Liberty and justice for all United States persons abroad

The Isaac Brock Society

Posted on by Posted in Issues regarding US persons abroad 20 Comments

Cross posted from RenounceUScitizenship

If this is true, it is will go down as one of the best examples of the worst judgment in the history of the IRS. You will find the complete write up on this story here:

If there is anybody who does not know the story behind this, you can either learn about it or refresh your memory in a post titled:

Taxpayer Advocate vs. The IRS – It’s A Question of Trust

I must admit that I am shocked by this. Commissioner Shulman has said on numerous occasions that it is his goal to “get people back into the U.S. tax system”. This clearly assumes that the IRS can be trusted to act in a predictable manner.  In this instance the IRS has:

1. Changed the rules two years on March 1, 2011 two years after the OVDP program had started;

2. Chosen (if this is really true) to ignore a Taxpayer Advocate Directive to clean up his act.

On January 9, 2012 the IRS reactivated OVDI. He might as well discontinue the program. How could anybody enter this program, if the IRS cannot be trusted?

On  a personal note, I will loose a chunk of change. I had bet that the IRS would comply with the TAD directive. How, if the goal is to bring people back into the U.S. tax system could it do anything else? Well, guess it’s time to rethink the objectives of the IRS.

Please, Commissioner Shulman, say it isn’t true!

Your thoughts?

20 thoughts on “Tax Analysts reports that IRS Commissioner Doug Shulman will simply ignore his statutory duty to respond to TAD”

  2. The difference between God and the IRS is God doesn’t think He is the IRS. God also isn’t a bully or a thief.

    Shulman is the devil trying to disguise himself as Moses carrying out Commandments of Congress.

  3. If the IRS wants to improve it’s public image the first thing they should do is fire Shulman and replace him with Nina Olson.

  5. I wouldn’t be surprised. As for whether or not we should pay taxes because it is the law, I would respond by pointing out that over half of U.S. households pay no taxes. Many of these same households also get money back, even though they paid no taxes. Either way you look at it all of these none tax paying households receive some form of government service.
    If the existence of the law is the sole basis for obligating a citizentry to pay taxes then the whole American revolution was an unlawful rebellion that should not be celebrated but condemned. The Founding Fathers should be looked upon as being the corrupt leaders of a lawless rabble.
    We pay our taxes to the government that represents us. In this regard the Republican party is the worse offender in our oppression because it is the party that has the rejection of double taxation as one of the core elements of its beliefs. It is also the party that rejects class warfare but yet seems to embrace class warfare when it comes to the taxing of non-resident citizens.
    Tarring all expats with the title of “tax evader/cheat” simply on the basis that some real tax evaders do inhabit the same neighborhood as law abiding expats is the U.S. government taxation equivalent to racial profiling.

  6. @Mr. Mopsick

    I guess we completely miss each other’s points. Is that called agreeing to disagree?

    I can see that your belief is THE LAW IS THE LAW, no matter the lack of common sense behind it. It appears to me that your belief is the same as Carl Levin, Douglas Shulman and so many others, including the media of the US – that expats around the world are in fact tax cheats. It is my perception from recent events that the puppets in power do not recognize that the US is following the path of other great nations in its blindness to the need for change ( such as citizenship taxation and of course the great military industrial complex warned about by President Eisenhower). It is my perception that the US, as other past great nations, will not learn from history.

    Do you have the inside answer – did the good IRS Commissioner thumb his nose at Nina Olson and the TAD he was to respond to? Has he stonewalled Nina, the mediator? Is there any way US persons abroad can respect his word or have any trust in what the IRS says they are trying to do? The Taxpayer Advocate Service was the voice of reason, our representation, but the IRS rules with an iron fist.

    Just as the law is the law is the law; I feel that a bully is a bully is a bully – whether it be a schoolmate, a marriage partner, a boss, a country or countries. It is all about control and dominance over another. When trust is gone, the relationship is dead.

    I thought it real when I was WARNED that I would relinquish my US citizenship upon becoming a Canadian citizen in 1975 – where is the US’s responsibility to have communicated to me that this was no longer true when the country changed its law? Where was my choice in the matter of retaining my US citizenship? I had made my choice – I took the Oath of Canadian Citizenship in 1975 because that is where I wanted to live, raise my family, work, pay my Canadian taxes, volunteer my time, be a contributing citizen. I liked what I experienced and what I saw for my life here in Canada.

