9 thoughts on “Accounting Today Talks about Renunciations”
I read this article today and had the unsettling feeling that the uncertain wording in the notice regarding the revised OVDP program meant exactly what I was afraid of:
“Since that deadline, we’ve had several people who came in who made disclosures because they were told in some manner that their name was about to be released by their banking institution,” said McKenzie. “This new program gives us a great deal of certainty about what might occur because the IRS has made it clear that those who came in during the gap from September to January now will be treated under the January program, so that part of the program was good. There’s certainty. We know exactly what penalties people potentially face, and we can quantify that for our clients.”
A few paragraphs down, it does indicate those in Canada may be viewed more sympathetically, but we all know how that goes…
It sounds like the December statement was another “bait and switch.” I sent 4 returns/FBARs just after and now and really afraid I’m going to see some penalties. Is it just me or is the lawyer jumping the gun here?
I did a long post in the comment section at Accounting Today, and it did not take, html, restrictions, I think. I modified and tried again. Still it did not take, so emailed the Editor with the message, and he responded a couple times.
Basically he wrote in appreciation for the comment, and that I was reading his article. He noted his references to the TAS and TAD had come from previous stories I had emailed him about the Tax Notes article on this conflict. (see email has impact!)
He was not sure why it did not post, character number restriction, most likely. I do get too wordy (as you can tell). I have been busy today, but will cut it down in size and see if I can get something to stick. In the meantime just in case anyone comes by here with any interest, I will post here. Nothing earth shaking or unknown to regular readers and commentators here.
Comment to Accounting Today:
Thanks for writing about this story and giving it some sunlight.
The problem for the OVDP program, is that the IRS has lost trust with the taxpayers.
There is a good write up about this by an Expat in Canada on this subject.
Title name: Taxpayer Advocate vs. The IRS – It’s a question of trust
Please Google the title, as I can not put a link in here. It is on the IsaacBrockSociety blog.
Now Shulman has 8 days left to do the right thing, and affirm Nina Olson’s TAD. It is due by January 26th. Will he do it, or just ignore the warning of the harm his agency is doing to the US image abroad and the unfairness of his practices?
He calls his program successful, and having compliance impact, but it also may not be the impact he desires. US Citizens around the world, who are now becoming aware of IRS practices and US penalties, are joining in an anti American advertising chorus to all would be immigrants. Know the risk before signing up for a Green Card or immigrating to America. Don’t do it. It is just not worth the Cost anymore! The penalty risk is extreme!
Good work Shulman, is this the message you wanted out around the world? “Stay away from America” “Do not become a “US Person!”
Btw, what is a “US Person?” It is more than a Citizen, and if you want to read more about the Consequences of being a “US Person” then read this from an US Expat living in France. Again, you will have to google it.
“The Consequences of Being a U.S. Person” at the Franco-American Flophouse.
Frankly, stepping back a moment from the IRS and TAS dispute, the IRS VDP overreach is just symptomatic of a basic core problem:
The Citizenship taxation Model.
The poorly thought out and ham-handed VDP IRS campaign in pursuit of offshore accounts (Whale tax cheats in the homeland) has had one benefit. It has raised awareness that the US income tax model is based upon a misguided policy. The fallacies of the US Citizenship taxation model is laid bare for the world to see.
Every other OECD country taxes on a territorial system, but the US asserts its right to keep its Citizens under a life long tax paying contract (some would say servitude) to the IRS no matter where in the universe they live, be it the Moon, Mars, Canada, New Zealand, Australia, Brazil or France.
Analogous example would be if you were born in California and later moved to Kansas. You would not expect California to continue to assert its right to tax you now that you are resident in Kansas, right?
That is a territorial taxation system, that is logical and makes sense, and every country in the whole wide world, except Eritrea, follows it. We keep good company, eh?!
