OVDI Collateral Damage – U.S. immigrants

A moment ago I posted about the effect of OVDI on U.S. expats. This post will highlight the effect of OVDI on U.S. immigrants. My heart goes out to this person. He thought by immigrating to the U.S. he was coming to the home of the free. He thought he was coming to “that great citadel of freedom and justice”. Here is a summary of his experience. Note that his life is not OVDI related work.


“To Anonymous Sep 17 6:12 PM:

Tell me about it.

First the Government trapped me into committing an offense that I did not intend to commit (i.e. by not publicizing the FBAR rule esp to immigrants like myself).

Yet I decided to do the right thing (or so I thought) and joined the OVDI inspite of the hefty totally out-of-proportion fines it entails. But as I collect information to start working on my amendments (I have filed for extension), I am shocked by just how difficult and painful the whole process is.

Anything for “peace of mind”…I had thought. But I am in a worse mental state after joining the OVDI. Not to mention that I will also be a pauper at the end of it.

For starters, getting all information from 8 years ago has been a nightmare of sorts. Then there are so many grey areas on how different tax situations will be treated and how penalty will be computed. Even the OVDI Hotline folks don’t give me unequivocal answers to many of my questions.

My CPA tells me that I should be very careful and not come across as hiding anything. Well, I have no intention to hide anything (because I have no skeletons to hide) but given that there is no one answer to many situations – I am stressed out thinking I will state something wrongly and will be considered fraudulent. So much for peace of mind.

Finally, there is this uncertainty on how much penalty I will have to really pay OR will I be forced to “opt-out” and deal with more uncertainty.

You would think they will make it easy for people to do the right thing. But this one is shaping to be nothing but super stessful.

And to make things worse…we probably have to wait 2 years for a closure (if there will be such a thing). Somebody mentioned about lost LCU (Life Credit Units). Its unbelivable I will be spending 2 years in a limbo of sorts while life will pass me by.

Is it all worth it?

I am seriously having second thoughts.

For 10 years I loved this country, worked hard as an immigrant and celebrated my rewards. My only brush with the law was a speeding ticket.

Then this FBAR thing came from the left field and turned my life upside down.

I don’t see America quite the same way now. I feel cheated and duped by the Government that I thought was the most fair in the world. Now I seriously don’t see myself living here for the long term.

I feel I am having to pay for America’s budget deficit problem. Nothing else explains this one-size fits all OVDI policy.

It is sad that there is not one story in US media on how this FBAR thing is ruining lives of families like mine. And why don’t I hear of any lawsuits?

To add insult to injury – the media is branding me a “tax cheat” for having done the right thing.

The bottomline is I am looking at a penalty of about 100K for no reason other than ignorance of a law that was poorly advertised and (from what I understand) barely enforced until 2-3 years ago.”


8 thoughts on “OVDI Collateral Damage – U.S. immigrants

  1. CA Freeb

    I am so sorry to hear of this persons situation. On the ex pat forums others have said they have had to go on anti depressants, and are having ill health effects because of this situation. I have lupus and RA which is always made worse by stress. There were five deaths in my family this year, and I was hospitalized twice once, with pulmonary breathing issues related to my RA and lupus. I have no doubt in my mind that my health is affected by this situation in a negative manner. This when I owed zero in taxes, all because of FBAR fines and penalties. And most of us were indeed proud Americans. I am so sick and tired of the U.S. press demonizing ex pats, making us sound like “lower” citizens when in fact most ex pats I know due to the fact that they get homesick have been more of the flag waver type than people living IN the U.S. These are the same people now feeling they are “forced” to renounce. On the section of the form you must fill out that asks if you are being “coerced in any way” to renounce I wish we could fill in that space “YES, by the “Hire” legislation, Carl Levin, Congress and the President in order to protect my family in the future from FBAR and FATCA” because that is why people are doing it for the most part.

    1. renounceuscitizenship Post author

      The irony is that it is only the “law abiding” who will be emotionally affected by all of this. The so called “tax cheats” don’t care. If they felt either fear of the government or a “moral” conviction to obey the law, they wouldn’t be “tax cheats” to begin with.

      Speaking of “moral” issues. The way that Obama, Levin, Geithner, Schulman, et al are behaving is the most immoral behavior imaginable in a so-called Western democracy. – it is morally synonimous with criminality.