    I foolishly thought I had no tax responsibility to the country which I had relinquished my citizenship. The US for decades turned a blind eye to me and to the estimated six million around the world regarding responsibility to file taxes. Did that not set some sort of precedent? Where was the US’s responsibility to absolutely communicate to us, all along, that we did have to file our taxes returns each year, no matter what the cost to us, no matter the little or zero revenue it brought in to the US? Where was our education on FBARs? Why does the US not even have a tax office of any kind in Canada? Why cannot we get answers to our tax questions from the various IRS phone numbers we are to call, usually with long distance charges? Why is the only advice I’ve received from the IRS is to consult cross-border accountants and US tax lawyers for my answers? Why are the regulations so complicated that my compliance depends on me being able to use my retirement savings for fees to cross-border accountants and US tax and immigration lawyers?

    I respect my heritage and also the many “good people” in the US just as you say you respect the “good people” of Canada. However, I want no more of my remaining energy to go to an unsustainable relationship. I want to regain the joy in life that I had before this tsunami hit. I want my energy to go to worthwhile endeavours in my family, my community, my country.

    It is disappointing; it is more than sad, but the marriage didn’t work.

  7. Let me speculate why IRS Commissioner Doug Shulman refusing to give fair deal to expats is because, he knows he collected a very large portion of the 4 billion from innocent expats. He agrees for a fair deal now, he has to return the very large portion from the 4 billion collected. Furthermore it cost IRS huge time to clear the mess, all the time re-doing all the OVDI/OVDP filings, just to refund the funds (especially considering the budget cuts and workforce reductions). If this is the reason he could never agree to reinstate FEQ#35 until there is a credible threat of class action law suite. In case of a law suite, he might loose more so he might concede.

    But if he is smart, he would give a simple work around out side OVDI for expats. Just file 6 years taxes and file FBAR. No penalties for non-willful FBAR failures. Automatic FBAR penalty weaver for bank accounts in countries that are not tax-heavens and the expats paid taxes on any income for the banks in their countries.

    If he continues to insist on his path, he bound to attract a massive law suit from a rich expat, who owes no taxes, but has to pay huge FBAR penalties. If it ends up in court, Commissioner Doug Shulman would have hard time defending his policies, especially since his term is ending in an year.

  8. Republican presidential candidate Santorum said: “This President’s … He alienates every one of our allies, and he’s trying to appease and negotiate with every one of our enemies.”

    Former House Speaker Newt Gingrich said Tuesday that President Obama is “dangerous” to America because his administration has lost the trust of other nations around the world, citing as proof that the United States still does not know who was hiding Osama bin Laden in Pakistan and a recent Saudi pact with China.

    Most of the duel-citizens and expats agree, Obama administration has lost the trust of six million strong expats, who were once the strongest supporters and promoters of the US interests around the world.

    I believe about 70% of the expats still not heard of FBAR trap. Also more than 50% of the green card holders have accounts in their countries, but most of them are ignoring IRS warnings, since it is nearly impossible to find such accounts in developing countries like India and China.

  9. I just received a copy of the Tax Notes in question, and due to the terms and conditions, I can not post them. I haven’t had time to read and digest, but I think I see the parsing that is occurring here…

    It comes under the Clinton category of…, “It all depends on what your definition of is is”

    Notice what this says… IRS Commissioner Douglas Shulman has no plans to respond “in writing” to National Taxpayer Advocate.

    Maybe some attorney, a 30 year vet, has parsed the language of the requirements, and determined that response can just be verbal and not formally written or not required at all..

    I can see there is argument about the codification of a TAD formal requirement vs the report to Congress which I think t he has to respond to. So, since FAQ 35 “bait and switch” plus all the problems of the IRS VD programs are in the Report to Congress, there will still have to be a formal response.

    He does have the power to ignore a TAD or not affirm it, as he obviously is doing, or at least that is my read. The buck stops there.

    At some point he still has to respond to Nina’s report to Congress, so not all is lost yet.
    .
    But,l then I don’t have a great legal mind, so I would put no weight on my opinion… 🙂

    Morally, it is a bankrupt decision, and continues to destroy trust. Has one man done more harm in one era, than Shulman? No wonder he thinks he needs a PR firm.

    http://blogs.wsj.com/washwire/2012/02/17/irs-seeks-some-pr-help/

    These bureaucrats never understand the best PR is just doing the right thing!

    PS, I will take one quote from the Tax Notes that might give hope…

    “Despite Shulman’s resistance to responding to the TAD in writing, Olson said the two have met in person and described it as “a good meeting,” but she added that she is not giving up on the issues raised in the TAD. Olson suggested that the TAD deserves a more formal response because it is rare that those directives are elevated to the IRS commissioner. “It is a rare event when one of these gets up to his level. This is the first time in 11 years,” she said.”