If you move from New Zealand, and take up residency in Australia, New Zealand doesn’t tax you on your income in Australia while you are residing there. It does not expect you to file out endless forms or assert huge penalties for not reporting your normal Australian checking Account. The US in contrast wants to penalize you, at a minimum of $10,000 for each “nonwillful” failure to report your bank account on a FBAR form. The penalties can be as much as 50% of the account if they consider your failure to be willful. BTW, you are guilty until you prove yourself innocent! Lovely, eh?
The burden is immense, if you really try to follow the rules and be compliant. Homeland Americans have no idea! There is a graph on an (AARO) web site I am going to provide you below, that clearly shows the differences between what someone living overseas has go to through versus someone in Kansas to remain compliant with every Statute and regulation issuing forth from Congress and the IRS.
Is it any wonder that many are reconsidering the value of a Passport or a greencard and are relinquishing them?
Unfortunately that is not easy either, and the cost and procedures you have to go through just to get out from under the double taxation that does occur when you reside overseas is enormous. You can’t simple “relinquish” a passport, you have to “denounce.” That sounds as emotionally traumatizing as it is, and yet many are now doing that now due to the enormous compliance burden and fear of the IRS extra territorial overreach. Again, Homeland Americans and the Dear Comrade Commissioner Shulman have no idea.
Finally, there is a very good argument to be made that Citizenship taxation is a job killer for the Homeland.
There is an article that makes a strong case that we should be unloosing the shackles on US citizens abroad, not tightening them down with new laws like FATCA and VDP witch hunts to exposure, penalize US Citizens abroad for having normal offshore accounts and not reporting income back to America.
A Winning Formula for Economic Growth: Americans Abroad = Increased Exports = Domestic Jobs
Again, you will have to Google that title, and end up on a web page of The Association of American Residents Overseas (AARO). Also, American Citizens Abroad (ACA) has lots of material and information on these subjects. Dear readers, arm yourself with information before you decide to go abroad to live, or decide to apply for a green card.
Thank you William for your efforts to educate others on this much ignored and misunderstood subject.
Oops… First name of editor, was Michael not Williams… duh!
Great comment, Just Me.
And I echo what everyone else has said about trust. They lost it. Nobody believes them anymore. At this point about the only thing that would make me even start to trust them would be a message straight from President Obama saying that he is putting the IRS on a leash and that a full amnesty for all U.S. persons will be implemented immediately.
And if that turned out to be a lie too then I would give it up.
@ Just Me
Exactly. I think that not only are they missing a huge opportunity to increase US exports by having US citizens based around the world to promote US products, but they are in fact causing the exact opposite to occur by creating hordes of bitter, disenfranchised “US Persons” who, instead of positively promoting the US and US products, are more likely to warn all friends and contacts to under no circumstances move there, invest there, or have any significant relationship whatsoever with the US. Great PR campaign..
To anyone still reading this thread. A call to arms, or should I say, a call for help with rebuttals.
If you have time to look at the Accounting Today article and respond to one Posted by: jwellman | January 19, 2012 9:19 AM, that would be great. Help this person understand what is wrong with the Citizenship taxation model. It might be good if someone else chimes in besides just me. I understand their point of view, as it is a typical provincial U.S. view, but maybe we can help this person understand that there is another perspective. Thnx
btw, the limit seems to be 4000 characters that that you need that much! , and no html. 🙂
not that you need that much! … grrr..
BTW, I just discovered that Accounting Today, had another article on the new OVDI, entitled…
Groundhog Day for IRS Voluntary Disclosure Do-over
Dated January 11, so a bit dated now.
I have to give this MICHAEL COHN, EDITOR-IN-CHIEF of , ACCOUNTINGTODAY.COM some credit for writing about these issues regularly, and so feel somewhat compelled to go back and post something so he knows that there are some Minnows reading what he is saying. I probably won’t argue too much about anything he got wrong, rather just add something about how Accountants measure success. This is Accounting Today, after all!