      By using the FBAR statute they are using a law that:

      – has never been enforced
      – is not known even by many in the accounting and legal professions
      – is not a tax provision
      – is not a law that anybody would imagine existed. (what expat could imagine that they should be reporting their day-to-day financial arrangements to the Treasury (not even to the IRS)
      – carries penalties that are so disproportionate to the gravity of the offense that they may trigger 8th amendment issues
      – has a disproportionate impact on older people who have spent a lifetime saving and are now fearful that their retirement savings will be stolen from them
      – is being applied in a way (to expats) that is completely unrelated to its purpose

      The application of OVDI to the expat community is equally immoral:

      I believe that a very high percentage of people who entered the OVDI program did so out of fear and bad advice from accountants and lawyers (who have reaped huge profits from this). The purpose of OVDI was to allow those who had been using foreign bank accounts and financial arrangements to evade tax to bring those assets into compliance with U.S. law. To put it another way, OVDI was a program that was designed for and presumed criminal behavior. For the hard core criminal, the provisions of OVDI were probably too generous. The principal advantage to OVDI was immunity from criminal prosecution. This was probably not an issue for many expats who entered the program. The second OVDI progam in 2011 specifically did NOT allow for “reasonable cause” arguments (unless of course you opted out). But, what would be the point of entering OVDI if you were just intending to opt out? In the 2009 OVDI the IRS made a decision (to NOT follow s. 35) under which “reasonable cause” for all practical purposes became irrelevant. This particular bit of IRS behavior was condemed by Nina Olson of Taxpayer Advocates and a number of lawyers, who have stated very publicly that the IRS cannot be trusted. See for example the very lucid articles written by Michel and Matthews which comment on the 2009 OVDI and 2011 OVDIs respectively at:

      Click to access TaxReport_OffshoreAccounts_21sept10.pdf

      Click to access TaxNotes_OVDI-is-Over_18oct11.pdf

      See also the comments of New York State Bar Association, which are also critical of the 2011 OVDI:

      Click to access New-York-State-Bar-Assn-FBAR-FAQ-Comments-2011.pdf

      The U.S. is completely out of touch with is philosphical, constitutional and moral origins. They are bullies who are preying on the weak and powerless. I am frankly embarrassed to be a U.S. citizen. OVDI is a program that in its application and design treats hard core criminals better than hard working tax paying expats.

      Perhaps we should the view the relatively good deal that the common criminals receive under OVDI as nothing more than a professional courtesy from the U.S. government.

      Like you, I am extremely angry! The United States is a country with very few friends. The number of enemies is increasing (FATCA, SOPA, etc). It is planting the seeds of its own demise.

    2. Hate_USA

      I am an Indian immigrant and in the same boat, I am being felt like a criminal and on anti-depressants and my BP has shot up to 180/110 in past few weeks because of the US IRS because of minimum fault of mine. never heard of FBAR form till this year.

      Way to go US .. make more enemies… your day is coming to an end.

      1. renounceuscitizenship Post author

        You are not alone in your sentiments. The treatment of Green Card Holders by the IRS is unprecedented, unjustifiable, uncalled for and unfair. Just make sure that you do NOT enter OVDP. Also, you must consider any and all “reasonable cause” arguments available to you. Check some of the posts on this blog in relation to this issue.

        And you are right. Once this story gets told, fewer people will want to immigrate to the U.S.

  2. Pingback: Buy U.S. Real Estate – Get A Resident VISA – Become A Friend of The IRS For Life! « Renounce U.S. Citizenship – Be Free!

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  4. Denny Zarule

    What is also unclear is the impact of OVDI on (potential) future citizenship/green card applications for those that have been through the OVDI process. Does this count as a ‘crime’ that was committed but not detected? The legal definitions in this area are ambiguous and not being able to apply for citizenship (or chance of denial) is a tough penalty for not knowing to file FBARs.

    Has anyone been in this position (applying for citizenship post OVDI) and can you talk about it? or does anyone have any information about this?

    There seems to be no subject matter online about this :/

    1. renounceuscitizenship Post author

      You raise an interesting question. My initial reaction is this (but this is must a thought and not any kind of advice):

      The one clear benefit of OVDI/OVDP is that you avoid criminal prosecution. Furthermore, there “may” be economic (possibly cheap way to get assets into the system) and psychological (certainty) reasons to enter OVDI (but there are few cases where this is true).

      Furthermore, both the IRS and the lawyers were (at least in the summer of 2011) encouraging people to enter OVDI as “the last best chance” regardless of whether one was a criminal.

      In addition, entering OVDI is just one of a number of possible compliance options, which are for the purpose of coming into tax/FBAR compliance. All of these options are for the purpose of trying to comply with the law.

      Here is a recent post identifying different compliance options:


      See the comments as well.

      Therefore, I would argue that entering OVDI is an attempt to be in compliance with the law and nothing more. The question I have for you is:

      Why would you want to be a citizen of a country that treats you this way?


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