A recent post described the unequal treatment under OVDP – that is the reality that “minnows” who entered the program paid proportionately more than “whales” (who the program was presumably designed for). Thus there was clear inequity in the OVDP program itself.
But, what about those who did NOT enter OVDP? How do their fates compare with with who entered OVDP early. Do you remember Commissioner Shulman’s claims that:
The above tweet references a post from Jack Townsend’s blog. It is a report on how the IRS is administering transitions (or lack of them) from OVDP to the new Streamlined program.
Well worth the read. It includes:
Now, as best I understand the recent iteration of the Streamlined program, the IRS realized that it had forced through fear taxpayers into the OVDI/P when they could opt out and get better results. Why force them to join in the first place when a shortcut implementation such as Streamlined can get somewhat close to the right result? Well, now the IRS seemed to be finally talking to their customers in a language they could understand. So, one could ask, why wouldn’t it be an easy decision for the IRS to let taxpayers in OVDI/P who had not yet signed a Form 906 to proceed fully under Streamlined. Well, it appears, that the IRS wanted to keep all of the income tax, penalties and interest for closed income tax years and penalties for open years that it was not entitled to, while giving a partial benefit of the Streamlined program (the 5% penalty applied to innocents, many of whom should owe no penalty). Basically, the IRS wanted something that it was not entitled to.
Oh, sure, the IRS says that, well, the taxpayer / customer unhappy with its lesser Streamlined benefit via transition, can opt out and get a better result if he or she is entitled to a better result. That sounds well and good but seems to me to be bullshit, of the same genre smoke that was hawked by tax shelter promoters promoting bullshit tax shelters, but in reverse. Basically, the message the IRS is sending — intentionally or unintentionally, but by now knowingly — is that those people who got into the program early to get right with the IRS will be treated more harshly and subjected to greater processing costs, time, angst, etc., than those who sat back and waited on straight Streamlined or proceeded otherwise (quiet disclosure, etc.).
Well if the past is a predictor of the future …
How could the IRS be so stupid?
The frustration is also reflected in the following comment to Jack Townsend’s post (which reminds of an old post titled
very sorry to hear that and I would have probably paid the same if I were not such a “cheap retired SOB” but I did the drudgery and process 100% by myself because my risk tolerance was very high and I do not get intimidated that quickly. Over the last 3-4 years I have helped and guided > 50 Minnows to make informed decisions what is and was best in their particular offshore situation and through this experience I saw the need to find a way to stop the bleeding towards incompetent and ruthless tax lawyers.There are very few law firms specializing in legal malpractice and prosecuting cases against accountants and lawyers and until recently, I have never heard of any involving accounting malpractice. Sure, some law firms will accept the occasional case against a CPA but it is usually ancillary to their main practice.
I am actually surprised that even in 7/2014 you experience what you described above in your comment. I can tell you 2010 to mid 2013 were horrific years for the average Minnow . Imo the guild of TAXLAWYER should win since 2009 – 5 consecutive Oscars for “corrupt” behaviour and liberal billing practices with regards to their offshore learning curve.
With regards to OVDI/P representation this guild/professional organization is guilty , in many, many cases of dishonest questionable practices, morally depraved, lacking integrity, debased in character , acting on mercenary financial motives without
regard to honor,right or justice. Since 2009 this profession in the US had a windfall profit/jackpot of > $500mio. Amongst others – putting grandmothers on the government’s conveyor belt to oblivion. Credibility must be earned. Most US tax lawyers have not earned credibility in this context . After all the conversations/ e-mail
exchanges I have had with tax lawyers over the last 5 years the things that describes the trade reoccurred so many times:
1. does not really listen to you and your specific facts and circumstances – is basically on auto pilot
2. sometimes had the feeling you were speaking to a “stranger” because
you received generic responses that have not much to do with your case
3. reading things into your statements that you have never said
4. makes remarks that constantly defends the IRS and the “system” as honorable and just
5. factual errors – small and bigger ones
6. disorganized with regards to billing statements and client correspondence
The Taxpayer Advocate Service, which is an independent office within the IRS, has released a two-volume report describing the mafia tactics that are being employed by the tax collectors in the US. The Executive Summary alone is 76 pages. And believe it or not, it’s a real page turner.
On page 37, for example, the report states that the IRS largely assesses tax penalties improperly.
Specifically, the Office of the Chief Counsel admonished the IRS that it was not legally authorized to impose accuracy related penalties on certain taxpayers, and that the service should abate those penalties already imposed.
Yet the IRS declined to follow its own Chief Counsel’s legal advice, and it has refused to abate penalties for nearly 90,000 taxpayers!!
In the words of the agency’s own Taxpayer Advocate Service, “The IRS’s failure to abate inapplicable penalties signals disrespect for the law and a disregard for taxpayer rights.”
Page 34 discusses how the IRS has abandoned its own checks and balances.
When a taxpayer is deemed to owe the US government money, the IRS is supposed to have a “collection due process (CDP) hearing” to verify that the IRS agent followed the law and consider whether the intrusion on the taxpayer was warranted.
Yet the report states that this has become nothing more than a rubber stamp formality, and that current practices “do not provide the taxpayer a fair and impartial hearing.”
In fact, among the most litigated issues at the IRS, the report states that “taxpayers fully prevailed only about two percent of the time.”
Two percent. If you go up against the IRS, you have a 2% chance of winning. Give me a break. You have more than a 2% chance fighting against the mafia.
Moreover, the byzantine US income tax code, which runs to an incredible 73,000+ pages, “disproportionately burdens those who [make] honest mistakes”, especially as it relates to offshore disclosures.
In fact, the report acknowledges that “tax requirements have become so confusing and the compliance burden so great that taxpayers are giving up their U.S. citizenship in record numbers.”
It’s not exactly Emperor Caracalla pointing to his sword… but IRS’s policies and tactics are not so far off from a police agency.
They disregard the law and the advice of their own counsel. They disproportionately burden honest individuals. They flout due process. And they push people to abandon their citizenship.
These are mafia tactics, plain and simple. And like the Romans, Ottoman Empire, and French monarchy before, the tax system in the Land of the Free has become a desperate farce marked by fear and intimidation. Interesting that Jack had to wait for his “HALO MOMENT” till 2014 when he was directly affected by 2 cases.