Monthly Archives: April 2012

Americans meet in Lausanne as tax filing day raises new questions

The following fine article is being reproduced with  permission and attribution to Geneva Launch.

Americans meet in Lausanne as tax filing day raises new questions

Tax filing day has different implications for Americans abroad

GENEVA, SWITZERLAND – This is the day when Americans back home are scrambling to get their tax forms to the IRS, but outside the US the difficulty of remaining tax compliant is leading a growing number of citizens to hand in their passports: on average, 7 Americans a day took the oath to stop being a US citizen in 2011.

For many of them, and this writer is one, 18 April offers a reminder of sorrow, not to be part of the nation one grew up believing in, but also relief that a major burden, often perceived as unjust, is gone.

“I’m just really relieved now”, says one former US citizen, who was grappling with the impact on pension money that could have been taxed twice, by the US and by the country of residence because their retirement fund laws differ.

The number of renunciations of citizenship (called “loss of citizenship” by the US Department of State) rose to 1,780 in 2011, the highest number ever. It is well up from the 235 figure for 2008, although overall the numbers have been steadily climbing since the US Department of Treasury began publishing them in 1998. Names of anyone who renounces and whose name is provided to the Treasury by the US Department of State are listed in the Federal Register. Continue reading


New HR Block blog offers tax tips for U.S. citizens abroad – As goes “Form Nation” so grows HR Block!

Life in “Form Nation” (or is it a “waste of a life”) …

Click here to read comments about this video.

PAYING tax always hurts. But America’s tax code seems designed to make it hurt as much as possible. It contains 3.8m words, and was changed 579 times in 2010 alone. Taxpayers must wade through a swamp of gobbledygook: tax compliance consumes 6.1 billion man-hours annually, according to the Internal Revenue Service (IRS). That’s the equivalent of 3m people working full-time, year-round—more than the entire federal workforce. Each year, Joe Taxpayer must sign a thick return that he cannot plausibly understand. And woe betide him if any of its contents should turn out to be inaccurate.

The Economist – March 24, 2012 Continue reading

Another expatriation driven by U.S. tax complexity and the time it takes – Expatriation is on the rise!

An interesting  post appeared today on Phil Hodgen’s blog. It appears that expatriation is on the rise. (Who could have known?) Note that the reasons have nothing to do with the payment of tax. They have everything to do with the the inability to live a normal productive life as a U.S. person living outside the United States.

What follows is an excerpt from his post: Continue reading

This is an important post on the issue of “abatement of penalties” and “reasonable cause”. As always, pay attention to the comments!

The Isaac Brock Society

We received the following comment from 30 Year IRS Vet:

This web site is a wonderful opportunity for people to vent about the new IRS initiative to focus on offshore compliance. I would guess that most people fall into one of two categories: those who are “off the grid” and do not file nor do they have any intention of becoming compliant with their US federal tax obligations and those who are sincerely attempting to figure this all out and determine what to do and then make a good faith effort to comply.

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This is a post I wrote a while ago. The comments are quite interesting.

The Isaac Brock Society

I wanted to make this a separate post so that it doesn’t get lost in the long line of comments.”

First, thanks to Mr. Mopsick for willing to post on this blog. He is the only lawyer (as far as I know) who has written complete posts. I thank him for sharing his perspectives. After reading the comments: it is worth remembering that his central message is that he is willing to talk to people – everybody has a different situation. Furthermore, the members of the Isaac Brock Society have proven that they are very knowledgeable about this issue and are perfectly capable of evaluating the value (or not) of specific legal advice.

But, the main purpose of this post is as follows:

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The Isaac Brock Society

A couple of days ago in a reply to the thread about Shulman not accepting a second term as IRS Commissioner, Roger Conklin wrote this:

“Petros, Allow me to make one important clarification: I think you will find that the Expat community voted heavily in favor of Obama because during his campaign he comitted to “level the playling field” for US citizens living abroad. He was very clear in this. But once elected he promptly did nothing to keep this vote-getting commitment.  ACA leadership has made many attempts to follow him up on this commitment, but the response has been absolutey zero.  It is if this commitment had never been made.  His actions speak much louder than his words.  I suspect and sincerely hope that in this next election the vote will be very lopsided against him. To those of you who are expats, please keep this in mind.”

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To OVDI or not OVDI: The “In lieu of other penalties” consideration

Deal with the devil

On January 9, 2012 the IRS reopened the Offshore Voluntary Disclosure Program “OVDI”. People should enter OVDI only after an objective discussion with a lawyer who is experienced in U.S. tax compliance issues. Contrary to what at least one tax preparation firm suggests, OVDI is one of a number of compliance options. Although OVDI is available to anyone who wants to enter, it presumes criminality. Minnows should think long and hard before entering OVDI and should have an objective reason based on your specific facts  for entering it. For many people, entering OVDI is an emotional reaction. You need to make a calm, rational decision. Those entering OVDI  should be able to answer in one short sentence the question:

How did your analysis result in your decision  to enter OVDI?”

In any case, this is for you to decide with the help of your lawyer.

Entering OVDI – Your deal with the devil

If you enter OVDI you are entering into a agreement with the IRS. The “deal” is in relation to both “tax issues” and “information reporting issues”.

Tax Issues: You agree to pay the tax you owe and penalties on that tax.

Information Reporting Issues: You agree to pay “in lieu of other penalties” an amount equal to a percentage (ranging from 5% to 27.5%) on the value of your penalty base. Your penalty base may (depending on the circumstances) be the highest value of your worldwide assets over the 8 year period.

What are these “other penalties“? They are penalties for failing to file the appropriate information returns. Since the summer of 2011 (but not before) Mr. FBAR has become a well known information return. The FBAR is probably required by most U.S. citizens living outside the United States and many “Green Card” holders inside the United States. But, there are many other information returns that are not as well known. You might find the following conversation between an experienced IRS attorney and a  minnow to be of interest.

I came across a superb article by Alvin Brown that identifies “some information returns”.  I highly recommend his article. It is very comprehensive and precise. Once again, this is to educate you prior to your visit with your lawyer. Continue reading