taking Money From Its New Citizens?

According to various government
reports, there are literally trillions of
dollars being hidden in offshore
accounts by Americans who don’t
want to pay their fair share of taxes.
Of course, everyone should have to
pay his or her fair share to Uncle Sam,
but no one should be penalized for
income that he or she earned as a
citizen of another country before
coming to America. However, that is
exactly what is happening to many
new Americans as soon as they gain
citizenship. So why is this injustice
happening and can anything be done
about it?
The Problem
At face value, it sounds like the U.S.
government is basically stealing from
its newly Americanized citizens. In
sense, they are, but it really comes to
down to paperwork. Because of the
government’s efforts to crack down on
Americans who are hiding money in
overseas bank accounts, these new
citizens are getting caught up in the
web of justice. However, as it turns
out, for them it’s a web of injustice.
When a person becomes an American
citizen he or she needs to file the
proper tax forms. However, many
people have no idea that these forms
even exist, let alone that they need to
fill them out.
Have You Filed Your
FBAR?
The problem occurs because these new
citizens haven’t filled out a very
important document called a Foreign
Bank Account Report (FBAR). Basically
this means that upon becoming a
citizen, or entering the country on an
H1B work visa, they need to declare
their foreign assets to the IRS.
However, the U.S Government doesn’t
bother telling people this and it seems
that many accountants either don’t
know or don’t bother to tell these new
immigrants this extremely important
piece of information. Failing to make
such a declaration can be very costly.
The Consequences
In fact, if you’re a new citizen and you
fail to submit this form, you could be
fined up to $250,000 and you could
also be sentenced to as much as five
years in prison. That’s a hefty price to
pay because you forgot to fill out a
form, or worse yet, you were never
told you had to.
The Best of the Best
There is another major downside to
this problem. Many of the country’s
newest citizens are some of the
brightest minds from around the
world, who have come to work for
some of the biggest and most
innovative companies in the U.S.,
including many for companies in
Silicon Valley. By penalizing these
people, the government is giving them
good reason to pack up and go back to
their homelands. That means our
country is losing some of the smartest
minds in the world. In fact, according
to one report, the number of people
who renounced their American
citizenship between 2011 and 2013
almost doubled. It’s impossible to pin
that solely on tax related issues, but
the number is astounding.
The Remedy
So what can be done to fix this
problem? At the very least, the
government should provide a written
form to every new resident alien or
new citizen so he or she can disclose
all assets as part of their being
admitted into the U.S. It should clearly
state in each person’s own language
that he or she would have to pay tax
on his or her global income and not
just the money earned in the United
States.
GROCO Can Help
Although it’s obvious that some kind
of reform needs to be made, for now
anyone who comes to this country as
a newly Americanized citizen or on a
temporary work visa, needs to make
sure to fill out the proper forms. At
GROCO we serve some of Silicon
Valley’s biggest players, and we can
help you too. We’ll make sure that you
have all the proper forms filled out,
including the FBAR, which can help
you save thousands, or even hundreds
of thousands, of dollars that is
rightfully yours. You can click here to
read more about taxation of foreign
individuals living in the U.S., or
contact us and we’ll be happy to
answer all your tax and accounting
questions.