Cross-posted from RenounceUScitizenship.
This is a response to the email from Professor Green. Note to members of the Isaac Brock Society: This post is in part, an attempt to consolidate a number of the comments to Professor Green’s email.
Dear Professor Green:
U.S. citizens abroad – Democrats, Republicans and Independents – thank you for the “FBAR/FATCA Task Force” and we note with gratitude that:
Your FBAR/FATCA Task Force has been working steadily to seek relief for overseas Americans facing onerous tax reporting burdens.
Furthermore, your six proposals would be welcomed by U.S. citizens abroad – to be specific:
- 1. Define a foreign or offshore account as an account in a country other than one’s country of residence or the US, thereby recognizing the legitimate need for local banking services;
- 2. Raise the FATCA reporting threshold to $1 million to put the focus on taxpayers with wealth sizeable enough to justify the costly and complex investment structures normally used to conceal assessable earnings;
- 3. Index the reporting threshold to inflation so that it goes up every year just as the Section 911 income exclusion does;
- 4. Add a provision that excuses anyone who does not owe taxes (because of the Section 911 exclusion or any other exemption or a tax treaty) from the obligation to file form 8938, regardless of the threshold reporting;
- 5. Merge the FBAR reporting requirement with the developing FATCA legislation to eliminate duplication in filings; and
- 6. Offer amnesty to overseas Americans who are delinquent taxpayers, inviting them to pay what they may owe and restore their status as tax-compliant citizens. (See our opening remarks for our success in this area.)
That said, your proposals are merely an attempt to improve the conditions of the prison of citizenship-based taxation. You are essentially just accepting the ideas of citizenship-based taxation, FATCA, FBAR and the rest. Gotta be in prison anyway. Why not put the effort into getting along better with the guards!
I once heard the following story:
During the time period that Obama was looking for the “First Dog”, he was out jogging. He met a man with a litter of beautiful puppies. He asked the man the following question:
What kind of puppies are these? The man answered, they are democrats Mr. President.
A week later, Obama brought his wife back to look at the puppies.
Naturally she asked: what kind of puppies are these? The man answered, they are Republicans.
Obama said what? Last week you told me these puppies were Democrats.
The man answered. Well, I was telling you the truth.
Last week they were Democrats. But, this week their eyes have opened and they are Republicans.
Professor Green: I think you need to open your eyes too.
My read of your bulletin is that you are making two broad points:
1. The Obama Democrats really are friends of U.S. citizens abroad. Here are your reasons:
Compliance: “The Internal Revenue Service has made a significant concession to overseas voters who present little or no risk to tax avoidance.”
Professor Green: It’s clear you haven’t read the “concessions”. What the IRS is saying is that for those who have not filed tax returns, and are a “low compliance risk“, people will not face penalties. Furthermore, if you keep your eyes open as you read, you will see that owing less than $1500 tax is NOT a guarantee that one is “low compliance risk”. In addition, it is impossible that this could affect more than a small percentage of taxpayers. Let’s not forget the reign of terror coming from the Obama administration. Hundreds of innocent people terrorized into entering OVDI. Remember “The silence was deafening“. Remember Ambassador Jacobson’s statement: “we are not unreasonable …” (while 70 year old grandmothers were terrorized into OVDI). Remember the IRS letting the 2011 tax season pass without following up on their January 9, 2012 promise of procedures to come into compliance. The effect of not giving people timely directives for how to come into compliance is that they remain out of compliance. (Of course this does allow the IRS to levy more penalties.) Remember the failure to respond to the TAD from Nina Olsen with the respect to the infamous Q. 35 “bait and switch” in the 2009 OVDP? And what about the treatment of those overseas Americans who didn’t even know they were Americans. The IRS is graciously telling them that they must pay 5% of their assets to the IRS. This latest message from the IRS seems to me to be an attempt to get more people into the system. The problem is of course, as all long-term tax filers will know, is that (assuming no filing of FBAR), they are at great risk of penalties because they are in the system.
I could go on, but I won’t. So, Professor Green, it doesn’t look like there any significant concessions to me.
FATCA: “The good news is that the threshold for reporting under the FATCA regime (Form 8938) has been raised from $50,000 to $200,000 for individual-filing Americans living abroad (to $400,000 for Americans living abroad filing jointly).”
Professor Green: To say this is good news is to say only that the impact could be worse or that a smaller number of people will be affected by FATCA. You assume that FATCA is inherently good. But, that only its application to U.S. citizens abroad is bad. This is ridiculous. FATCA is an an attack on the sovereignty and freedom of all nations and all free people. I will say it another way: FATCA is inherently bad. FATCA is he beginning of the end of freedom and democracy the world over. People the world over, need to oppose FATCA, and not just how it applies to certain U.S. citizens abroad. Believe me, sooner or later it will apply to all. The time to take a stand is now. Somehow, the following poem by Martin Niemoeller comes to mind:
First they came for the Communists but I was not a Communist so I did not speak out. Then they came for the Socialists and the Trade Unionists but I was not one of them, so I did not speak out. Then they came for the Jews but I was not Jewish so I did not speak out. And when they came for me, there was no one left to speak out for me.
You should be opposing FATCA and not just the application of FATCA to certain groups!
But, you do make the point that:
The Government should be attacking tax cheats: You proudly state that:
In our discussions with political and bureaucratic officials we go to great lengths to express our support for the Government’s crack down on money launderers and tax cheats before explaining the adverse impacts and outlining our recommendations for making FATCA less harmful to overseas Americans.
Professor Green: The Obama administration is defining U.S. citizens abroad as tax cheats. So, what you are really saying is: We express support for the IRS attacking U.S. citizens abroad, it’s just that it is harmful to U.S. citizens abroad to be attacked by the IRS.
