Wednesday, September 14, 2011

Experiences Inside OVDP / OVDI #1 (9/14/11)

This blog is created for users to share, by their comments, their experiences inside the OVDP / OVDI programs.  I know the IRS touts that there is little flexibility inside these iterations of the voluntary disclosure program, and that has concerned the practitioner and taxpayer communities.  However, I suspect that, in extreme cases, accommodations may be made inside the program without the necessity of opting out to obtain the just and fair result.

So, I encourage readers to post their experiences here to help persons in the program, particularly those who are not represented, to take affirmative steps, to avoid pitfalls or just to obtain some comfort from others' experiences.  Or even some amusing anecdotes "inside the program," if any, could be helpful.

Thanks,

Jack Townsend

Note to Readers:  Please post new comments to the #2 version of this blog, titled Experiences Inside OVDP / OVDI #2 (4/4/12), here.  For context, if you are referring to comments below (i.e., on the #1 version of the blog), please copy and paste the content you reference into the new comment on the #2 version so that readers will understand your comment.

305 comments:

  1. Thanks to "just me" and "Anonymous November 23, 2011 11:48 AM" for posting your comments and trying to help me understand.

    Thats true ... I am from India and had joint accounts with my parents. I am in the OVDI since I also had a few single accounts.

    Regards

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  2. hi, I became permanent resident 4 months ago. I have been living here in US for 13 years now. I hadn't heard about FBAR till now. I wonder why. After i completed my studies I was remitting money back home in india to my dad to my student loans and such. In 2004 I sent money for my wedding expenses. In 2008 I opened an account in India and have been wire transferring money regularly (after paying taxes here) . Most of which is invested in stock market. So total balance could be approx $150,000 now (It is almost 40% of my savings). Income from dividends and interests is at most $1000/year. I did not know i had to pay taxes for this income. Like I said never knew about FBAR either. I recently heard about it from my friend and started researching on this. I clearly missed OVDI. It seems I would have to 25% of 150K in penalties for not paying tax on $3000 unreported income last 3 years. Plus unpaid taxes with interest. I really have no problem paying taxes with interest but the 25% penalties is too high. I have been planning on returning back to India for good last 2 years and that was the main reason for opening the account. It is likely I will return in 2013.

    I am still researching on this and that is how I ended up on these blogs. It looks like there are lot of people like me who do not like what IRS is doing. I want to pay my taxes but it seems the process is going to take years and I maybe in India by then. I am not sure what route to take. Do quite disclosure and leave or enter VDP and wait 2-3 years till my case is resolved. It is likely i will opt out because i don't want to pay very high penalties as it wipes out lot of my savings. Since i am leaving in 2008 it is likely i will not have file 5542 when i renounce my green card. I believe you have to GC holder for 8 years to do that. So many options going through my head. I have practically lost my peace of mind because of my ignorance of US tax law.

    Also it seems i should send my story to Amy Feldman. I agree with most of the comments posted here. IRS is on wrong path here and one size fits all shouldn't be applied here. In my opinion the penalties should have been same was not paying taxes for dividends/interests income earned here in US.

    I would appreciate any advice you might have. Is there a independent government agency that can help me here? TAS maybe? I am obviously trying to avoid paying high attorney fees. Thanks! I have learned a lot from reading these blogs and comments here. You guys are doing a wonderful job.

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  3. Anon of "November 24, 2011 3:16 PM",

    As a participant of OVDI, I feel like in a cage looking at you as a freeman -:).

    You may consider do it "quiet" (I would rather say do it right). If you have only 3k under report income, you may be lucky enough to pass. The worst is that IRS may come after you for civil penalty (on FBAR etc), this is just like those who are in OVDI who choose opt out. You have shown your honesty and responsibility as a tax payer. I don't see possibility of criminal prosecution for doing it right (make sure if you do QD, do it accurately and completely).

    I am not a pro, but I would choose to do so if I were you based on what I feel about OVDI now.

    If OVDI is about to take immigrants offshore retirement which has hardly anything related to tax noncompliance. What would you expect if you have 150K with tax non-compliance issue ?

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  4. To Anon Nov 24, 2011 3:16 PM

    Happy Thanksgiving

    I am not an expert, and I hesitate to give any advice, as tempting as it may be to do so. I have certainly tried to share the thought processes I went through as I was deciding what to do, but giving specific advice as what you should do is not something I would be comfortable doing.

    I do understand your dilemma, but wouldn’t recommend that you make decisions based upon what anyone says on these blogs. It is not a replacement for good paid professional guidance from someone who can question you in more detail about the specifics of your situation.

    Yes, it will cost you, but don’t be penny wise, pound foolish. You can limit that cost by being well prepared before you contact them. If you don’t know anyone in your area, Jack has a list of attorneys posted here:

    http://bit.ly/u3zyjj

    Now that said, I think it is fair to say, everything comes down to a risk assessment at the stage, especially considering your target date for leaving the US. Before you seek out expert advice, I might make 3 suggestions for you.

    First suggestion: You seem knowledgeable of these blog threads, but I would definitely be sure you have read these three (A, B, C) carefully...

    A. To OVDI or Not to OVDI - That is the Question (Of Quiet Disclosures and Doing Nothing) (5/23/11) This represents folks asking the questions and seeking answers similar to what you are asking now.

    http://bit.ly/ve0rM7

    B. To OVDI or not to OVDI - Part 2 (7/31/11) Here Jack goes through the analytical processes he uses to help determine a course of action for clients. I would have to think this might really help you.

    http://bit.ly/t9ncz9

    C. Finally, download the Special Report from this thread (11/9/11) and read it carefully. It deals with some of the Practitioner dilemmas as what to advise clients now that the OVDI is closed. You might find something useful there.

    http://bit.ly/uIC7gn

    Second suggestion: Download the IRM related to FBAR penalties. Print, read, and digest how you might be handled in a regular VD program and audit, where agent discretion should apply. It would be helpful if you know this information before you seek out an attorney. It will shorten the amount of time ($) they will have to spend explaining the audit and penalty processes to you. Here is the link:

    http://1.usa.gov/t9UfsD

    Final suggestion: Do a trial amendment of your most recent (2010) return and complete the form 1116 for tax credit to see if you will have any tax liability once the credits are applied. It is possible that you will have no tax due, if your interest/dividend income is really as low as you say that it is. (consider also doing 2009 and 2008) This tax liability will be vital for an Attorney to know, before he can really advise on best course of action. It will be part of the decision tree to decide whether a VD or a QD is best. So, do that work now, before you contact an attorney, because, ultimately, it seems to me, he is going to want to know and it saves time ($).

    If form 1116 seems too complicated, then pay a CPA who specialized in foreign tax issues, to do the amendment for you. That is what I did. For the money you pay, be sure they explain to you exactly how the 1116 was completed, so that you understand it. Go to school on their work, as it is possible to do this yourself, within Turbo Tax, but having a guide is helpful.

    Now, with this info and knowledge in hand, you are more ready to talk with a tax attorney. Or, maybe you now have enough information to arrive at a decision yourself on what to do. I can’t tell you what to do, but if it were me, this is the direction I would go before I decided. Learn as much as you can first, then consult with the expert. Saves $

    I don’t know if this is helpful or not, but it is the best suggestions I have given the limits of my knowledge and the nature of this forum. Hope it helps.

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  5. does anyone received 906 in 2011 ovdi

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  6. Thanks ij, Just Me!!

    Just Me, i think you provided a great professional non-professional advice. I am sure Jack being a professional in this field would agree. :)

    It looks like I have a lot of work ahead of me. When I found out about I could be criminally prosecuted, I literally was expecting people in black suits arriving in black SUV knocking on my door anytime. I am always nervous when I check my mails, thinking there will be a letter from IRS. Life is not good these days. Hopefully I can put this behind me soon and move on and return back to India with only good memories of USA.

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  7. To Anonymoust 11/27/2011 4:20pm

    I agree that Just Me has provided a tremendous service to both me but, more importantly, to readers of this blog. He has gone above and beyond the call of duty to learn all he can about the subjects implicated by the IRS initiatives and to share his learning with readers so that they can be more effective in their consideration of the issues and do not unduly angst about the uncertainties in the process.

    Jack Townsend

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  8. @ Anonymous November 27, 2011 4:20 PM

    Ever since I found out about OVDI my life is not the same. Like you every time I check my mail I expect a letter from IRS. In the beginning I was very much shocked about criminal prosecution and I was afraid that me and my wife will be arrested any moment.

    I wish I never found out about the OVDI program.

