Comments on the effectiveness of OVDI and FBAR

Very interesting discussion thread on the effectiveness and impact of OVDI.
http://federaltaxcrimes.blogspot.com/2011/10/tigta-report-on-irs-offshore-accounts.html
Here are three real gems:
“I was born on an airforce base in Florida in 1964. I became a Canadian citizen in 1966. I have never worked in the US or lived there. I just found out that I’m supposed to file taxes in the US. Who’s responsibility was it to tell me? The accountant? The US itself? I’d never heard of such a thing and now I’m treated like a criminal?

So, I’ve gone to an accountant and it’s going to cost me $5,000 to file 5years worth of returns. The banks are charging me for generating all the statements I need, the accountant saids that I will owe the US taxes because I ‘m in a terrible job position. I say “What?” I day trade stocks and so all of my income is considered “passive investment
income” and so I’m taxed 100% in the US. This is on top of the tax that I’ve already paid in Canada. So I’m getting double taxed! I’m no longer eligible to hold a Tax Free Saving account and I must stop trading immediately. My rights as a Canadian to have a Tax free savings account and an RRSP are gone just like that. So are dividends, interest, and capital gains. So, my life savings are going to the US and I’ve lost my way of making a living. I’ve gone from a self-employed Canadian Taxpayer to a broke, unemployed American. Don’t even get me started on my Retirement Savings Fund or my children’s Education Fund. The US is extorting all of my money and what is Canada doing about it? This is unbelievable! I can’t sleep, eat or drive a car safely. What should I do? Do I file or do I hide? This is so unjust we have to get organized people and tell the US to stuff it! My peace of mind is gone and I’m just a single Mom.”

Anon5% said…
“Jack,Given Recommendation 8 in the Michel and Matthews Report and the accommodations mentioned by the US Ambassador to Canada, David Jacobson (References 1,2,3 below), what is your view that the IRS could be considering a more lenient policy for overseas filers who have omitted filing certain forms?  How is the general tax practitioner community viewing this possibility?  How could it be possible that only Canadians would be accommodated?In our small, but increasingly US tax aware overseas community, we were quite concerned when we read the Canadian newspaper articles on accommodation of Canadian citizens.  We hope that there will be accommodation, but that this accommodation is applicable to all non-US resident citizens/persons worldwide, regardless of other nationality, or country lived in. In the country in which we reside, the taxes we pay are as much, or possibly more, than Canadians pay and there are 10s of thousands of overseas US citizens here, including grandmothers.We read with satisfaction the American Citizens Abroad (ACA) letter to the Honorable Douglas Schulman (Reference 4 below).  These were our concerns exactly and it was good to see that ACA voiced them to him. Considering that the Honorable Mr. Schulman has not deigned to answer another letter sent by ACA (listen to the “Switzerland in Sound Interview on FATCA” file on their website) and that the ACA has been in touch with thousands of US citizens in more than 90 countries, the hubris of the Honorable Mr. Schulman in ignoring a constituency this large is astounding.

One practitioner has stated that he does not expect the IRS to give any more concessions to nonresident citizens living abroad (Reference5 below-paragraph 10). If this is the prevalent view in the practitioner community, we wonder about the veracity of the Ambassador’s statements.

We have always understood that, in terms of citizenship, all Americans are treated equally as Americans and that citizenship in another country is of no regard in the eyes of the US.  Yes, for tax filing, there have been some concessions to Canada that are not available to other countries (Form 8891 filing for RRSPs), but ultimately, residents of other countries are not different. For the most part, we are law abiding, tax compliant citizens in our countries.  The fear we experience of IRS confiscation of our hard earned retirement savings for a foot fault is the same worldwide.

1 http://www.cbc.ca/news/canada/story/2011/10/18/taxes-us-citizens-canada.html
2 http://www.theglobeandmail.com/globe-investor/personal-finance/ottawa-seeks-leniency-for-canadians-in-us-tax-hunt/article2205001/
3 http://canada.usembassy.gov/ambassador/news-and-speeches/18-october-2011-ambassador-jacobsons-remarks-to-the-canadian-club.html
4 http://www.aca.ch/fbar-canada.pdf
5 http://kflaw.com/siteFiles/News/94B33BDC2239C3238E51D3E488321BA0.PDF”

“Poser said…
M: I saw the threats in the 1040 booklet for my 2009 taxes and decided never ever to file an FBAR, but instead, to lose my American citizenship a.s.a.p., and never ever co-operate with the IRS again. Guess what? The IRS sent a letter now asking where my 2009 tax return is, and I just received it this week. If I don’t respond, I suppose they will just assess me a penalty and tax–even though I can’t owe anything with Canadian rates. I’ve decided to drop off the face of the map. No more academic conferences in the Us, no more expensive holidays in Hawaii, no more investments or real estate purchases in the US. If my Dad wants to leave something in the will, it goes to my brother and sisters (I have yet still to convince him of this). I am now a Canadian and I don’t give a damn about the IRS. I wish all my compatriots would do the same: stop complying. The information that you give them will be used against you. So stop giving them information. Take your money out of the FATCA banks, RBC, TD, Scotia, CIBC, and put it in a credit union. I suffer; may be I’ll never be able to go to the US again. I’ve considered that I may have to avoid US airspace as well, just in case of emergency landing.Anyway, the ambassador Jacobson was lying about the US being reasonable. If they were, then the IRS wouldn’t have sent me the damn letter threatening me. They would have reasonably concluded that we are all just wasting our time, because I’ll never ever pay any tax to the US. I just don’t make enough for it to ever matter. If the IRS was reasonable, then they would stop trying to get Canadian resident to file. There is no tax to collect here in the first place–from the vast majority–unless you want to abolish the US-Canada tax treaty.”
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