Two solitudes – To “OVDP” or to NOT “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
These come from a comment to a post that I did at the Isaac Brock Society.
The comment notes that:
Harks back to the days of the Nazis scouring through records looking for Jewish “indicia.”
Thanks Carl Levin.
Updated July 22, 2016 – almost four years to the day of the original post
I am updating this post to appear in the “Looking For Mr. FBAR” series of posts. A previous post confirmed that to impose a “willful FBAR penalty”, the government must prove that the failure to file the FBAR was the result of “the intentional violation of a known legal duty. Clearly this is a question of fact. The post was and is to explore the extent to which knowledge of the FBAR requirement can be inferred from Schedule B and other facts surrounding the preparation of the tax return.
I have updated this post to include third commentary on the impact of the Williams case. This post is now divided into two parts.
Part A – The original 2012 post
Part B – The 2016 updates: The third party commentary on Williams
Part A – The original 2012 post
As you know, Mr. FBAR is a particularly nasty piece of work. Absent a showing of “reasonable cause”, Mr. FBAR opens the door to a sliding scale of penalties. In the past I have written about Mr. FBAR and the non-willfulness penalty structure. This post is about “willfulness.” Specifically, what constitutes “willfulness”? Conviction for the “willful” failure to file an FBAR comes with “unspeakably high penalties”. So, I won’t speak of them here. The non-willful penalties are bad enough. But, the penalties for “willfulness” clearly invite 8th amendment (“excessive fines”) scrutiny. This is certain to come. In fact, it may well be that the next step in the “Williams saga” will be just that.
The Williams Saga
A brief overview of the Williams saga may be found courtesy of Robert Wood here and Jack Townsend here (appellate decision) and here (initial trial decision). Before analyzing these decisions and considering what they may mean, it is important to understand that this is not a situation of the IRS attempting to target a taxpayer whose sole sin was a failure to file FBARs. Mr. Williams, by his own admission was a willful tax evader. In addition, he failed to file FBARs. What is interesting is that the IRS decided to go after him for FBAR violations as well. Why? I haven’t a clue. I am not sure if I see a purpose to it. But maybe the IRS simply lacks purpose … Continue reading
American Exceptionalism = Extreme Corruption
In other countries this sort of bribery takes place underneath bridges and with cash in brown envelopes. In America it is institutionalized and legal but it is the same thing: Cash to politicians in return for favorable treatment from the government.
The U.S. tax system is not simply corrupt, it is corrupt in a deceptive manner that has degraded the entire system of American government. Congress is able to funnel vast sums of money in perpetuity to its favored funders through the tax code without anyone realizing it.
Fareed Zakaria – America Needs a two page tax code
How corruption in the political process is affecting the Presidential Election Continue reading
Where it came from – 2009 – Obama describes his justification for what is to become FATCA
Obama Goes After Overseas Tax Cheats AKA U.S. Citizens Abroad – See the following video which was uploaded in May 2009. Obama says taxes are an obligation of “citizenship“. Obama lauds the work of Levin and Rangel (at this point they are the future architects of FATCA). The whole video (where “First Tax Cheat Geithner” introduces Obama) is interesting. Note in particular the video starting at 7:30 where Obama provides his justification for what is to become FATCA.
How it came about – 2010 – The Hire Act (which included FATCA) was enacted.
It is important to note that FATCA was legislation which was unrelated to the principal purpose of the Hire Act. It was “slipped in” at the last minute. It is likely that few legislators knew what they were signing when FATCA was signed into law. FATCA was “Trojan Horse” legislation at its finest. But, FATCA is many other things including:
FATCA is a creator of jobs
FATCA has created new and lucrative work for accountants and lawyers. (An NYU tax professor recently referred to FATCA as “The gift that keeps on giving“.) It has been a boon to the education industry – it will be soon be possible to receive a certification in FATCA compliance.
FATCA is a form of Capital Control
President Kennedy said that the U.S. government has never had to erect a wall to keep our people in. That was then. This is now.
FATCA is an attack on the sovereignty of other nations
Why should foreign banks do what the IRS wants?
FATCA – through Form 8938 – is an attack on U.S. citizens living abroad
This is the primary purpose of this post.
FATCA needs to be understood as legislation which is aimed at foreign financial institutions and U.S. persons with foreign assets. Almost all of the FATCA discussion has been about the effect of FATCA on foreign financial institutions. Form 8938 is the part of FATCA aimed at U.S. persons. It has received very little analysis until now. FATCA mandates form 8938 which allows the U.S. government to impose massive penalties and force people to disclose their assets to the government. Continue reading