    Thank to numerous posts on this forum I realized I am not the only one that undergoes some mental discomfort related to OVDI and IRS and I got some hope that things are not so bad and there is hope...

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  9. 'Do a trial amendment of your most recent (2010) return and complete the form 1116 for tax credit to see if you will have any tax liability once the credits are applied. It is possible that you will have no tax due, if your interest/dividend income is really as low as you say that it is'

    For a resident in the US, there will almost certainly be some tax due for foreign accounts. Foreign countries will typically assess taxes only on income sourced in their country, so there will be no tax credits, so there will be tax due unless the country has a very high tax rate starting at a very low income level.

    As far as how the IRS would treat this, I don't know, but it doesn't seem unreasonable to me if they conclude that someone who has been in the US for 13 years should have been familiar with the requirement to report worldwide income.

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  10. From today's New York Times, referring to Judge Rakoff's opinion concerning an SEC/Citigroup settlement. He might have been speaking about the OVDI settlement process:

    "An application of judicial power that does not rest on facts is worse than mindless, it is inherently dangerous. The injunctive power of the judiciary is not a free-roving remedy to be invoked at the whim of a regulatory agency, even with the consent of the regulated. If its deployment does not rest on facts — cold, hard, solid facts, established either by admissions of by trials — it serves no lawful or moral purpose and is simply an engine of oppression."

    The judiciary is not involved in the OVDI, at least in its civil structure. But the same mindless application of rules without consideration of the underlying facts is inherently unjust.

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  11. Hello all. Can anyone tell me more about the IRM, specifically section 20? It appears that revisions were made on 11-25-2011. Is this true? Does anyone have the older versions that were in place prior to the 2011 OVDI deadline? Is the IRS changing its review, penalty, interest, etc. procedures now that we are all sucked in? Can they do that? Does anyone have the older version of the IRM sections?? Thanks and fight them hard!!

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  12. Which part of the IRM are you referring to?

    Can you provide the specific citation and/or link?

    Thanks,

    Jack Townsend

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  13. ' As far as how the IRS would treat this, I don't know, but it doesn't seem unreasonable to me if they conclude that someone who has been in the US for 13 years should have been familiar with the requirement to report worldwide income.'

    Right, because with each year the taxpayer is more likely to read all the warnings that IRS sends about global income and with each year there is a greater likely hood that the 1099-INTs from foreign banks aren't completely ignored. Since each year all immigrants are duly notified of their duty to report the last rupee/yuan/peso, and friends don't let friends under-report global income, it is improbable that one doesn't know of this requirement after 13 years.

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  14. Just got back to NZ, and catching up on my blog reading. Thanks Jack for the kind comments. I think I am running out of anything productive or new to say about the processes. I hope "Anonymous 11/27/2011 4:20pm" has good fortune on sorting out what to do. I understand the mental anguish he is going through, and can commiserate with ij comments...totally! I just can't imagine nor does it seem reasonable that the IRS is going to waste time on criminal prosecution for this type of Minnow. However, my analysis is suspect, as I have been wrong so many times on what seems reasonable and logical when it comes to the IRS. Thus, I will leave it to the professionals to help him weigh the risks of VD, QD or nothing.

    Regarding my 2009 OVDP closure: I was pleased to note, that I had two separate letters from the IRS waiting for me when I returned home. Both were signed 906s. Not sure why twice, as both were mailed on the same day! Maybe one for me, and one for my wife? We signed jointly, so not sure why we would need separate documents. After suffering through the 2 year OVDP ordeal with me, I don't think she will be divorcing me anytime soon! :)

    Anyway, after 753 days (that's $33.20 a day for its effort)from filing for the OVDP to the mailing date of closing 906, I am done with the IRS's OVDP!

    Well, not quite.

    There is still the little matter of reconciliation of the money the IRS owes me which is several thousand dollars. I was suspicious that this would take more time and effort. I had made estimated payments to the IRS for years that my amendments were delayed due to lack of file copies of original 1040s. I did this to stop the interest penalties from running, and over paid as I had no idea what my tax liability was going to be. That took on a comedic aspect, as the IRS sent me back the money with interest and a letter saying they couldn't accept it. I had to turn around and mail it back again with a plea for them to keep it and apply it to the year I had requested!! It seems that those funds were misplaced in another account somewhere. The reconciliation of those funds with refund was supposed to accompany the 906, but nothing was received. I will have to call my TAS Case Officer and see what gives. She assured me that my Examiner had said it was in process with the 906. Will need to get up early tomorrow and give a call.

    Back on Sept 14th, I predicted (cynically) I would be still struggling on the reconciliation 6 months from that date. Well, more than 2.5 months have past now, so let's hope it really won't take another 3.5 more months! On the plus side, the IRS will have to pay me interest that is more than I get in the bank now, so maybe there is a silver lining!

    Finally, for those that are interested, Jackie Bunion, of American Citizens Abroad was interviewed on the SwissInfo web site about Expat issues and FATCA. Here is the link.

    http://bit.ly/v58GhG

    Now, out to the garden chores.

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  15. I am an ovdi participant who should have remained in India. I am Tax compliant in India but not in the US due to investments made in india out of income earned in India with no US connection. When in college all i dream't was coming to America but today every waking moment of my life, i wonder why did i come to America? Not sure about my lawyer and for that matter i am not sure about myself.

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  16. Jack

    I'm not the original poster, but I did look at the IRM after Anon@November 28, 2011 7:56 PM mentioned it. Section 20 dealing with penalties, reasonable cause arguments etc. has been updated significantly, with updates marked 11/25/11. I don't know what it was like originally, so I can't tell whether the changes are significant, substantial or just procedural.

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  17. Jack,

    Under the OVDI, does compounding interest apply to just the extra tax due (for what is owed for unreported income) or also the 20% penalty?

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  18. To Anonymous @ November 29, 2011 4:41pm

    The in lieu of penalty (10% in OVDP 2011 and 25% in OVDI 2011) does not begin to accrue interest until assessed at the end of the process.

    The income tax and the penalties on the income tax do accrue interest from the due date of the return.

    Jack Townsend

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  19. Interest compounding applies to the tax due.
    I am not sure if interest starts clicking when
    we receive final calculated fbar penalty from IRS.

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  20. I cannot make a decision for others (since I am not willing to pay their penalties for them) but I am highly likely to opt out. I will of course get legal advice before doing so, but I am willing to take the risk. The way I look at it I take risk in changing jobs (hte new company may go bankrupt) getting married (may divorce) even driving to the supermarket (may get killed in a car crash.)

    The way I look at it the fact that I am disclosing shows by definition that my conduct was NOT willful. (The only ones that could be willful were UBS clients at risk of having their info disclosed, and who the program was designed for.)

    I think that in the case of minnows (small accounts with small income, no corporations to hide ownership, previously taxed funds deposited) the IRS will NOT want to get into a protracted battle to exact 25% penalties and would rather put its limited resources elsewhere.

    I may be wrong of course but in my situation I don't feel full penalties are justified and am willing to fight this as a matter of principle, same way that I have spent hours preparing and going to small claims court over a minor dispute.

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  21. To "Anon of November 30, 2011 3:06 PM",

    This weekend, I watched the video "Catch me if you can" again

    Frank Abagnale Sr (who also had some issue with IRS) said:

    "Two little mice fell in a bucket of cream. The first mouse quickly gave up and drowned. The second mouse, wouldn't quit. He struggled so hard that eventually he churned that cream into butter and crawled out. Gentlemen, as of this moment, I am that second mouse."

    I wish you a good luck being the second mouse.

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  22. Ready to be the first mouse, I went to shopping last Friday (black Friday), I spent total of $6 (no kidding) at a local thrift shop. I got three pairs of used shoes at 50% discount.

    Obama calls me a "Fat Cat", and you know how fat I am.

    Before signing 906, I am in no mood to buy anything except keeping a roof over my head and basic food on the table.

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  23. ij,

    You read my mind. I also did $0 shopping this thanks giving. I am just buying basic necessities to live. Even gave up on $8 netflix plan.

    I am saving every dollar I can just in case I get kicked out of this country (since I am on visa) for unintentionally hiding joint account with my parents back home to which I have contributed $0

    I will hold on any more discretionary spending till I get that coveted 906.

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  24. To Mouse ij,

    Thanks for the humor. :) I forgot that story from "Catch Me if you Can." Sounds like your shopping habits are like mine. The only clothes I have bought in the last 2 years, are T shirts from Goodwill for $1.50 each. Perfect for wearing the the garden and painting on the house. Other than that, I need or buy nothing. This time of year, we just eat out of our garden too, and you know, it is healthy and good!

