Liberty and justice for all United States persons abroad

The Isaac Brock Society

45 thoughts on “IRS releases new FAQs for OVDI and rules for some non-filers – The perspective of the Accounting Industry”

  1. I see that the new faq has effectively made the fine for FBAR 385% for an account of 1,000,000.  This is the new effective number:  385% fine.

    FBAR penalties totaling up to $3,825,000 for willful failures to file
    complete and correct FBARs (2005 – $575,000, 2006 – $600,000, 2007 –
    $625,000, 2008 – $650,000, and 2009 – $675,000, and 2010 – $700,000)

  2. Why make things simpler when you can make them more complex?  We love complexity and technical rules, and of course as many possible penalties as you can pile on. 

    BTW, Found another blog explaining the consequences on US Expats for failing to file income taxes…

  3. The new examples are ridiculous:
    The first one of  FAQ 51.1 shows no tax due. The person shouldn’t even do OVDI.
    Example 3 shows up to 27 millions in fines for a $14,000 tax liability

    What is the 8 year 6677 penalty?

    It would be laughable if the impact on people wasn’t real. Makes me even wonder if I should even participate in the super minnow disclosure if they allow it for residents. My trust in the these people to be fair is gone. The uncertainty is just killing me. No winners here.

  4. Another advisor from Rickerby Wealth Management, Sean Millington, was on Global News this am. He said they’ve been getting a lot of letters after their FATCA interview here:

    http://isaacbrocksociety.ca/2012/06/14/its-not-a-battle-financial-institutions-can-wage-shaun-rickerby-of-rickerby-wealth-group-td-waterhouse-makes-a-canada-call-to-arms-regarding-fatca-on-june-12th/

    Today, the way he presented the demands of the US, without a lot of background and just the bare nuts and bolts is really driving home what blind-siding-cash-grabbing-money-grubbing entity the IRS has become. Get ready for US citizens filling up Canadian cardiac wards. 

  5. I particularly like FAQ 19. The answer is the same as the question. 

    19.

    Is a taxpayer who previously sought relief under the IRS’s traditional Voluntary Disclosure Practice before the OVDP was announced eligible for the terms of the OVDP?

    Is a taxpayer who previously sought relief under the IRS’s traditional Voluntary Disclosure Practice before the OVDP was announced eligible for the terms of the OVDP?

  6. *@ Petros

    Not only that 385% issue but this little gem (last paragraph) of Question 8:

    Note that if the foreign activity started before 2003, the Service may
    examine tax years prior to 2003 if the taxpayer is not part of the OVDP.

     

  7. @ all who actually waded through that FAQ

    How the heck do you do it? I couldn’t get through half a page before my eyeballs rolled back into their sockets and my head started spinning.

  8. @em

    Some people actually like reading that stuff(thank goodness we have those who can decipher). I try but my eyes glaze over too!

  9. Thought you might be interested in this video I just found.  I was the 1st to view it…  Lucky me! 🙂



     

    It is posted on this web site…

    http://www.irsmedic.com/2012/06/28/2012-ovdp-and-fbar-amnesty/comment-page-1/

    I left him a lengthy comment, still in moderation, and just pointed out areas that I might not be in agreement with his positions, and invited him over here to join the conversation.  I will be surprised if he lets it see the light of day, but who knows…

  10. It reminds me of the Greenback Tax Services guys.
    Also, he looks like he mentions wrong information regarding the new procedures. He says that it applies only to US citizen who were unaware of it. Is that really the case?
    Again, another guy who pushes OVDI and is against QDs. Unbelievable that he calls them ILLEGAL!

  12. @Pacifica 777

    ah, I see that.  Thanks for letting me know.  

    In my comment, I challenged him his illegal characterization…

    I noted with interest you comments about what you call a Soft Disclosure, or others use the Term Quiet Disclosure (QD). I don’t think you are right when you say that a Soft Disclosure is illegal. It is not illegal, as people do it all the time when they file 1040X with amended income. That is a quiet disclosure. There is nothing illegal about that at all. 

    Ended with this…

    I hope you allow this post to come out of moderation, which I assume it will enter. If not, I hope you do explore some of the links I have provided, and if you like, join in the conversation. Let’s try to do right by the minnows, and limit the money making to the Whales? 

  15. *@Calgary,

    I think this is noteworthy from Roy Berg’s notes:

    “Second, high net worth individuals may be precluded from participating in the program under the new procedures. This is problematic as assets are typically not disclosed on the income tax return. Thus, it appears probable that taxpayers may be required to submit a personal financial statement to the IRS in order to participate under the new procedures.”

