We received the following comment from 30 Year IRS Vet:
This web site is a wonderful opportunity for people to vent about the new IRS initiative to focus on offshore compliance. I would guess that most people fall into one of two categories: those who are “off the grid” and do not file nor do they have any intention of becoming compliant with their US federal tax obligations and those who are sincerely attempting to figure this all out and determine what to do and then make a good faith effort to comply.
For those in the second category, here is a thought from a 30 year IRS veteran attorney. The name of the game here is the abatement of civil penalties (assuming your tax problems do not arise from an illegal activity). Under widely recognized IRS procedures, civil penalties can be abated upon a showing of reasonable cause. That could mean reliance on the wrong advice of a professional, or ignorance of the law, say for someone who has lived in Canada all their lives and is an “accidental” US citizens who never had any reason to know about FBARs or FATCA.
At the present time, the IRS is under an enormous amount of pressure to “be reasonable” in its administration of these new penalties and statutes. If you happen to “get caught up in the system” and the IRS comes after you, you can be sure at some time you will get a computer generated notice with penalties stacked up automatically. If you choose to cooperate and play the game, it is usually an easy matter to get to talk to a human being and talk some sense into them and agree to pay the tax owed but get all the penalties abated.
My initial response to him was as follows:
Perhaps you misunderstand. We are not here to “vent” as if this is some kind of gab session. Neither are we here to figure out some way to reduce civil penalties as though we admit being some kind of tax cheats as the media in the United States has constantly called us. Nay, we are here to fight the IRS and to encourage the politicians in our countries to stand up for us.
Many of us aren’t even really Americans, at least not according to international law. We are of dominant Canadian or other nationality. But your portrayal of our activity here as “venting” is condescending. If you want to help us, then please help us by fighting. We are not going to back down, and we are not going to compromise with the IRS.
Now, hopefully this attorney won’t mind answering questions as Blaze has already started. There are some here who desire to comply with the United States’ illegal extra-territorial tax grab. I am not interested in compromise or compliance, beyond what is necessary to satisfy the requirements of my government, that is the government of Canada. The United States is a foreign country to me. I am no longer an American as 28 February 2011. However, anyone wishing to employ 30-yr IRS vet, I’m sure he wouldn’t mind if I told you how to get a hold of him.
UPDATE: Response from 30-yr IRS vet:
Dear Petros. Touché, and I applaud you and respect your anger. Having done federal tax for 41 years I have never seen something as controversial and volatile as this issue. I must say based on my experience in working for the IRS that the Washington never considered or could have anticipated the problems with the new rules which are specific to Canadians. We don’t want to alienate our good neighbors to the North. I can tell you that Washington is certain to consider the problems of Canadians under FATCA and I am sure they will be addressed in the regulations once they are published and the whole world has a chance to comment.