    And "Anon of November 30, 2011 3:06 PM",

    Good luck to you. I do think it is worth fighting back a bit and being that Mouse ij mentioned. Will watch for your reports and hopefully your outcome will support your decision process. I trust that some Practitioner will provide some information here about any of their clients that are Opting Out. That would be very helpful for all those that are in the OVDI and reading here...

    Cheers

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  25. 'The way I look at it the fact that I am disclosing shows by definition that my conduct was NOT willful. (The only ones that could be willful were UBS clients at risk of having their info disclosed, and who the program was designed for.)

    I think that in the case of minnows (small accounts with small income, no corporations to hide ownership, previously taxed funds deposited) the IRS will NOT want to get into a protracted battle to exact 25% penalties and would rather put its limited resources elsewhere.'

    I don't think the IRS/DoJ would pursue willful penalties in the cases you cite. The greater matter of concern is the non-willful penalties. Even if the IRS does not try to get the really ridiculous 10K per year per account, they could well go for 10 K per year. For 5-6 years, that can add up quickly. For a small account, that would be greater than a 25% or 12.5% penalty.

    For the non willful penalties, I think it would not be difficult for the IRS to make a court case, because the burden of proof would flip back to the respondent, who would have to show 'reasonable cause', and that would be hard for someone who has been filling tax returns in the US regularly (I exclude expats who haven't filled tax returns). And remember that for the IRS, its not just the money to be obtained in a particular case. Its setting an 'example' if you will. For the willful case, the IRS/DoJ might be reluctant to proceed because the burden of proof is on them, but for the non-willful case, it could be different. A few successful collections would have a so called deterrent impact, and that would be an incentive for them to proceed.

    Opting out would still make sense in some cases (say someone had rental property worth a lot of money which is not included in regular penalty, but is included in FBAR penalty). Or if someone has few assets in the US (say an expat), the iRS will likely not proceed. But for other cases, these factors should be considered.

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  26. Does IRS have to go to court to collect willful FBAR penalty even for minnows when no criminal activity is present.

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  27. FBAR confusion?? Which version to use? Robert Wood has a good posting on Forbes, in case you are confused.

    Title: Got FBARs? But Which One?
    http://www.forbes.com/sites/robertwood/2011/12/01/got-fbars-but-which-one/

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  28. 'Does IRS have to go to court to collect willful FBAR penalty even for minnows when no criminal activity is present. '

    Yes, it seems that the IRS has to go to court to collect willful penalty, and probably even the non-willful penalty, although that should be much easier for them to collect, because in that case the taxpayer would have to show 'reasonable cause'.

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  29. I am curious Jack and others as to your opinion:

    Do you think its worthwhile to include accountant's worksheets etc... in a OVDI submission? Some are of the opinion that it is worthwhile to make things easier for IRS agents to review quickly, and other think that it might invite too much of a review and makes "their lives too easy". What do you think?

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  30. What would be the theoretical risk for a minnow if a portion of offshore funds are determined to be untaxed?

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  31. To Anonymous December 2, 2011 12:39 PM

    The tax professionals I worked with were of the opinion that the examiner would ask for the information they needed if they required clarification.

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  32. To Anon December 3, 2011 9:14 AM

    The tax professional advice from "Anon at 10:48 AM" may be good advice, however, I took my own council on this. I was more generous with informational worksheets.

    I provided all copies of the excel worksheets I used to figure everything OVDP related, like penalty calculations, flow sheets of funds between accounts, method used to figure highest aggregate amounts, FX rate calculations, and tax reconciliation worksheets.

    I did not provide worksheets for the actual amended returns, except where I discovered errors while doing my own audit of my work. Then I documented the changes with worksheets and provided those. No questions arose from those relatively minor changes.

    Generally speaking, I figured more was better, and since I assumed a full audit, (which this was not, as I learned later) I had nothing to hide.

    I think it made the Examiner's work more difficult, as she complained about how big my file was, but in the end, she followed and used my worksheets for reference. So, I think that helped me when it came to reconciliation of who owed what. It also meant when a question was raised, I could refer her to something she already had.

    That said, I still haven't gotten my money back that the IRS owes me, but I have a real good worksheet record, and know she has exactly the same thing so any lingering disputes should be easier to resolve.

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  33. Canuck Minnow:
    I discovered my US citizenship and its implications just days before the original Aug 31, 2011 OVDI deadline. Being tax-compliant in my own country and risk-averse, I decided to come forward. I was granted the 90-day extension for submitting documents. This gave me time to obtain a Social Security Number, which I have never had since I have lived and worked in Canada for my entire adult life.

    I've just submitted my documents and paid the tax and tax related penalties. My tax preparer was advised by OVDI hotline agents not to send a check for the FBAR penalty payments yet (although we did complete the worksheet and submit it).

    I believe I have reasonable cause for not filing 1040s or FBARs as my citizenship results from an obscure ammendment to the 1952 Immigration Act. Originally, everyone born in another country with one US parent between 1952 and 1978 was required to live in the US for a number of years between age 14 and 28 in order to maintain US citizenship. In 1978 the residency requirement was eliminated...creating many Accidental Americans, the majority of whom probably have no idea of their dual citizenship! (This is a complex area of law, so best to obtain an expert opinion from an immigration lawyer.) My parent registered my birth so I have an official document stating the law of the day....which I had no reason to suspect was no longer valid.
    Needless to say, I was more than a little shocked to discover my situation...and how much it would cost me.

    I am resigned to paying the tax, but cautiously optimistic about the FBAR penalties. Even at 5%, these are many times the tax I owe for the 8 yr OVDI period. I truly had no idea of my citizenship or the reporting requirements and hope, after David Jacobson's announcement last week, that some discretion will be shown in assessing FBAR penalties. If not, I can appeal to TAS or opt out of OVDI.

    Many thanks to the regular posters, especially Just Me, for giving me a better idea of the process and the courage to speak out. I have spoken with Amy Feldman and written to various politicians.....and expended many LCU's since August!

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  34. Has anyone had experience with opting out in regards to reasonable cause? (Significant head injury). I am having absolutely no luck in doing research or in talking with the folks on the OVDI helpline. ANY help or advice anyone could give is much appreciated.

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  35. To Canuck Minnow

    Stunning story, and vividly shows what is so wrong about IRS enforcement practices of some pretty terrible Statutes. You should not have had to expend one LCU on all this nonsense.

    Pleased that you talked with Amy. I just had a long conversation with her the other day, and she has submitted a story to her editors. She has been amazed about what she heard from the many VD participants that contacted her from around the world, and had no idea of the impact these programs were having on minnows.

    Now whether or not her Editors have an interest, and/or how much they chop it up and leave the nuance on the cutting floor, will be interesting to see. It is a hard story to tell, if it is confined to 500 words.

    BTW, I just had my final conversation with the TAS Case Officer. She was as delightful and as professional government official as you could ever hope to deal with. She has closed my case as of Dec 6th. I am officially done! However, since I have not yet received my reconciliation refund, I am to touch base again in February if a check has not arrived by then for monies owed me.

    One interesting side note: I called the TAS attorney who worked on my case and authored a lot of the TAS appeal letter. He spent a lot of time educating me on the ins and out of the TAS appeal process and basic FBAR history and practice. He also had participated in a conference call I had with about 10 IRS officials when I was appealing for discretionary reason. He was aggressive with my Examiner in my defense, and liked having him on my side. I wanted to thank him for his efforts, figuring that he probably doesn’t get much in the way of positive feedback, dealing all the time with disgruntled tax payers who are mostly bitching. He was pleased that I called, and said, he has 'never ever' had any tax payer call to thank him before. So glad I made the effort.

    In our discussion he wanted assurance that I had actually received my final 906, as sometimes the IRS "re-nigs on their agreements." I was somewhat startled at that comment, and maybe should not make too much of it. He could be just speaking casually and off the cuff. I assured him that I had 2 copies in hand, so that was that! I had never really considered the possibility that they might do that, but then I had sent in my payment as soon as the verbal agreement was communicated to me by the TAS. That was long before the actual paper work arrived. I wondered why it took so long to process. I hoped they weren’t having second thoughts, but since they cashed my check I hoped it precluded any possible reconsideration. Anyway, as a cautionary note, it does speak to the issue of not counting the chicken until the 906 is hatched!

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  36. Jack - do you have any "ball park" estimate of months from submission of package to start of processing cases for OVDI 2011? I ask because I presume you have a portfolio of cases submitted at different times and would have some idea when the processing starts. Thanks in advance for any insight.

