Some of the readers of Barrie McKenna’s new article, Watchdog slams IRS for alienating expats, are still unhappy. But I thanked Mr. McKenna for telling this very important side of the story:
It is very nice to see you pick up the story of the Tax Advocate Service, which is the branch of the IRS sympathetic to the plight of Americans abroad. Nina Olson is a glimmer of light in a very dark and sinister place. I thank you for telling that part of a very complex narrative.
You do allow the IRS to assert their formal response, without rebuttal, “measures are in place to prevent taxpayers from being subjected to financially devastating penalties.” The devastating penalties relate to FBAR fines, which can be up to 50% of the a person’s financial wealth per annum for up to six years (i.e., circa 300%). Such fines are not merely devastating but game changing. Congress increased FBAR fines in 2004, to create compliance (!). Is it any wonder that when the IRS offers an “amnesty” of only 20-25-27.5% and then systematically applies it to the 2009 OVDP people, like my good friend FBAR_Compliant whose story is now famous, that the so-called “Amnesty” itself is devastating?
This is why the IRS is a thug organization and why Nina Olson is a great heroine: the IRS fined Marvin van Horn (who told his story to Reuter’s Amy Feldman) $170,000, but the TAS (Olson) advocated for him until the fine was only $25,000 non-wilful fine, an 85% reduction of what the IRS wanted from him!
Yet whether it is $25K or 170K, it makes little difference: it is the deprivation of life, liberty or property without due process of law (5th amendment)–the FBAR law with its attendant fines is a violation of the 4th amendment (creating a general warrant), 5th amendment (self-incrimination), 6th amendment (if ever tried criminally, where would a person have to go? –to the US, a far away land), 8th amendment (Excessive fines of a percentage of a person’s wealth). An FBAR is a procedure whereby a person voluntarily relinquishes his 4th amendment right to a require a specific warrant before handing out papers to the US Federal government–it is the equivalent of a general warrant–a specific warrant requires probable cause, oath or affirmation (of arresting authority), and a description of place to be searched, and the persons or things to be seized. Forcing millions of unnamed people to handover their bank information without a warrant and without probable cause is a circumvention of the 4th amendment and it is thus an illegal law. For in most cases, there is no probable cause of an underlying crime!
Canadian residents should know that the government of Canada will not collect FBAR fines. Furthermore, Canadian citizenship is the best protection against US government overreach.
Thanks again for writing about the TAS. Now, I can put you in touch with some Canadians who have been devastated by these tax issues, so the readers of the Globe can see the other side of the story.
Peter W. Dunn, http://issacbrocksociety.com