To those reading here who are in the OVDI, I draw your attention to this Jack Townsend guest post by Asher Rubinstein, Esq.
It has been said that the 2011 Offshore Voluntary Disclosure Initiative (OVDI) corrected many of the hiccups of the 2009 Offshore Voluntary Disclosure Program (OVDP)…… However, as more OVDI cases now head toward resolution, it appears that the IRS is again wavering in certain policy decisions, again to the detriment of taxpayers.
Why am I not surprised by this?
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Yes Mona. I also find it strange that more Americans abroad are not aware, concerned, protesting, joining ACA or being in this Society. And the media in the world is mainly silent. I known! a lot of resident aliens in the US and either they do not know about FBARS and FATCA or are not concerned or complying. Is the problem with us? I am member of Democrats Abroad, tried to talk about this issues with very few responses. I guess that Americans Abroad, employed, who have savings in the USA only have to file form 2555 in addition to 1040…Are they the silent majority? Perhaps I should move alll my savings to the USA? Is this the problem?l
Completing my thinking… You all please correct me, The harrassment for Americans Working Abroad starts if they have more that $US 10.000 on all accounts, if they have more than $US 50,000 in one account, if they are Self-Employed or if they receive non taxable income in the country of residency. They may not have to pay any IRS income but they will have to spend endless time and money complying with the forms and forms. And yes, they will have be enormous penalties, more than the ones Americans Living in the US have. This to me is discrimination plain and simple.
@markpinetree
‘The harrassment for Americans WORKING Abroad’ – it also applies to retired Americans living abroad – they don’t have the FEIE to use.
True.
@tiger, the discrimination goes on; layered on those abroad – seniors/retired people (re FEIE), persons with disabilities trying to hold RDSPs (treated as trusts) and having the right to renounce, US citizen children in Canada (RESPs are treated as trusts), those wanting to participate as community volunteers or in professional organizations (re treasurer or co-signatory roles), etc. Some days it seems that every avenue is blocked.
If someone were to prepay the in lieu of penalty and then decided to opt out on getting the closing statement, could the IRS just assess the amount, and then retain the in lieu of penalty as an ‘offset’ ? I tend to doubt it, since the in lieu of penalty is for the specific purpose of the program, it is not a tax penalty or a tax payment and hence can not be used as an offset.
As for Canada collecting tax and/or penalties claimed by the IRS, see the following, from Article XXVI A (“Assistance in Collection”) of the consolidated version of the Tax Treaty:
“7. A revenue claim of an applicant State accepted for collection shall not have in the requested State any priority accorded to the revenue claims of the requested State.
8. No assistance shall be provided under this Article for a revenue claim in respect of a taxpayer to the extent that the taxpayer can demonstrate that
(a) where the taxpayer is an individual, the revenue claim relates to a taxable period in which the taxpayer was a citizen of the requested State, …”
There is one caveat: The Tucker cases in Britain and the Channel Islands, and Bullen v. Her Majesty’s Government of the United Kingdom, 553 So.2d 1344 (Fla. App. 4th Dist. 1989), show how a tax claim made part of a bankruptcy proceeding could be enforced abroad even where the tax claim alone could not be, under the Lord Mansfield dictum.
In any event if one has not the intention to pay there is no reason to concede an obligation to do so. The whole point of the Lord Mansfield doctrine is that administrative claims should not be adjudicated abroad; an admitted debt would seem to bypass or compromise this principle, just the way its inclusion in a bankruptcy proceeding has done.
@tryagain…
Well first of all, I am not sure why anyone would prepay a “in lieu of penalty”. That seems fool hardy. You would naturally wait until the assessment, as you might want to ‘opt out” by then instead of paying it.
Would it be refundable, well I assume yes it would be. They really have no way legally to hold on to it, if you don’t sign the 906 closing agreement. So, I think you answered your own question, but I am not the expert in this matter.
I’ve just been reading a few expat forums this evening and musing on the FBAR requirements – I wonder how inundated Treasury will be with FBARS this year (30 June 2012)? It seems like the word is finally hitting home to the general expat community and everyone is scrambling like crazy to file/backfile, etc. Any ideas? Thoughts?
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