I read this article today and had the unsettling feeling that the uncertain wording in the notice regarding the revised OVDP program meant exactly what I was afraid of:
“Since that deadline, we’ve had several people who came in who made disclosures because they were told in some manner that their name was about to be released by their banking institution,” said McKenzie. “This new program gives us a great deal of certainty about what might occur because the IRS has made it clear that those who came in during the gap from September to January now will be treated under the January program, so that part of the program was good. There’s certainty. We know exactly what penalties people potentially face, and we can quantify that for our clients.”
A few paragraphs down, it does indicate those in Canada may be viewed more sympathetically, but we all know how that goes…
It sounds like the December statement was another “bait and switch.” I sent 4 returns/FBARs just after and now and really afraid I’m going to see some penalties. Is it just me or is the lawyer jumping the gun here?
I did a long post in the comment section at Accounting Today, and it did not take, html, restrictions, I think. I modified and tried again. Still it did not take, so emailed the Editor with the message, and he responded a couple times.
Basically he wrote in appreciation for the comment, and that I was reading his article. He noted his references to the TAS and TAD had come from previous stories I had emailed him about the Tax Notes article on this conflict. (see email has impact!)
He was not sure why it did not post, character number restriction, most likely. I do get too wordy (as you can tell). I have been busy today, but will cut it down in size and see if I can get something to stick. In the meantime just in case anyone comes by here with any interest, I will post here. Nothing earth shaking or unknown to regular readers and commentators here.
Comment to Accounting Today:
Thanks for writing about this story and giving it some sunlight.
The problem for the OVDP program, is that the IRS has lost trust with the taxpayers.
There is a good write up about this by an Expat in Canada on this subject.
Title name: Taxpayer Advocate vs. The IRS – It’s a question of trust
Please Google the title, as I can not put a link in here. It is on the IsaacBrockSociety blog.
Now Shulman has 8 days left to do the right thing, and affirm Nina Olson’s TAD. It is due by January 26th. Will he do it, or just ignore the warning of the harm his agency is doing to the US image abroad and the unfairness of his practices?
He calls his program successful, and having compliance impact, but it also may not be the impact he desires. US Citizens around the world, who are now becoming aware of IRS practices and US penalties, are joining in an anti American advertising chorus to all would be immigrants. Know the risk before signing up for a Green Card or immigrating to America. Don’t do it. It is just not worth the Cost anymore! The penalty risk is extreme!
Good work Shulman, is this the message you wanted out around the world? “Stay away from America” “Do not become a “US Person!”
Btw, what is a “US Person?” It is more than a Citizen, and if you want to read more about the Consequences of being a “US Person” then read this from an US Expat living in France. Again, you will have to google it.
“The Consequences of Being a U.S. Person” at the Franco-American Flophouse.
Frankly, stepping back a moment from the IRS and TAS dispute, the IRS VDP overreach is just symptomatic of a basic core problem:
The Citizenship taxation Model.
The poorly thought out and ham-handed VDP IRS campaign in pursuit of offshore accounts (Whale tax cheats in the homeland) has had one benefit. It has raised awareness that the US income tax model is based upon a misguided policy. The fallacies of the US Citizenship taxation model is laid bare for the world to see.
Every other OECD country taxes on a territorial system, but the US asserts its right to keep its Citizens under a life long tax paying contract (some would say servitude) to the IRS no matter where in the universe they live, be it the Moon, Mars, Canada, New Zealand, Australia, Brazil or France.
Analogous example would be if you were born in California and later moved to Kansas. You would not expect California to continue to assert its right to tax you now that you are resident in Kansas, right?
That is a territorial taxation system, that is logical and makes sense, and every country in the whole wide world, except Eritrea, follows it. We keep good company, eh?!
