Phil Hodgen is an International Tax Attorney who has been mentioned occasionally by me and others. He has a blog that I always read, if and when he is posting. He has in the past offered OVDP/OVDI information and/or advice with a twist of sardonic humor which I enjoy. One thing Phil does occasionally, when he is traveling, is sends out an email called a Jell-o Shot. With his permission, I am posting his latest here. In it he discusses the form 8938 which is a current topic. As Petros says, the Isaac Brock Society maintains a non-endorsement policy of tax-professionals (see here). However, if you want to follow his blog as part of your personal education Drudgery, here is the link. There may be some archived information there that is of interest to you.
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FORM 8938
The US government wants all Americans to reveal all assets owned outside the USA. I will spare you the editorial comments. Not content with Form TD F 90-22.1 (the dreaded FBAR), there is a new form in effect for this year that more or less asks the same questions: Form 8938.Form 8938 tells you to report your foreign financial assets. That is defined rather broadly, and I guarantee you the definition will expand in future years.The usual severe penalties apply for screwing this up.What I’m seeing
There is a large set of our clients who are being hit by the requirement to file this form. They are not citizens of the United States. They don’t live here. Yet they are being forced to reveal all of their foreign financial assets to the U.S. government. Here are the ingredients for this sad result:
Next Action
If this remotely sounds like you, duck and cover (YouTube) then call up your favorite international tax expert. And practice some preventive medicine so you don’t have to experience this joy in the future. The easiest way to do this? Don’t spend too many days in the USA.Phil
@Just Me! Phil is an old friend of mine. We worked together with the Cal Bar (I am not a member) State Tax Section and I know Phil to be a great lawyer, a terrific guy and with a great sense of humor;
Phil: I just read your entire write up on form 8938 on your blog and totally agree with you and with your permission, would love to re-publish it with attribution on my blog!
@all: Phil makes an important point which I have been trying to stress for the past six weeks on the IBS web site which is, THE IRS WILL ACTUALLY COME TO THE RESCUE OF MANY OF OUR FRIENDS FROM THE GREAT COUNTRY TO THE NORTH BY WRITING REGULATIONS THAT APPLY A REASONABLE READING OF THE STATUTE.
What Phil said on his blog was form 8938 could trip up someone who works in the US and spends too much time here requiring the filing of US tax return, which in turn invokes a possible application of form 8938.
Not unlike the Canadian Accidental American, in this case, a kind of accidental-US-resident-for-tax-purposes may, with no intention whatsover from the government in Washington, could be faced with the prospect of having to disclose all of his world wide assets to the IRS!
Phil and I are not permitted to advise you to “not obey the law.” But as Phil’s hilariously funny U Tube Video (which is an early 1950’s US Government civil defense film about what to do in the event of an attack on our fine homeland by way of the detonation of an atom bomb) says–this may be a good time to “duck and cover”!
Respectfully submitted,
30 Year IRS Vet
@Steven
You might want to ask Phil about reposting over at his blog.
http://hodgen.com/form-8938-can-apply-to-nonresident-aliens/#comments
@Stephen…
It’s a small world. I like Phil too. I have learned a lot from him. He amuses as well as provides good information. Good guy. I have emailed him with your request. Last I heard he was traveling back to the Sand countries in the Middle East in March, but maybe he is still around.
cheers
Form 8938 is nothing compared to keeping track of every single foreign currency transaction I make in my country of residence (not the US), my CPA says I need to figure out how much of a loss/gain there was between the time I acquired the foreign currency and spent it against the USD.
This is so crazy, taxation based on citizenship is so wrong.
@steven: “…BY WRITING REGULATIONS THAT APPLY A REASONABLE READING OF THE STATUTE.”
Would a reasonably WRITTEN statute in the first place be too much to ask?
I don’t want to have to rely on the IRS interpretation of something for my future well-being. The IRS has been proven to be inconsistent, unreliable, and untrustworthy. If the statute was written correctly in the first place perhaps I wouldn’t then have to spend chunks of the entire rest of my life checking for unfavourable IRS changes to some “regulation” or another.
Utterly, utterly bonkers. Lawmaking in the US is totally broken, and this is the result.
Here is another U Tube clip that Phil had posted on his blog about joining the OVDP. I thought it was funny but in reality it symbolizes the truth.
@anon – TOO FUNNY!!!
@Anon123 The endless applications of Monty Python clips! I love this one too. Thanks for the entertainment, again.
@anon – agree with the others, thanks for posting and just hilarious!
Yes its funny but the truths are clear:
You obey and disclose only to get blown up.
Even the snitch got blown up (Bradley Birkenfeld)
In the end, the bad guys blew themselves up (seeing this everyday in America)
Hurrah! In the end I got a webpage from where I be able to really take valuable facts regarding my study and knowledge.