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  37. Well,...

    Amy Feldman wrote her article, Reuters published it and it is very much appreciated. She was one out of 100 reporters that were interested. (Most were not!) This might be the best we get in terms of discussion in the US media of unintended consequences of IRS efforts to catch USB style Tax Cheats. Below is the link. I decided to let my name be published, if it helps others understand what minnows go through. Maybe it lends credulence to the story about the unintended consequences of the noble IRS OVDI and OVDP efforts to catch Whales. Maybe not. Who knows? Certainly not me, but it is my best effort, as a Minnow, and probably the last. The system is bigger then I, and it grinds on, spitting out the victims in pursuit of the Whales. So it goes.

    Thanks to all the others who read these blogs and shared their stories with Amy. I also appreciate your efforts.

    http://www.reuters.com/article/2011/12/08/us-usa-taxes-foreign-idUSTRE7B723920111208

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  38. Just Me,
    Great article by Amy and thanks for all your efforts in getting media attention to this issue. I hope now better sense prevails and IRS does the right thing.

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  39. The Reuters article by Amy Feldman on OVDI/OVDP experiences has been published. She has captured the distress and circumstances of many in OVDI well.

    http://www.reuters.com/article/2011/12/08/us-usa-taxes-foreign-idUSTRE7B723920111208

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  40. 'I called the TAS attorney who worked on my case and authored a lot of the TAS appeal letter. He spent a lot of time educating me on the ins and out of the TAS appeal process and basic FBAR history and practice'

    Marvin -- Do you have any idea if the TAS is seeing a lot of FBAR cases now, say after opt out ?

    ReplyDelete
  41. To Anonymous December 9, 2011 7:01 AM

    I do not know if the TAS is seeing a lot of FBAR cases now. I haven't specifically asked my Case Officer that question, but even if I did, I am not sure she would know what is happening around the country in all the TAS offices.

    That would be something Nina Olsen, the head of the TAS would know, but I am not in the position to ask her. That might be something I could ask ACA to look into, as they do have a good relationship with the TAS. Then again, given the general secrecy nature of the IRS, it might be something that would only come to light from a FOIA. I just don't know. Sorry.

    To December 9, 2011 4:35 AM who "hopes now better sense prevails and IRS does the right thing."

    I hate to be cynical, but as a practical matter, I doubt that this has any significant impact on IRS practices. This is like a small fish butting up against the bow of a Super tanker, and hoping it's actions will cause a course correction. Won't happen! However, it might shed some light on the type of sea life that is out there in the VD ocean. Prior to Amy’s article, the only US information available was from the ship's Captain, who implied that it was only full of whales.

    ReplyDelete
  42. @ Anonymous (December 7, 2011 8:23 PM)
    "Has anyone had experience with opting out in regards to reasonable cause?"
    I've opted out but have yet to hear back on the IRS's response. So no real help for you. My perception is that they are becoming more and more open to reasonable cause (correlation with negative publicity perhaps!?).

    @ Just Me
    Great work on Amy's article. Nice to finally see a balanced and insightful critique. She didn't use my story but I suspect she is overwhelmed with stories that are even more eye-popping than mine. Good to see the story has been picked up by other papers too (Chicago Tribune, Baltimore Sun).
    BTW: I ran into Peter Dunne at lunchtime yesterday as he was collecting on the street for a local charity. I gave him $20 and we had a laugh about the irony of the Minister For Revenue holding a bucket on a street corner and soliciting donations. I considered hassling him about addressing the FATCA/FBAR mess on NZ soil but I figured he was doing a good deed and didn't need the added grief ;-).

    ReplyDelete
  43. Moby,
    If it is not too much of a trouble, can you please send a link to Chicago Tribune article or Baltimore Sun? Very encouraging to read your post on media picking up the story. I hope we all continue to drive this momentum.

    Also, special thanks to Just Me (although we now know his name), for initiating contact with Amy - we all have reached this far. And, Canadians have been a great help in raising awareness as well.

    Media, including social media is a potent source to highlight atrocities - could this be a start of the "Arab Spring" for the IRS?

    A question for all - do you feel that the recent concessions and announcements by IRS has something to do with all the noise from ACA, Canada and others minnows caught in this mess?

    ReplyDelete
  44. Moby,
    I agree, IRS is getting a lot of negative publicity about voluntary disclosure programs. Many of the participants are non targets paying a heavy price for minor infractions. Our decision to opt out is the right one, if you had no intent to evade taxes. Are you talking to TAS now to prepare your arguments? Just wondering what is your broad strategy to deal with opt out scenario.

    ReplyDelete
  45. Moby,

    I think you were right, not to hit up Peter Dunne when he was in the street doing his civic duties. Although it was tempting I am sure. That is one thing I like about NZ, is it is still small enough, that you can meet your leaders in the street taking up collections for worthy causes. What I don't totally understand is MMP, and Winston Peters back in Parliament without winning one district. Do you?

    Anyway, now that you know my name, any interest in getting in touch and seeing if there is some strategy for raising the awareness of FATCA in NZ? I don't know that I have the energy or time, but then again, that is the common excuse that all of us have who are not activist at heart!

    Thanks for your comments and contributions here. I have enjoyed reading them.

    and Anonymous December 9, 2011 10:38 PM: As for the links to the Baltimore Sun, this is just a repeat of the Reuters story. You can google it under the heading of "Taxpayers with overseas accounts seethe at penalties". Only a couple papers picked up the story, which shows the general lack of interest in tax matters. It is like financial stories, the average person finds them too boring or incomprehensible to read. The Lindsey Lohan Playboy picture leak on the internet is much more interesting to click on. :)

    ReplyDelete
  46. @ Anonymous December 9, 2011 10:38 PM: "do you feel that the recent concessions and announcements by IRS has something to do with all the noise from ACA, Canada and others minnows caught in this mess?"

    My thinking is "Yes". Until the Canadians went berserk this issue was beneath most peoples' radar. The Canadians (bless 'em) got this issue the publicity it needed. The IRS is trapped; they have to cut the Canadians a break (just for the sake of good relations with one of their biggest trading partners and neighbours), but they can't make a rule that is explicitly specific to Canadians (discriminatory). The Canadians have no more "reasonable cause" excuse than anyone else in the VDP so the IRS will end up (hopefully) having to cut everyone a break.
    But it gets better; the IRS has repeatedly carved out groups in the VDP for special treatment. Think: signatory but no financial interest, accounts less than $75K, unaware citizens, and now something-that-will-be-a-proxy-for-Canadians.

    So it is quite obvious that the IRS:
    1) Gets external pressure about the fact the VDP unfairly discriminates against a bunch of people
    2) Specifies relief for a specific bunch of people
    3) Goes back to (1) when the pressure comes from another group.

    In doing so the IRS has repeatedly admitted unfairly
    discriminating against numerous groups of people, and then exacerbates the discrimination by bestowing a relief privileges upon only those with enough political clout to get special treatment. Its like discrimination to the power of N! The structure of the VDP was always morally indefensible; now it's even more so.
    So I think the IRS will be going out of its way to be nice in opt-outs.

    @ Anonymous December 10, 2011 7:20 AM: "what is your broad strategy to deal with opt out scenario"

    My argument is - Didn't know; couldn't have known. :-)

    "Are you talking to TAS now to prepare your arguments?"

    Nope; all me. I prefer making my own case. TAS is not involved.

    @ Just Me
    Re: Winston - He's a sly dog is Winnie; surprised everyone. MMP awards the number of seats based on proportion of the party votes they got. NZ First got ~7% of votes so they get ~7% of the seats. Electoral votes only give voters power over who sits in the seats awarded by the party vote.

    Re: Contact - Happy to make contact; collaboration is good. Not sure how much activism I have in me but I'm happy to keep my oar in the water to help out others. I believe I know enough to contact you in an offline channel; I'll send you snail-mail with my details.

    ReplyDelete
  47. Hi Guys,
    My story got worse for me. I joined OVDP early and closed with a 906 in October of 2010. I posted before that even after the conclusion I struggled with how emotionally and physically taxing the entire process was. Almost two years of back and forth got the best of me. Well October of 2011 I suffered congestive heart failure. My blood pressure was 250 over 140 when I went to the ER. My kidneys are now shot and while thanful to be alive I think, I despise the IRS, Mr. Shulman and his bogus programs. I am now limping along on about 11 different medications that I take daily. What really gets me is that by joining and settling early in the process I missed out on the subsequent guidance that may have made opting out a real viable option. I can not express my admiration of Just Me enough for the intestinal fortitude and courage he displayed in challenging the IRS. I can not help but think of how deeply America has fallen in the view of the world and by many of its own people. You may say well just go back to where you came from but America makes doing that a challenge as well. To any immigrants thinking about making this your home...think it through clearly. This country is a trap just waiting to be sprung on you if you do not dot your i's and cross your t's. If you do decide to move here and you have any assets of significance you need to consult a tax specialist to avoid seisure of your assets by a canibal government. Its disgisting.

