Category Archives: OVDI Compliance

More on #IRS abuse of #americansabroad

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The following comes from a post at the Isaac Brock Society.

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Streamlined compliance may now be an option for those who wish to file amended returns!

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Assuming the correctness of this, it is very big. It signals that the focus of the IRS may be moving away from penalties and toward getting people back into the system! Note the discussion of the role of Taxpayer Advocate.

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What a FATCA IGA “would” mean for non-compliant U.S. citizens abroad

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Are you a U.S. citizen abroad?

If you are not a U.S. citizen (or other kind of U.S. person) you may have little to worry about. Panic is starting to set in. There were many U.S. citizens who became citizens of other countries. They may or may not have lost their U.S. citizenship. Even if at this moment you believe you are a U.S. citizen, I urge you to consider this issue.

If you are NOT a U.S. person there is no reason for you to read the rest of this post. But, if you are then:

It’s all about Cause, Reasonable Cause

The Good News – FATCA Is In Trouble

FATCA is in trouble – it appears to be stalled. Treasury was (at least it said) anticipating up to 50 IGAs by December 31, 2012. As of today, they have a total of four. That is a pathetic and pitiful number. To make matters worse, Treasury failed in its commitment to get regulations/information/direction to the foreign financial institutions by the December 31, 2012 date. (The word is that the release of the final FATCA rules is imminent. Update January 18: the IRS has finally released the final FATCA rules.)

At best FATCA is not going as smoothly as Treasury predicted. At worst FATCA is in serious trouble. As James Jatras preaches, it is a mistake to think that FATCA is inevitable. Furthermore, Canada (the Government and the banks) can put an end to FATCA by just saying no. Just Say No!

The Good News – We Are In A Pre-FATCA World For Non- Complaint U.S. Persons

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The Mopsick Trilogy – Thoughts on the compliance dilemma

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Anecdotal evidence suggests that the majority of Americans Abroad and Green Card holders are not in compliance with their tax and FBAR filings. Much has been written on this in the last year. Of particular interest are a series of posts written by former IRS attorney Steven J. Mopsick.

In order the posts are:

Compliance Dilemma For Americans Abroad With No Tax Liability To The United States – May 21/12

Tax Justice for Americans Abroad – July 16/12

Tax Justice II: No FBAR Penalties For Otherwise Compliant Recent Immigrants To The United States – August 2/12

Update on OVDP and OVDI issues

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On January 9, 2012 the IRS reopened the Offshore Voluntary Disclosure Program “OVDP”. You should exercise caution when considering whether to enter OVDP. During the last year I have written a number of posts about OVDI and OVDP.

Here are some selected updates.

New Filing Compliance Procedures for Non-Resident U.S. Taxpayers – Effective September 1, 2012

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Note: There is an updated version of this crossposted to the Isaac Brock Society.

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Why IRS conduct may contribute to establishing “Reasonable Cause” for failure to file Mr. FBAR

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Two solitudes – To “OVDP” or to NOT “OVDP”

To OVDP:

To NOT OVDP:

When it comes to the “compliance dilemma”, the thinking seems to be:

“To OVDP or to NOT OVDP” – Note the Isaac Brock press release on OVDP 2012

That question has consumed created enormous “life altering anxiety” and a large number of LCUs life credit units). Readers of this blog will have seen a number of compliance options acknowledged and considered. These range from “compliance going forward” at one end of the spectrum to OVDP at the other. At a minimum it is important to consider the ramifications of all options. That said, there are a large number of lawyers who believe that entering OVDP is the “default option”. At least one lawyer as stated his view that compliance means OVDP. (The validity of this position was strongly questioned here. At least one other lawyer has stated that he has “always gone in under reasonable cause”.

In any event, I have come to see that the question is NOT:

“To OVDP or to NOT OVDP”.

The question is:

“To reasonable cause or to NOT reasonable cause” Continue reading →

As Form Nation becomes a police state, there is an increasing number of laws and a decreasing requirement to prove wrongful intent

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The purpose of this post is to make three important points.

1. The U.S. has so many laws that it is impossible to know whether you are in compliance with the law

2. It takes less and less (in terms of guilty intent and knowledge) to be convicted of the crime of violating one of these laws.

3. The combined effect of  “1″ and “2″ is that the U.S. has the highest rate of incarceration in the world.

I will discuss each point separately. Continue reading →

The best thing Joe Green and Democrats Abroad could do is encourage all Democrats to vote for Romney

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This is a response to the  email from Professor Green.

Dear Professor Green:

U.S. citizens abroad – Democrats, Republicans and Independents – thank you for the “FBAR/FATCA Task Force” and we note with gratitude that:

Your FBAR/FATCA Task Force has been working steadily to seek relief for overseas Americans facing onerous tax reporting burdens.

Furthermore, your six proposals would be welcomed by U.S. citizens abroad – to be specific:

  • 1. Define a foreign or offshore account as an account in a country other than one’s country of residence or the US, thereby recognizing the legitimate need for local banking services;
  • 2. Raise the FATCA reporting threshold to $1 million to put the focus on taxpayers with wealth sizeable enough to justify the costly and complex investment structures normally used to conceal assessable earnings;
  • 3. Index the reporting threshold to inflation so that it goes up every year just as the Section 911 income exclusion does;
  • 4. Add a provision that excuses anyone who does not owe taxes (because of the Section 911 exclusion or any other exemption or a tax treaty) from the obligation to file form 8938, regardless of the threshold reporting;
  • 5. Merge the FBAR reporting requirement with the developing FATCA legislation to eliminate duplication in filings; and
  • 6. Offer amnesty to overseas Americans who are delinquent taxpayers, inviting them to pay what they may owe and restore their status as tax-compliant citizens. (See our opening remarks for our success in this area.)

That said, your proposals are merely an attempt to improve the conditions of the prison of citizenship-based taxation.  You are essentially just accepting the ideas of citizenship-based taxation, FATCA, FBAR and the rest. Gotta be in prison anyway. Why not put the effort into getting along better with the guards! Continue reading →

Something new (maybe) from the IRS for taxpayers residing outside the U.S. and who have NOT been filing tax returns and FBARs

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Whatever this means was announced on June 26, 2012 under the title of New Filing Compliance Procedures for Non-Resident U.S. Taxpayers. Those interested in this topic should check back frequently for more specifics. The specifics should be available no later than September 1, 2012. I am certain that the “cross border professionals” will say that this is “nothing new”. After all the statute of limitations for FBARs is six years. This is a message from the IRS and therefore it needs to be read carefully. It also needs to be read in the context of:

1. OVDI – You are all criminals

2. The December 2011 FS – well maybe “reasonable cause” does really exist

3. Voluntary disclosure in general – always been there anway

You can be sure that the IRS chooses its words carefully. Therefore, we must read the words of the IRS carefully. Continue reading →