    As Roger Conklin said elsewhere regarding these new procedures, ”Will you step into my parlor said the spider to the fly?…”

  16. @nobledreamer, and as I said, be prepared to disclose your gold bullion, jewels, real estate and art. 

  17. @nobledreamer,

    Yes, it seems to get worse. Roger nailed it with the analogy of the spider and the fly!

    Most of us would not have been deemed ‘high net worth individuals’. It seemed that was previously only determined when doing a Net Worth Statement for the 8854 and the Exit Tax, for those over the magic net worth of $2 million. Is that determination to be made sooner, like a yearly process, now?

    I’m so glad you are almost all done with this!

  19. @Bubblebustin,

    Hmmm  gold buillion? buried in up north. Ditto for the jewels. Burned down the house and the art along with it.    🙂

  20. @Calgary,

    Thanks. Me too. I wish I could file now for the grand 19 days of 2012 that I was a USC but methinks I have to wait for the 2012 forms, eh?

    I don’t know anything about this – I just quoted from Roy Berg’s comments. It makes sense though. They are saying that high net individuals may be precluded from the program and in order to determine that, they would likely have to have something tangible, similar to an 8854. Let us not give them any ideas, please!  LOL

  21. @calgary, the information and advice provided by Moody’s is really valuable, thanks for finding that.

    What ‘indicia’ revealed by the FBAR will determine a further look, I wonder.

  22. Thanks for that link @calgary411 Re: “Here is commentary from Roy Berg:

    http://www.moodystax.com/blog/21-us-taxation-services/185-irs-offers-partial-tax-amnesty-for-canadians-with-qlow-compliance-riskq-though-questions-remain.html .”

    and re speculating on the anticipated details and guidelines for the September 1st ‘different method of compliance’

    On the important issue of how they will define ‘Low compliance risk’: If merely participating in Canadian government designed, approved and heavily promoted registered savings like RESPs, RDSPs, and TFSAs are considered ‘sophisticated’ tax ‘planning’ or ‘avoidance’, then who will qualify for any relief under this newest IRS announcement?  They are very common and popular here – because the Canadian government actively blesses and promotes them – and the IRS must know that – and know that excluding those who might qualify for relief, just on the basis of owning one, is a way of making sure that many will not be able to come forward for relief under their latest announcement – unless they decide to be flexible before the solidification of the details in the forthcoming rules.

    If basic tax ‘planning’ through Canadian government blessed registered savings is somehow questionable, then why would it be promoted by the Canadian government? How can the US seriously claim that those in Canada who see government ads for TFSAs, or RESPs, and walk into their bank to arrange for one constitutes any evidence of ‘sophistication’? And why would the Canadian government promote anything that was tax ‘avoidance’ – since we pay tax first to Canada – before the US share on top (if any, after FEIE and Foreign tax credits)? Again, the deliberate criminalization of any ordinary life – if it takes place outside the US.

    The mere legal holding of these Canadian savings should not be a toxic liability. They are held inside the country where we live and earn. They are registered with the government and CRA.  There are fairly conservative contribution limits. Rules limit their redemption. Is it really about the IRS deeming them to be ‘trusts’  – (which they deemed RRSPs to be not so long ago too right?), or is it that they know that many people are likely to be disqualified from the newest program simply because TFSAs and the like are so common? TFSAs have only existed for a few years. They can’t exceed a certain ceiling per year – so in reality, how much ‘risk’ could they actually have provided in terms of lost revenues for the IRS? Other than penalty revenue of course – double taxation by another means.

    We know from Flaherty’s reply about the RDSPs (and the like) not being covered by the US/Canada treaty – that there was no timeline for officially addressing that issue. So, @bubblebustin is right about the political solution and need for the federal government not to rest on this. The US is saying that what the Canadian government designs, controls, promotes and provides to ensure responsible savings by its citizens and residents is a crime.

  24. http://www.vancouversun.com/business/taxman+finally+eases+pressure+American+citizens+Canada/6853117/story.html

    Good article by Don Cayo noting that this may not provide substantial assistance to the bulk of those affected in Canada. Thoughtfully and critically notes devil in the details.

    ….”The IRS was, in my view, slow to the point of negligence in determining some kind of relief for people who were put in a terrible situation through no wilful wrongdoing. And the agency still needs to clarify the details.”

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