    Anon123

    ReplyDelete
  48. Hi
    I've turned in the OVDI, now my question is what about my STATE TAX RETURNS? As an american who has straight forward overseas bank accounts, but also an apartment in the US, I have to file NYS Taxes as well.

    The instructions on Form IT-201-X indicate: "Generally, Form IT-201-X must be filed within three years of the date the original return was filed or within two years of the date the tax was paid, whichever is later."

    "If you file an amended federal return to make changes to your federal income, tax preference items, total taxable amount,..., you must also
    file an amended New York State return within 90 days of the date you amend your federal return"

    QUESTION: DO I FILE NYS AMENDED RETURNS FOR ALL 8 YEARS OF THE OVDI, (COMMON SENSE WOULD DICTATE) OR, DO I FILE JUST LAST THREE YEARS?

    ReplyDelete
  49. Thank you "Just Me" for contacting Amy Feldman. I like the term Minnows. It applies to many of us.

    It is patently absurd, where our corporations are global, and yet the IRS is "surprised" (profitably may i add) when it finds it's citizens are global as well! Who'd a thunk it? Duh.

    The narrative coming out of IRS is absurdly evil and unequal. Corporations are lobbying for tax holidays in the same situation as citizens with money abroad. In my case it was a total oversight regarding this Fbar stuff for meager interest income. I've just googled regarding amending my state tax returns to match my OVDI process, and implications as well, with unpleasant results: NO HITS! That's BAD.

    As bad, as an "early withdrawal of your IRA accounts" another total "Blind spot" in the instructions for State Taxes: it's like Voldemort in Harry Potter: that which shall not be named. All my IRAs are underwater tax free to the US government. What a great law.

    ReplyDelete
  50. I just read the Reuters article. Good job to everyone who participated.

    Some statistics from the article:
    39 mil immigrants, 6 mil expats, 534,043 FBARs.
    If 1/2 of immigrants have accounts abroad that would make it an overall compliance rate of 2.1%

    $2.2 billion collected from 2009 OVDP, 15,000 participants. Average take: $146,667. Kinda small considering that UBS reported 5000 names with over $1 mil in assets. That alone equals $5 billion, representing over 1/2 of the penalties.

    This means the remaining 10,000 had assets between $100,000 and $600,000.

    Also, I don't understand how someone in Canada would pay taxes to a foreign country because her mother registered her at some embassy. If that country were Zimbabwe, I doubt anyone would trip over himself on the way to his accountant.

    Also, there was an article referenced here earlier written by a tax lawyer who was afraid of the US Navy (7 aircraft carriers and the Navy Seals). This fear was his reason why his clients should comply with the IRS.

    A word to the wise: if your tax lawyer is not willing to personally ride a torpedo into one of those carriers and personally engage the Navy Seals in an underwater knife-fight, what chance does he have against the over-worked, under-paid government bureaucrats at the IRS and the US Congress?

    Great job to all contributors and happy holidays.

    And happy taxes! like my tax preparer writes.

    ReplyDelete
  51. @Moby,

    Good analysis! thnx

    Regarding contact: I don't know that I have much activism in me either, but collaboration can't hurt. Snail mail will work, or you can contact Jack, and he will give you my email details.

    @ Annon 123. I really feel bad for you. Stay on those meds!! Stress can do bad things to you, and I have felt its effects too.

    I can't help but wonder if there isn't some relief for early 906 closures. As I have told someone else on the Dec 9th thread, I would try the 'Hail Mary' TAS pass. As Jack says, the probabilities are slim, but what is the harm of asking. I might help you heal!

    @ Kiers... Be sure to read AB's comments on the Dec 9th thread reading Laura Saunders WSJ article. I also just posted something there.

    ReplyDelete
  52. Kiers - I participated in OVDI. I was on temporary work visa so was more concerned about NY State compliance as well. My advisers told me to file under NY State's own disclosure program. Their program is easier to navigate so far than OVDI. I could have amended my NY state returns without participating in their disclosure program but I was advised that its far safer to participate through the disclosure program. Info is available on the NY State tax website - also if you google search you will see pronouncements from NY State at time of OVDI 2009 to file amended returns before they come to know through IRS. I think thats most important. Given the time for OVDI processing, it will take longer for the NY state to get your details but I would still advise to file NY state amends through their program ASAP - they realize that IRS is not done with processing your OVDI package and any amends to state returns are subject to final determination by IRS. Hope that is helpful.

    ReplyDelete
  53. I got a mail from IRS Seattle Office asking me to sign form 872 to consent tax year 2008 assessment time to Dec 31, 2012.

    I thought I had done this with my OVDI package, and this was a bit strange to me.

    I guess it may not be related to OVDI at all. If so, I should be happy for already being in OVDI as only possible tax non-compliance problem would come from offshore accounts.

    Recall that I got a few letters from CRA (Canadian Revenue Service) asking me to file return because my Canadian banks had sent T slips to CRA -- and they thought I was still Canadian resident (even though I have been using US address).

    Anyway, if it is not OVDI related, it seems the close working relationship between US/Canada tax agencies. According to the US/Can tax treaty, they exchange tax information all the time.

    Anyway, if it is true, now OVDI is a safe heaven -:)

    ReplyDelete
  54. ij,

    In doing my OVDP, I got one of those assessment extension requests on form 872. I was told my examiner, that I was not required to sign it, but if I did not, then they would assess taxes and penalties anyway to "protect" their position. So, actually, they had all the leverage, and the request would have been better phrased as a "demand letter", rather than couched in polite voluntary request language.

    I signed of course, and wrote at the time... "I am still not sure why I am doing this, as I have said, you have all the power and will assess me even if I don’t sign, but since I can’t afford to spend more money for attorney opinions, we will sign and forward back to you. Hope there isn’t some hidden gotcha, or some reference in the instructions to some other form or information booklet I should have read."

    What an amusing game we play, if you could only stand back divorced from the outcome and just observe the absurdities!!

    ReplyDelete
  55. Just me,

    Thank you. Of course, I will sign and send it back.

    I just took a look at what I had done with OVDI. In fact I had signed 872 for years from 2003 through 2008 to extend assessment time to Dec. 31, 2012 which was required as part of OVDI package submission.

    So this single year 2008 seems to me a duplicate. Also it is from Seattle Office (big business and international). Are they treating me like a big whale ? -:)

    I will call this agent today to find out why they want me to repeat what I have done inside OVDI. I still think it is not from OVDI (mail usually comes from Austin TX)

    ReplyDelete
  56. A colleague just forwarded the following info from Democrats Abroad. I am not a member of Democrats Abroad, however, I find the news that they will take action is good. Any little bit of action and attention may help those who decide to opt out and those who are still not compliant.

    My colleague also told me they should be lobbying the Senate Finance Committee.

    What is interesting about the letter is:
    1) Political groups are addressing this issue. Note that the Chairman is Canadian (thanks again to the Canadians).
    2) The fact that they have had conversations with senior lawyers for the IRS and it leads them to interpret the recent IRS newsroom instructions as they do in their mailing.
    3) That they will also be collecting stories of problems and concerns and will set up an online site for that.

    Due to text limitations on comments to this blog, I have had to edit out some of the letter, but I have tried to keep what will interest readers of this blog.

    Here is the some of text of the letter:
    12 December 2012

    We know that many of you have expressed considerable concern about two relatively recent developments regarding US taxation issues for Americans living abroad, developments that go beyond the requirement to file annually the IRS tax return (1040 and associated forms): the Report of Foreign Bank and Financial Accounts (FBAR) and the Foreign Account Tax Compliance Act (FATCA).