  10. @Just Curious

    The problem with your sensible plan of not fining expats for missed FBARs is that the IRS wouldn’t stand to make their cut! I know it sounds great that Shulman is almost gone, but who knows who will come next? I find both political parties to be hostile to expats. A Republican candidate probably views it as the patriotic duty of all “US persons” to pay for their “privilege”, while Obama has already proven that he is dangerous since he signed off FATCA without blinking.

    @calgary411

    I think that it absolutely criminal what the US Supreme Court decision has done in automatically and without consent forcing those who lost their citizenship to resume it. I note that I also was born with US citizenship without my consent, and that had I been born in most other countries in the world I would never have been given citizenship!

    I find the US case to be really strange though. For example, Italy expressly forbade dual citizenship until after 1992. After this point the constitution was changed and Italians who lost citizenship by naturalising elswhere had a ten year window to apply for the reactivation of their citizenship at the Italian consulate. If they missed the deadline, tough luck, they have to move back to Italy now. The point here though is that in order to reclaim citizenship former Italians had to actively file a claim to receive it back and respected the rights of former citizens to not do so if they so wished!

  11. @Don Pomodoro,

    Now that’s the common sense we’re missing with the US — everyone who had given up Italian citizenship had a good window of time to reclaim or not. Everyone would have been served fairly by Italy’s wise use of choice in the matter.

  13. @Mona – that one flew over my head.

    @Don – If you had been born in Brazil, you’d be a Brazilian. You could kill 50 people in Italy, run to Brazil, and they wouldn’t extradite you to Italy. No joke. There was a big scandal in the media about 6 months ago about that: An Italian comitted crimes in Italy and fled to Brazil many years ago. I think they didn’t extradite him because he was doing something “revolutionary” and many of the people in power here (including the current Presidenta) were “revolutionaries” left-wingers back in the day.

    Ha! I would love for the US to put out warnings: either you reaffirm your oaths to the US or you lose citizenship. It’s moronic that we are born with US citizenship against our will, but have to pay $450 plus travel expenses to get rid of it. I didn’t ask for it.

    From reading about citizenship laws in Europe, I believe that kids only get citizenship where they are born if they are stateless at the time of birth. It’s not as generous as the US or Brazil, but fair in its own right.

  14. Here is the comment about this from Jack Townsend’s News site…

    http://federaltaxcrimes.blogspot.co.nz/p/news-on-offshore-evasion.html

    Wesley Elmore, Shulman Won’t Formally Respond to Taxpayer Advocate Directive on OVDP, Olson Says, 2012 TNT 34-6 (2/21/12)
    This article reports the following:

    1. IRS Commissioner Shulman has no plans to respond to the taxpayer advocte directive (“TAD”) regarding OVDP.

    2. There is some confusion regarding whether Commissioner Shulman is required to respond.

    3. Apparently Commissioner Shulman is not required by law to respond except to recommendations in the Taxpayer Advocate’s report to Congress; a separately issued TAD does not require a response.

    4. Despite his nonresponse, the Commissioner and the Taxpayer Advocate met and had what she described as a “good meeting.”

    5. The Taxpayer Advocate is not giving up the issues presented and suggested that the TAD requires a more formal response.

    The article notes:
    Olson said the TAD came about because the IRS was treating everyone participating in the OVDP with a “one-size-fits-all” approach that assumed they were “all people trying to rip off the federal government.” The IRS should recognize that there are different categories of taxpayers in the program and should clarify what taxpayers in each of those categories should do under the program, she said. For example, taxpayers with no tax liability or minimal liabilities should be told to “go and sin no more,” while taxpayers who show reasonable cause or who meet a non-willfulness standard should be allowed to opt out of the program, Olson said. She added that she believed some examiners were trying to provide taxpayers with such options before the March 2011 memo was released.

  16. @all
    Every time Steven Mopsick trys to explain the relationship that Mr. Schulman and Mrs. Olsen related to their responsibilities in the IRS this video keeps popping into my mind. I keep getting the feeling that Mr. Schulman is Benny Hill and Mrs. Olsen is the poor old guy who is never respected, listened to, or even taken seriously!!!!!

    Forums, lunches, memos and internal e-mails have, in my working experience so far, have never really ripened to anything more than to be become overly ripe, fall of the tree and return to the perpetual life cycle. In other words it’s just business as usual.

    What a shame!

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