Why improving relations with #Americansabroad is difficult for the #IRS and USG

This is a comment on a post at the Isaac Brock Society.


Here is a post that I did in February 2012 titled:

Canadian RRSPs and the OVDI Penalty Base


You will note that it includes a comment from Ij

In any case, it is clear that that the “Shulman Reign of Terror” has caused irreparable damage to the relationship between the IRS and Americans abroad. As the Hodgen post demonstrates it is quite obvious that the IRS was using OVDI as nothing more than an “FBAR Fundraiser” and was in fact – once it became clear who was entering the OVDI program – quite deliberately and willfully extracting penalty revenue from its victims.

Although the original intent of OVDP/OVDI may have have been to allow “criminals” to legalize their illegal gains, it soon became clear that an entirely different group of people (law abiding Americans abroad) were entering the program. By entering OVDI, Americans abroad were allowing the IRS to confiscate a large portion of their legally earned and after tax gains! In other words, OVDI was designed to give a fantastic deal to criminals and to confiscate the lawfully earned assets of Americans abroad!

The IRS did NOTHING to discourage this! In fact, by NOT contradicting the claims of lawyers/accountants that a failure to enter OVDI was a “forbidden quiet disclosure“, the IRS encouraged Americans abroad to enter OVDI. This immoral and unethical treatment of American’s abroad sealed the deal. Shulman proudly proclaimed OVDI a success (notwithstanding the OVDI concerns raised by Taxpayer Advocate).

As Phil Hodgen commented (see the reference in the Badger comment above):

“Think about what the IRS is saying:

Ordinary Canadians must give the United States Treasury 25% of their pension savings because of a missing piece of 8.5 x 11 paper.”

Yes, this is exactly what was going on in 2011 and 2012. So incredible that NOBODY believed this when it was explained to them. Think about it. Your whole retirement savings subject to confiscation because you didn’t file a piece of paper that NOBODY would even imagine needed to be filed!

From that moment on, Americans abroad understood that they needed protection FROM the U.S. Government. There were are are only two ways to get that protection:

1. Stay underground and hide your “U.S.Ness”; or

2. Renounce/relinquish (at an increased cost, more people will take the first option).

(Don’t forget that that these problems were enabled and exacerbated by our friends “The Cross Border Professionals”. They regarded their “professional obligation” NOT as protecting the client but to enter people into OVDI. Instances have been reported of people entering OVDI who ceased to be U.S. citizens in the 70s. Think about it.)

The hatred and distrust of the IRS and the Obama administration is so extreme that anything the IRS does will remind everybody of the “FBAR Fundraiser” and OVDI. For example, I personally believe that the new 2014 Streamlined Compliance Program IS an IRS attempt to allow Americans abroad to come into the system “penalty free”. But the complexity of U.S. tax laws and PAST experience with the “Shulman Reign of Terror” means every proposal is interpreted in an atmosphere of distrust.

The fastest growing source of hatred of the United States of American is (and understandably so) Americans abroad.

It’s obvious that the only thing that makes sense is to:

Renounce and rejoice!

4 thoughts on “Why improving relations with #Americansabroad is difficult for the #IRS and USG

  1. Donald Maisch

    In Australia the Greens party is becoming concerned over this issue especially as they have a high % of expats as members. We may soon have a policy and advisory service on FATCA. However, as I understand it, one cannot renounce US citizenship until one has become tax compliant (5 years of returns + FBARs.) For expats who have not filed for years they are looking at $ 10,000-15,000 just for a tax professional to do the paperwork. So, is it possible to renounce without going through that $$$$$$ path?


    1. renounceuscitizenship Post author


      1. The Green Party in Canada is opposing FATCA. Green Party of Canada leader Elizabeth May was born in the United States (although she apparently became a Canadian citizen many years ago). So, that is a help.

      2. When it comes to renouncing U.S. citizenship you must deal with both:

      A. Citizenship – Department of State – Nothing prevents you from renouncing.

      B. Treasury IRS – The requirement of 5 years of tax compliance is necessary if you want to avoid being a “covered expatriate”. Once you are a “covered expatriate” you are subject to the Exit Tax. Note that even if you have the 5 years of tax compliance you could still be a “covered expatriate” because you have too many assets (over two million USD) or you have too much income (which is determined in a complicated way based on tax liability.

    2. Donald Maisch

      Since I wrote that piece last October things with the Australian Greens have taken a turn for the worse. The “FATCA’ expert with Greens leader Christine Milne thinks there are “good aspects” to FATCA as “it will catch multinational corporations who are not paying their fair share of taxes to Australia”. This is referring to the non-enforceable reciprocal IGA agreement between Australia and the IRS. In other words, the Greens have been deceived by the spin put out by the Aust. govt for a reason to sign the IGA. Now the Greens have distanced themselves from the issue altogether, I suspect from the advice of Greens Senator Peter W. Wilson who just happens to be a former director of Deutsche Bank! Of course it is this bank who now is divesting itself of “US Persons”. Interesting coincidence that!


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