    There is in place a DPCA Task Force, chaired by Joe Green in Canada, which has been examining the changes taking place in the US tax system and how those changes impact on those of us living abroad. The Task Force has been and will continue to be in contact with appropriate senior staff at the IRS, the Department of the Treasury (home to the IRS) and the Senate Budget Committee. Members of the Task Force are, in addition to Joe, Stanley Grossman (UK), Maureen Harwood (Canada), Carmelan Polce (Australia), Maya Samara (Switzerland) and Joe Smallhoover (France).
    ...
    More than a few US citizens living abroad long ago stopped filing the form 1040, assuming they owed no tax, and had no idea about the requirement to file the Report of Foreign Bank and Financial Accounts (FBAR). This rule—in effect since 1982—requires every American citizen to report all assets held in foreign banks or other financial institutions if, at any time during the year, the sum of those assets exceeded $10,000. Moreover, failure to file this FBAR report is punishable by a fine of up to $10,000—and even more if the failure to file is deemed deliberate. The IRS has rarely imposed these fines in the past but, recently, announced that, after a grace period—which expired last September—it would impose fines going back up to six years on taxpayers not in compliance.

    In a recent phone conversation with senior lawyers for the IRS, we learned that, while all US citizens at home and abroad are still required by law to file both their income tax returns (Form 1040 and associated forms) as well as the FBAR, the recently released IRS information sheet may provide some comfort for those of us living abroad who have not complied. To comply with the law, non-filers are advised by the IRS to file six years back for both the income tax reporting and for the FBAR (in the latter case, non-filers are advised to attach a letter explaining why you had not filed earlier.) That information sheet can be found at http://www.irs.gov/newsroom/article/0,,id=250788,00.html and is specifically directed to Americans living abroad (and not just to dual citizens).

    To assist in our on-going discussions, we will be asking overseas Americans to share their stories of problems or concerns they have had with compliance and related tax issues. We will be creating an online site where these can be posted anonymously and we’ll get back to you shortly with relevant details.

    Kenneth Sherman
    International Chair

    ReplyDelete
  57. To Anon123 December 11, 2011 8:11 AM

    Get well soon my friend. If it was not for your posts here around a year ago, combined with stories on Phil Hodgen's blog, I would have resigned myself to paying a penalty in OVDI that is even more over-the-top than Just Me's was and I have spent less than 1 year in America in the last quarter century.

    So while it does not make your condition better, maybe it will help you to know that you helped me not to feel so alone. I live in a country that is even less of a tax haven than Canada and am the only person I know who knew about and entered the amnesty. I had no support other than from distant lawyers who basically have just told me what the program requires and charge me a lot.

    Your posts, along with those of Just Me, Moby, Jack, ij, ACA and many others on various forums on the web, motivated me to start to fight back against the injustice being done by the IRS to law abiding citizens who live overseas, whether they are in OVDP/OVDI or are non-compliant.

    We all have our own ways of helping others. I talk to anyone who will listen about the situation, especially those who may not know what to do. I wrote Amy Feldman and although my story ended up on the cutting room floor, there is an indirect reference to my case. I have been in touch with ACA and my Congressperson. I have not given up yet and will continue to try to raise awareness and not just be passive in my case.

    So you have helped me and thank you. I hope this little bit of gratitude helps you, too. Take care.

    ReplyDelete
  58. 'Just Me', in your case the situation was probably different, right ? You got the request from your regular OVDP examiner and you had not already signed a waiver. In ij's case, he has already signed a waiver (I assume) and this does not seem to be from an OVDP person, but from his local (I assume) center. So it could be an independent audit.

    ReplyDelete
  59. Why would anyone want to join their state's VD program (unless really large sums are involved) or the state is offering some sort of discount ? States have no FBAR penalty, so the most they can access is tax and interest and maybe some small penalty (I doubt they can go for a fraud penalty except in rare cases). For most states, you would have to file an updated state tax return, and pay tax + interest, but that should be sufficient --- no need to join their VD program unless you are a big time tax evader genuinely worried about jail time.

    ReplyDelete
  60. 'Moby'

    When you said you were going to opt out, did the IRS make any effort at all to 'keep you in the fold', i.e. offer a reduced penalty ? Or was it just, 'Sure, no problem -- we'll just audit you'.

    'Just Me' -- I believe you might have answered this question before, but I recollect your saying the IRS was trying to get you to say that your violation was willful. Did they say that and was it based on the 'Schedule B' question ?

    ReplyDelete
  61. Anonymous said...December 12, 2011 5:39 AM

    "Why would anyone want to join their state's VD program (unless really large sums are involved) or the state is offering some sort of discount?"

    Does this not apply to people in OVDI as well?! People who join OVDI join because (i) 25% is often less than 50% or non-wilful penalties (ii) IRS does not tolerate quiet disclosures (iii) people are afraid of criminal prosecution (and you are kidding yourself if you believe that states will not prosecute you for small sums go to the new york state site for recent criminal prosecutions there is no real threshold

    There are pronouncements from NY State asking people in OVDI to consider participating in the state program if they qualify (if they have no pending audit)

    Anyways there are also pure economic reasons - only if you participate in the state program, the state waives the late payment penalties - if you file amended returns regular way you have to pay late payment penalties.

    Hopefully you learnt that life is a little more grey than black and white today!

    ReplyDelete
  62. Anon @December 12, 2011 7:47 AM

    'Does this not apply to people in OVDI as well?! People who join OVDI join because (i) 25% is often less than 50% or non-wilful penalties (ii) IRS does not tolerate quiet disclosures (iii) people are afraid of criminal prosecution (and you are kidding yourself if you believe that states will not prosecute you for small sums go to the new york state site for recent criminal prosecutions there is no real threshold'

    It is ABSOLUTELY NOT the same situation as OVDI because states have NO fbar penalty, therefore the most they can assert is tax penalty. IRS has the huge FBAR potential penalty.

    Please note that I most definitely said that one should file in state tax returns without formally joining the program. You are kidding yourself (or being scared of your own shadow) if you think a state will bring a criminal prosecution against you if you have filed and paid all taxes and interest due without joining their formal program, especially if there is only a small amount of tax due The most they might charge is a late payment penalty.

    I exclude the case of genuine tax evaders with large sums due or other indicators of frad.


    'Anyways there are also pure economic reasons - only if you participate in the state program, the state waives the late payment penalties - '

    Well, if you read my post carefully I specifically excluded the case where the state offered some sort of discount. If the state is offering abatement of late payment penalties, then that may be a good reason to join the state's program.

    'Hopefully you learnt that life is a little more grey than black and white today! '

    Hopefully you'll learn not to be scared of your own shadow someday ..

    ReplyDelete
  63. Looks like IRS has started sending closing
    agreements for people who filed for OVDI in June.

    http://sktaxes.com/?p=425

    ReplyDelete
  64. To Anon...December 12, 2011 5:36 AM

    Yes, I did get my waiver request from my Examiner, and now understand that ijs came from another house in the IRS kingdom, so it probably is different. Sounds like he is calling to find out what gives...

    ReplyDelete
  65. Anonymous December 12, 2011 6:14 AM

    Regarding your question... "the IRS was trying to get you to say that your violation was willful. Did they say that and was it based on the 'Schedule B' question ?"

    Close, but not quite correct.

    When the Opt Out instructions were finally posted in June, and I read and digested them, I saw that both I and the Examiner were supposed to present our respective statements of Fact to a Management Committee. I assumed (or feared), that if there was a strong disagreement between us at that time, the Examiner's position would trump mine, as I had no standing or ability to affect their finding. You don't get a opportunity for a verbal discussion with the committee. You don’t get to plead your case at that forum and their determination is final. At least that is how I understood the process worked, and with no Opt Outs known about since the beginning of the 2009 OVDP, my Examiner had no further insight as to what to expect.

    So, I had a frank discussion with my Examiner as to what she was going to find. She was a pretty determined little girl that I was “willful” (black and white) and that was what would be in her facts, but then conceded that maybe I wasn’t as “willful” as the whales and my degree of willfulness was less, maybe 1 or 2 on a scale of 10. Of course, I totally disagreed with her, and pointed that while I appreciated she did recognize I was not the IRS target whale, there was nothing in her IRM that spoke to degrees or scales of willfulness, and I could not accept her finding and the penalty implications outside the OVDP. Schedule B was what she was hanging her willful hat on in spite of the many arguments I had previously made to the contrary.


    So, that was the disagreement that triggered my decision to go to the TAS, and in the end get a lesser penalty using FAQ 35 relief and a nonwillful finding which she signed. In this respect, it was kind of a back door Opt Out where discretion was applied as I hope will happen in OVDI Opt Outs.

    ReplyDelete
  66. HI Jack,

    I sent my complete package in May and I havent heard anything. In your experience, and with other here, have any of you been assigned an agent if you had sent in before the August deadline?

