— U.S. Citizen Abroad (@USCitizenAbroad) September 13, 2015
This post originally appeared at the Isaac Brock Society.
Updated November 3, 2014 – Readers are strongly encouraged to read the comments as well. One must remember that Streamlined and OVDP are programs which have been invented by the IRS. They are not found in the Internal Revenue Code. Consequently this post should be read in the context of the following comment to this post:
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!
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:
One June 4, 2014, I wrote a post speculating that that upcoming IRS amendments to the Streamlined and OVDP programs would likely provide relief for Green Card Holders resident in the U.S. This was based on a speech given by the IRS Commissioner of June 3, 2014. As was reported in numerous blogs (and given an enthusiastic review to Mr. Mopsick), the speech included:
Steven Mopsick has written another post on what I would call “Tax Justice For Americans Abroad”. I have commented on a number of Mopsick posts on this blog. Leaving aside Mr. Mopsick’s position on FATCA, he has consistently been opposed to citizenship-based taxation and has been a strong voice for exposing the injustice of the the FBAR Fundraiser and other IRS insanities.
The article referenced in the above tweet includes:
The above tweet references an excellent series of posts written by CPA Joe Kristan about Commissioner Shulman’s tenure as IRS Commissioner and the FBAR Fundraiser. This collection of posts are among the best ever written about FBAR, OVDI and the like. Most of these were written during the “OVDI Terrorism” years of 2009 – 2012. While I’m at at it, here is some of my commentary during this period:
(This includes links to another four posts on this topic.)
(And when the IRS reintroduced the Offshore Voluntary Disclosure Program)
I have followed this story from the beginning and written a number of posts about Mr. FBAR and “The FBAR Fundraiser”. It’s even possible that the IRS may have contributed to the failure of Americans abroad to file the FBAR.
Please note that Mr. FBAR must now be filed online and only online. Mr. FBAR even has a new name. He’s called: FinCen 114.
Frankly, I don’t know how any government could do this to its citizens or lawful permanent residents. What is wrong with these people?
The above tweet references the following comment at the Isaac Brock Society. It explains why (if the U.S. is really serious about encouraging Americans abroad to enter the U.S. tax system, it will have to offer a serious amnesty program. This commenter is brutally honest and explains the reality of the situation very well. (Note I have added various links to the comment.)