If you move from New Zealand, and take up residency in Australia, New Zealand doesn’t tax you on your income in Australia while you are residing there. It does not expect you to file out endless forms or assert huge penalties for not reporting your normal Australian checking Account. The US in contrast wants to penalize you, at a minimum of $10,000 for each “nonwillful” failure to report your bank account on a FBAR form. The penalties can be as much as 50% of the account if they consider your failure to be willful. BTW, you are guilty until you prove yourself innocent! Lovely, eh?
The burden is immense, if you really try to follow the rules and be compliant. Homeland Americans have no idea! There is a graph on an (AARO) web site I am going to provide you below, that clearly shows the differences between what someone living overseas has go to through versus someone in Kansas to remain compliant with every Statute and regulation issuing forth from Congress and the IRS.
Is it any wonder that many are reconsidering the value of a Passport or a greencard and are relinquishing them?
Unfortunately that is not easy either, and the cost and procedures you have to go through just to get out from under the double taxation that does occur when you reside overseas is enormous. You can’t simple “relinquish” a passport, you have to “denounce.” That sounds as emotionally traumatizing as it is, and yet many are now doing that now due to the enormous compliance burden and fear of the IRS extra territorial overreach. Again, Homeland Americans and the Dear Comrade Commissioner Shulman have no idea.
Finally, there is a very good argument to be made that Citizenship taxation is a job killer for the Homeland.
There is an article that makes a strong case that we should be unloosing the shackles on US citizens abroad, not tightening them down with new laws like FATCA and VDP witch hunts to exposure, penalize US Citizens abroad for having normal offshore accounts and not reporting income back to America.
A Winning Formula for Economic Growth: Americans Abroad = Increased Exports = Domestic Jobs
Again, you will have to Google that title, and end up on a web page of The Association of American Residents Overseas (AARO). Also, American Citizens Abroad (ACA) has lots of material and information on these subjects. Dear readers, arm yourself with information before you decide to go abroad to live, or decide to apply for a green card.
Thank you William for your efforts to educate others on this much ignored and misunderstood subject.
Oops… First name of editor, was Michael not Williams… duh!
Great comment, Just Me.
And I echo what everyone else has said about trust. They lost it. Nobody believes them anymore. At this point about the only thing that would make me even start to trust them would be a message straight from President Obama saying that he is putting the IRS on a leash and that a full amnesty for all U.S. persons will be implemented immediately.
And if that turned out to be a lie too then I would give it up.
@ Just Me
Exactly. I think that not only are they missing a huge opportunity to increase US exports by having US citizens based around the world to promote US products, but they are in fact causing the exact opposite to occur by creating hordes of bitter, disenfranchised “US Persons” who, instead of positively promoting the US and US products, are more likely to warn all friends and contacts to under no circumstances move there, invest there, or have any significant relationship whatsoever with the US. Great PR campaign..
To anyone still reading this thread. A call to arms, or should I say, a call for help with rebuttals.
If you have time to look at the Accounting Today article and respond to one Posted by: jwellman | January 19, 2012 9:19 AM, that would be great. Help this person understand what is wrong with the Citizenship taxation model. It might be good if someone else chimes in besides just me. I understand their point of view, as it is a typical provincial U.S. view, but maybe we can help this person understand that there is another perspective. Thnx
btw, the limit seems to be 4000 characters that that you need that much! , and no html. 🙂
not that you need that much! … grrr..
BTW, I just discovered that Accounting Today, had another article on the new OVDI, entitled…
Groundhog Day for IRS Voluntary Disclosure Do-over
Dated January 11, so a bit dated now.
http://www.accountingtoday.com/news/Groundhog-Day-IRS-Voluntary-Disclosure-Do-over-61387-1.html#
I have to give this MICHAEL COHN, EDITOR-IN-CHIEF of , ACCOUNTINGTODAY.COM some credit for writing about these issues regularly, and so feel somewhat compelled to go back and post something so he knows that there are some Minnows reading what he is saying. I probably won’t argue too much about anything he got wrong, rather just add something about how Accountants measure success. This is Accounting Today, after all!