    Thank you

    ReplyDelete
  67. Yes, we have been assigned agents, but I think (without going back to all of them) the ones assigned agents were persons who came in during the period between OVDP and OVDI and were then shunted into OVDI, so we had the preparation process far enough along that we could submit before August. I can't recall that we have any that came directly into OVDI 2011 that submitted final packages before August.

    I think it is hit or miss as to whether (i) it is assigned and (ii) the agent can get to it timely.

    Jack Townsend

    ReplyDelete
  68. Jack,

    How would I know if I have been assigned an agent ? Would he/she send me a letter to say "Hello, I am John/Jane Doe, I am now working on your case".

    It seems to me that unless there is something going on (such as needs more docs etc), the agent does not really communicate with the taxpayer. Is it possible someone would get a form 906 out of blue ?

    ReplyDelete
  69. ij

    In the OVDP, I first got a letter, then a call. Don't know if the procedure will be different for you.

    ReplyDelete
  70. To ij...December 12, 2011 7:14 PM

    Yes, Looks like some people who applied in June have
    got their final agreements (form 906) from IRS.

    http://sktaxes.com/?p=425

    ReplyDelete
  71. Anonymous: Thanks for the NYS tax program tip!
    A real gem of information. thanks again.

    I would again like to reiterate, the US government feigns surprise at GLobal Citizens, but Not Global corporations. Hypocrisy. The reuters article is staggering: $2.2Bn from minnows! What savagery. Lucky that "Just Me" was able to at least get the ear of a journo.

    I fear, Many of the other minnows wouldn't stand a chance: just be fodder to the system. God Bless.

    ReplyDelete
  72. Kiers...

    Thanks for your acknowledgement.

    Luck comes with a lot of perseverance and generous expenditure of my remaining LCUs. :) My emails would fill a book as a testament to the "luck" of finding Amy who showed an interest in the story.

    This falls into the category of making your own luck.

    I encourage others to keep trying. One story does not a campaign make. There are those in Canada who have done much more than I to get their story public, and I rode on their backs to interest Amy.

    ReplyDelete
  73. @Just Me: I was thinking, the ONLY type of taxpayer that's going to be caught up in this FBar law is the minnow! Did you read the "exclusion" from being penalized IF you can get your "paid professional lawyer" to fess up that they were responsible for neglecting to inform you about reporting your Fbar and schedule B tick box!

    Obviously, I am guessing here, that groups over a certain income who have had long standing paid relationships with such "paid professional lawyers" would have NO DIFFICULTY satisfying that built-in loophole.

    That leaves us DIY minnows. How twisted is that?

    ReplyDelete
  74. To Kiers December 14,2011 2:01 AM

    I suppose that some professionals might fall on the sword for their clients and might even require some remuneration comfort to do so. But, professionals can be subject to discipline sanctions under OPR and, should the IRS smell a rat in the professional's "confession" of malpractice, the gambit might not work and the taxpayer and the professional might face additional criminal and civil sanctions. Bottom line, a professional should think twice before doing that for even a good client.

    Of course, if the professional really did screw up and not properly inform the client, he or she should fess up.

    Jack Townsend

    ReplyDelete
  75. Would a professional admit openly to having screwed up (unless there is a document trail) ? At the very least, they would admit incompetence, at the very most leave themselves open to damages.

    I suppose there could be rare cases where a highly paid lawyer/professional would do so to oblige a very wealthy client, but that leaves them open to the penalties Jack describes.

    ReplyDelete
  76. Kiers,

    I will just leave it with Jack's comments, as I have nothing more to add. Still, I wonder about the Minnow to Whale ratio in the programs, and hopefully, the ACA FOIA request, which will take about a year, I bet, might shed some light on that issue.

    ReplyDelete
  77. I filed my OVDI package and filed the amended returns for federal. I live in Minnesota state and was wondering if I should file the amended state taxes now or wait until the final OVDI closure and then file the amended taxes for state.

    Any idea it it makes a difference in interest/penalties if I wait till first week of Jan 2012 vs file them by end of 2011?

    Thanks

    ReplyDelete
  78. To anonymous above......

    It is best to have the federal returns finalized until the MN state returns are filed or else if the examiner determines that the numbers should be different then you would have to file the state returns again.

    ReplyDelete
  79. Does Amy Feldman have the following correct?

    "...the penalty for failing to report foreign accounts was generally 25 percent of the highest aggregate balance between 2003 and 2010, plus an additional penalty of $10,000 for each FBAR not filed..."

    I sent a check for the unpaid taxes, interest, and the 12.5% penalty, but never included $10,000 for the FBAR penalty. I am confused (and worried).

    ReplyDelete
  80. Anonymous December 30, 2011 1:04 PM

    The posted information is not correct. You would not pay the 12.5% penalty for a balance under 75K and then pay an additional 10k per FBAR year. As a matter of fact, within the program there is no reference to a 10k penalty. Now if one opted out and refused to pay the in lieu of penalty(12.5%) as stated in your case, then upon examination after opt out the IRS could impose a 10K per year penalty even on a non-willful case. Rest easy friend. It sounds like you already paid the correct amount.

    Anon123

    ReplyDelete
  81. Anonymous December 30, 2011 1:04 PM

    Not too worry, she got a little confused. I think she was talking about the OVDI and should have left off the "plus" statement.

    ReplyDelete
  82. oh, also:

    "I sent a check for the unpaid taxes, interest, and the 12.5% penalty, but never included $10,000 for the FBAR penalty. I am confused (and worried)."

    Hopefully you included 20% accuracy penalty on the back taxes as that was part of the deal too. If not they will likely bill you for it but it should not be that much with a high balance of under 75k.

    Anon123

    ReplyDelete
  83. Thanks to Anon123 and Just Me re. the Amy Feldman article.

    I did send the accuracy penalty, but was a little freaked out I missed something about the 10k FBAR penalty. The fear that I missed / overlooked something has a way of creeping in now and then when I read about how draconian the IRS will be.

    Thanks and let's hope 2012 brings a positive resolution to this collective nightmare!

    ReplyDelete
  84. To Anonymous December 30, 2011...

    There is good news about Sally and her Opt Out results, so hope you have read this more recent thread... Don't know your situation or facts, but maybe there is some hope for you... :)


    http://federaltaxcrimes.blogspot.com/2011/12/opting-out-of-ovdi-and-ovdp-what-is.html?

    Happy New Year...
    Be sure to watch the Sydney Harbor Fireworks. A great way to bring in a better year...
    http://www.youtube.com/watch?v=_crNUYe3q8g

    ReplyDelete
  85. Just in. Experiences and views in OVDI.

    Thank you Jamess Fallows. Thank you Just Me for getting these viewed aired.

    http://www.theatlantic.com/international/archive/2012/01/the-fatca-menace/250763/

    ReplyDelete
  86. Anon 5%...

    James Fallows has now posted a trilogy, called the FATCA Chronicles dealing with the US citizenship taxation model, Fatca, FBAR, etc. Here is the link to all of them in order of posting... I am very appreciative for the outlet his column has provided.

    Fatca - The Menace You'll Hear About in 2012
    http://bit.ly/uzB7nk

    The Fatca Menace!
    http://bit.ly/uXbQyQ

    The Fatca Chronicles: Tales From China, Canada, and Estonia
    http://bit.ly/sYYMgy

    It has taken a while to get a person in the public opinion forum interested in the subject, but James has sunk his teeth in for the new year. Now the conservation and the debate has started, we need to keep it going to assist with the education of normal Americans, and attempt to keep it non partisan, in my opinion. I know James trilogy is narrowly defined toward the Expat perspective, but there is nothing but fear stopping Immigrants from making their voices heard too. Email James. Maybe he will provide an outlet there also. You never know, and you never get anywhere unless you try.

    ReplyDelete
  87. Jack,
    Any news of any OVDI 2011 participants being close to receiving the 906?
    Thanks
    Anon123

    ReplyDelete
  88. Lawyers & Attorneys took more money from me than the IRS.

    This whole thing stinks which ever way you look at it.

    We need smaller govt. Eliminate GOVT Tyranny by squeezing these bloated departments whose only purpose is to take taxpayer money and then harass tax payers.

    ReplyDelete
  89. To Anonymous January 7, 2012 6:56 AM

    While I understand your anger at having to pay a lot in Attorney fees, in fairness, Lawyers and Attorneys didn't take it from you. You entered into a voluntary relationship. There were other choices you could have made, and that was to go the route of self education and do the process yourself instead of paying for the full service approach.

    This is not like the Catholic church in the dark ages, where you needed a priest to intercede for you with God and you had to pay the priest indulgences for your sins. You just thought you did!

