Tag Archives: OVDI

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!


#IRS provides penalty relief: Isolates Congress and US tax laws as the problems for #Americansabroad


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:

Continue reading

@Mopsicktaxlaw takes moral high ground on taxation of #Americansabroad

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:

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Something new (maybe) from the IRS for taxpayers residing outside the U.S. and who have NOT been filing tax returns and FBARs

Whatever this means was announced on June 26, 2012 under the title of New Filing Compliance Procedures for Non-Resident U.S. Taxpayers. Those interested in this topic should check back frequently for more specifics. The specifics should be available no later than September 1, 2012. I am certain that the “cross border professionals” will say that this is “nothing new”. After all the statute of limitations for FBARs is six years. This is a message from the IRS and therefore it needs to be read carefully. It also needs to be read in the context of:

1. OVDI – You are all criminals

2. The December 2011 FS – well maybe “reasonable cause” does really exist

3. Voluntary disclosure in general – always been there anway

You can be sure that the IRS chooses its words carefully. Therefore, we must read the words of the IRS carefully. Continue reading

Compliance counseling is like a box of chocolates – “You never know what your gonna get” – Circular 230 vs. the fiduciary duty to the client

The Isaac Brock Society is becoming a interest place to “hang out”. At least this is true for many U.S. citizens living abroad who are desperately attempting to ensure that they are in U.S. tax compliance Many people are grappling with how to be compliant on a “going forward” basis. Others are trying to figure out to deal with “past compliance issues”. There are of course a number of ways to come into compliance. What all these people have in common is a desire to be U.S. tax compliant. Yet, the IRS seems hell bent on continuing on treating U.S. citizens living abroad as though they are tax cheats. For many U.S. citizens living abroad the emotional strain is such that they are driven to renounce U.S. citizenship. This is the price of a good nights sleep.

So, what’s a poor U.S. citizen living abroad to do? Well, they consult a “cross border professional” where they get advice that comes in all shapes, sizes and perspectives. The advice is so varied that it reminds me of the line in Forrest Gump:

Life was like a box of chocolates. You never know what you’re gonna get.”

When it comes to “compliance counseling” – You never know what you’re gonna get.” Continue reading

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

Loyalists in the American Revolution – Liberty’s Exiles – Updated with a comment from Schubert

Liberty’s Exiles – Maya Jasonoff

History is always written by the victors. The American Patriots were a little like George W. Bush. When it comes to the British:

“You are either with the Patriots or you are with the British”

In an earlier post I noted that not all the residents of the colonies wanted to break ties with Britain. Those who wanted to keep ties with Britain were called Loyalists. Given the persecution of American Citizens abroad, I have become interested in the lives of the Loyalists during the American Revolution.

The truth is that the Patriots were NOT an overwhelming majority. In fact it is not clear who were the true patriots. Were those who opposed the British the patriots? Were those who supported the British the patriots?

Who were the True Patriots?

In fact, the early colonies came within one vote of agreeing to something close to the British North America Act. Would you like to have a Loyalist during the American Revolution? If you knew what they had to endure, the answer would be no.

I cam across a fascinating book (just walking around a bookstore) titled “Liberty’s Exiles” by Maya Jasanoff. I read the first chapter and was hooked. Then I came across the video of the author herself. This video is worth an hour of your life. Continue reading