The ugly downside of US tax treatment of expats. Likely bankrupted and destitute to pay the US fines for not reporting accounts to the US treasury when there was NO US tax to be paid and the money was not even US origin. Ridiculous.
On November 7, 2025 the U.S. Justice Department, acting on the request of the secretary of the Treasury, brought an action against an elderly couple living in C
papers.ssrn.com
FBAR Penalty: Appropriating Retirement Savings of the Elderly?
On November 7, 2025 the U.S. Justice Department, acting on the request of the secretary of the Treasury, brought an action against an elderly couple living in Christchurch, New Zealand. The Action alleges that the couple willfully failed to report their interest in foreign financial accounts from tax years 2005 to 2012 and claims penalties of more than US $3.6 million, plus amounts for interest and late-payment.
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Both are U.S. citizens. Barribeau was born in the United States3 while Solomon was born in the United Kingdom, grew up in South Africa, and in 1976 moved back to the United States where she became a naturalized citizen.4 They married in the United States in 1977,5 leaving to become South African residents in 1984.6 In 1991, they moved to New Zealand7 and became citizens of the country in 2003.8 They have lived there ever since.
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For each of the years 2005 through 2012, Barribeau has been assessed civil penalties in amounts ranging from $99,003 (for 2008) to $189,082 (for 2006).17 The average penalty per year is $138,800.18 The total penalties assessed for Barribeau are about $1.1 million.19 For each of the years 2005 through 2012, Solomon has been assessed civil penalties in amounts ranging from $181,562 (for 2005) to $393,562 (for 2007).20 The average penalty per year is $315,239.21 The total penalties assessed for Solomon are about $2.5 million.22 The total combined penalties for Barribeau and Solomon amount to more than $3.6 million, plus interest and late-payment penalties.23
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Barribeau and Solomon are retired and, most likely, older (probably in their 70s or early 80s).24 The funds in the accounts represent most, if not all, of their retirement savings and likely a large portion of their total net worth (depending on the value of their home and other assets). Further, the funds have no connection to the United States other than the U.S. citizenship of the account holders. That is, the amounts in the accounts are employment and inheritance proceeds from outside the United States. Likely, their inheritance came from nonresident aliens. The United States played no part in the generation of the funds.
No U.S. income tax was due in relation to either type of proceeds. For the funds generated from Barribeau’s employment, the foreign earned income exclusion and/or foreign tax credits applied.25