    The limited money I spent on Attorneys I thought was value for the money spent. It came at critical decision points, rather than full service processing, but it did still cost me in LCUs instead of attorney $, and that was choice I made.

    But, as you say, and I can't disagree with, the entire OVDP/OVDI process does stink.

    I just saw a story yesterday about the IRS announcing new Policies on Innocent Spouse Relief. http://bit.ly/zoMdfA

    It said "that requests .... are granted in the initial stage of the administrative process."

    Now why in hell couldn't the IRS do this in the OVDI/OVDP rather than putting everyone through hell (financially and emotionally) on their assumption that we were all criminal Whales, before allowing an Opt Out at the end of the process? That is what cost all the money and time, and that is what I am more angry about!

    The innocent spouse relief (if reported accurately) shows me the IRS can learn from their stupid processing rigidity eventually, and should have applied something similar from the "get go" on the OVDPs. Maybe the TAS will force this on them if Shulman chooses the right political decision. See Jack’s most recent blog:

    Tax Notes Discusses Dispute Between the Taxpayer Advocate and the IRS About OVDP 2011 (1/6/12)

    ReplyDelete
  90. The international press is reporting on FATCA and FBAR consequences, even in foreign languages. A full page spread on FATCA and FBAR appeared on Monday, January 9, 2012 in Sweden’s Dagens Industri print edition which, is the Swedish equivalent of the FT in the UK and the WSJ in the US.

    Before listing the points made in the bylines, Lisa would like to thank Just Me and Canadians. Their torrent of activity inspired her to speak with the press in her country. While it is just a drop in the bucket from that part of the world, the ocean is made of up of a lot of drops ...

    This article is interesting because it reports how one American abroad in a non tax haven is getting beat up from both FATCA and FBAR. High penalties, high bank fees and account denials. There is also a sidebar that points out, based on interviews by the author, that most banks and financial advisers in Sweden have no idea what FATCA is. When they find out things could get worse for Americans. Many of the smaller financial institutions have already closed out American customers while the bigger ones do not yet know what they will do. They are considering charging Americans higher fees.

    The reporter is Martin Rex (martin.rex@di.se). Last May he wrote an article in the Swedish press called “American Taxhunt can cost Swedish Banks their Shirts”. It just goes to show that other countries have given FATCA a lot more thought than its US authors have.

    The article is not in the online version of the newspaper. If you want a copy for your compendium of FATCA and FBAR articles so you can run it through Google Translate yourself, try writing the author.

    The main article has the title "Pressure on Customers" with the byline "The USA's intensified hunt for tax cheats has hit American citizens in Sweden hard. In addition to receiving high fines, those who make a
    mistake in the labyrinth of difficult forms also risk being banned from Swedish banks." The bylines in the main article state: "Americans blacklisted". "Insecurity in the (banking) branch" "Heavy fines".

    The case of Lisa, a Swedish-American resident in Sweden is described. She was initially denied an bank account because she was American, but eventually got an account because she did not live in the States. The author states that she was also subject to FBAR fines for not sending in the FBAR form on time. He says that Lisa is not alone and it could happen to any American anywhere in the world regardless of whether they are a citizen or have a Green Card. He says that Americans can lose their life savings by being ignorant of these filing requirements.

    He ends with a quote from Lisa. "I am in shock. How can it be possible to owe money to the IRS for the rest of your life for not filling in a form?"

    Sound familiar?

    ReplyDelete
  91. Third offshore voluntary disclosure opened.
    Penalty is 27.5%

    IRS Offshore Programs Produce $4.4 Billion to Date for Nation’s Taxpayers; Offshore Voluntary Disclosure Program Reopens

    WASHINGTON — The Internal Revenue Service today reopened the offshore voluntary disclosure program to help people hiding offshore accounts get current with their taxes and announced the collection of more than $4.4 billion so far from the two previous international programs.

    The IRS reopened the Offshore Voluntary Disclosure Program (OVDP) following continued strong interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programs. The third offshore program comes as the IRS continues working on a wide range of international tax issues and follows ongoing efforts with the Justice Department to pursue criminal prosecution of international tax evasion. This program will be open for an indefinite period until otherwise announced.

    ReplyDelete
  92. IRS Reopens Offshore Disclosure Program

    http://www.bloomberg.com/news/2012-01-09/irs-reopens-voluntary-disclosure-program-for-offshore-assets.html

    ReplyDelete
  93. Lisa...

    It has taken me a while, but I wanted to thank you for your post about the Swedish Story. I did email the Reporter and he was kind enough to send me a PDF of the entire page. Google translate works reasonably well so as to be able to read it. I love that FATCA is always translated as FATCAT. :)

    Martin did a good job reporting the realities of FATCA, and if that paper has any readership at all, then they know more than most Americans do.

    I also noted that he was pretty explicit in pointing out that this affects more than US citizens. He stayed away from the "US Person" category as most are not familiar with the term or concept. Prior to 2009 I had never heard of it, but then I am not a tax attorney.

    He said, “The aim is to give American authorities greater opportunities finding and taxing U.S. citizens and people with American residence permit. “

    Thanks again...

    ReplyDelete
  94. Anon123
    would you mind sharing your fbar penalty and the number of accounts?

    ReplyDelete
  95. HSBC provided Indian client information to US?

    http://indiancpa.us/2012/01/18/recent-updates-unreported-foreign-bank-accounts-assets-and-income-%E2%80%93-fbar-non-compliances-2011-ovdi/

    ReplyDelete
  96. Hi Jack -

    Do you think OVDI'11 case processing is working slower than VDP'09? I looked at timeline of people like Just Me, Anon 123, and Sally and seems like their case processing started within 9 months from entering program and they received their first 906 within 15-18 months of start of program. I have filed my package for last 9 months and I have not heard anything. Maybe they are backlogged because of VDP participants who are arguing for 5% or 12.5% penalties given the retrospective relief provided by IRS. Any insight would be appreciated.

    ReplyDelete
    Replies
    1. My experience is very anecdotal. I have cases still pending from OVDP 2009. I have some cases processed for OVDI 2011 (not the ones in which I expect the clients will opt out). It does seem to be going slower over time, but I have no information as to what the apparent slow down is attributable to.

      Jack Townsend

      Delete
    2. Thanks Jack. Appreciate your inputs. IRS case processing sounds like a "Random Walk"

      Delete
  97. 2009 cases still in the works? Its been so long but I think the deadline to join 2009 was October 15 of 2009 was it not? That indicates that those that joined even at the deadline are grinding through the third year of processing. Simply incredible.
    I am starting to wonder where ij is. Have not seen a post from him in a while. Are you still out there ij? How is your situation moving along?

    Anon123

    ReplyDelete
    Replies
    1. Anon 123 your case processing was much faster... i know my attorney still has half a dozen 2009 cases still on his hands and none of his 2011 cases have been assigned an agent.

      Delete
    2. That is incredible. And they want the potentially millions of expats and immigrants with these issues to enter what for some is a 2 year plus... program. Surely there is a better way. Remember that IRS highly discouraged quietly filing amended returns. They stated that the way to resolve these issues is to join the program. They failed to mention that you may be left hanging for what now looks like up to three years. I am so glad I entered the first wave and did so early. My results sucked but after almost 2 years at least I got the golden ticket(906). I wish you luck for some relief from this madness. I know many people are just staying under cover rather than going through this song and dance. Makes you wonder if they made the right choice. I honestly feel that being compliant is the right thing. But going through this drawn out process only to be slammed with confiscatory penalties defies logic. I wonder if vast numbers of opt outs are causing additional delays. I really feel for those who joined in 2011 or 2012. Maybe they will get done by 2015.

      Anon123

      Delete
  98. Haplessly FlounderingMay 18, 2012 at 10:21 AM

    I found out I am a "US person" after being 12 years in the USA.but I am still considered a resident "alien". The govt. can drag out the green card process for "aliens" like us and make us pay visa extension fees  regularly but come tax time, we became "US persons" -  that too without our knowledge....:O :O

    ReplyDelete
  99. Jack,

    The penalties in 2012 OVDI are:
    27.5% highest aggreg amount
    back taxes + 20% accuracy + interest
    failure to file and failure to pay

    WHAT ARE THE FAILURE TO FILE AND PAY PENALTIES FOR?
    are they for failing to file a tax return OR FBAR??

    ReplyDelete
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  101. I am a "US person" after being 12 years in the USA and had been deported ( no green card , just SS# , and bank accounts overthere ) 10 years ago. FANNY

    ReplyDelete

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