Professor Green: U.S. citizens abroad are tax cheats only because the U.S. continues to terrorize its citizens with citizenship-based taxation (just like Eritrea). Citizenship-based taxation may be a violation of international law. There are some who believe that citizenship-based taxation is a crime against humanity. By using citizenship-based taxation, the U.S. has created a class of criminals that doesn’t exist in any other place except Eritrea. So, how about this for a novel idea:
Get rid of citizenship-based taxation. Lower the number of tax cheats. Lower crime.
Some comments on these points from readers from your email:
Here is a list of Democrats including @barackobama who are destroying the lifes of #americansabroad isaacbrocksociety.ca/2012/07/04/wha… #FATCA #FBAR #OVDI
— U.S. Citizen Abroad (@USCitizenAbroad) July 5, 2012
recent US laws designed to harm #expats and #ameriansabroad Much more than #FBAR #FATCA isaacbrocksociety.ca/2012/07/04/wha… Most comes from Democrats
— U.S. Citizen Abroad (@USCitizenAbroad) July 5, 2012
More #americansabroad punished for coming into #FBAR compliance isaacbrocksociety.ca/2012/07/04/wha… #OVDI rewards criminals and punishes innocents
— U.S. Citizen Abroad (@USCitizenAbroad) July 5, 2012
2. Americans abroad should get out and vote for Obama:
But, as we move forward toward November 6, please bear in mind that, as troubling as our tax issues are now, conditions would be much worse (taxes and way beyond) with a Romney presidency, a tea party House and a Senate without a filibuster-proof majority. Imagine a right wing activist Supreme Court for thirty years (despite the welcome news about the President’s historic health care initiative)!
Some comments on this point:
@aaforobama Q. Would you vote for @barackobama A.Get real! would you invite for dinner your child’s murderer? isaacbrocksociety.ca/2012/07/04/wha… #FATCA
— U.S. Citizen Abroad (@USCitizenAbroad) July 5, 2012
@demsabroad : although @barackobama bad to #americansabroad they should still vote for him isaacbrocksociety.ca/2012/07/04/wha… #FATCA #FBAR #OVDI
— U.S. Citizen Abroad (@USCitizenAbroad) July 5, 2012
@aaforobama Even members of @demsabroad will be among the #americansabroad not be voting for @barackobama isaacbrocksociety.ca/2012/07/04/wha… #FATCA #FBAR
— U.S. Citizen Abroad (@USCitizenAbroad) July 5, 2012
Professor Green: What is your objective here? Is it to promote the Obama administration or is to help U.S. citizens abroad? Unfortunately there is NO POSSIBILITY OF DOING BOTH. The Obama administration has declared war on U.S. citizens abroad. It has forever changed their lives as they knew them. Remember:
It’s not what you take from somebody, it’s what you leave them with!
Let’s explore the consequences of both promoting Obama and of supporting U.S. citizens abroad.
1. If you are trying to support U.S. citizens abroad, then you should be telling the Obama administration that if they don’t change their policies NOW that you will be encouraging your group – Democrats Abroad to vote for Romney. The only thing the Obama administration will understand is a loss of votes. With respect, the notion that we should trust these people to make changes after the election, ranks as one of the stupidest things I have ever heard! They have had a long time to change their policies toward U.S. citizens abroad. Instead, it is getting worse and worse. By suggesting that people should vote for Obama, Professor Green you are encouraging and supporting the same policies that you claim to protest.
Since, you are busy urging that people vote for Obama, it is clear that you do NOT represent the interests of U.S. citizens abroad. Comment after comment has demonstrated how hostile the Obama administration has been to U.S. citizens abroad. Let me put it another way:
The Obama administration has forever changed the lives of U.S. citizens abroad! The IRS and Obama administration have stolen the lives of hard working Americans. I venture to say that many U.S. citizens abroad are not even the same people they were a year ago.
2. If you are trying to support Obama, I suggest that give us a reason to support Obama that is related to Obama. You are doing what all Democrats do – “Romney would be worse”. As a professor, grading a paper, you would expect somebody to explain their position. So, far I would give you a very low grade. I ask you to explain your position. In fact I ask you to explain two specific things:
First: Exactly how or why would Romney be worse?
@demsabroad thinks that @mittromney would be worse than @barackobama Please explain how this could be the case isaacbrocksociety.ca/2012/07/04/wha… – #FATCA
— U.S. Citizen Abroad (@USCitizenAbroad) July 7, 2012
Second, how about offering a reason to vote for Obama that has something to do with Obama? I know it’s hard. But, surely you can come up with some reason. Here is another thought that captures this sentiment:
@aaforobama The administration of @barackobama has declared war on U.S. citizens abroad isaacbrocksociety.ca/2012/07/04/wha… #FATCA #FBAR
— U.S. Citizen Abroad (@USCitizenAbroad) July 7, 2012
Professor Green, I request that you provide answers to these two questions.
(Interestingly, a number of prominent democrats,including President Clinton believe that Romney is qualified to be president.)
Why no U.S. citizen “with his eyes open” should vote for Barack Obama
Obama is in charge of the executive branch of the U.S. government. He is in charge of First Tax Cheat Geithner, who is in charge of Shulman and the IRS. This attack on U.S. citizens abroad is NOT because of citizenship-based taxation (which is the result of an Act of Congress). It IS the result of the manner in which existing laws have been administered. The Obama administration is responsible for the administration of these laws and has used these laws to INTENTIONALLY attack U.S. citizens abroad.
U.S. citizens abroad should organize themselves one community at time to vote against Barack Obama.
In closing
I hate to sound like George Bush (You are either with the terrorists or you are with us). But, the reality is that the Obama administration has declared war (in a metaphorical sense) on U.S. citizens abroad. The only way to win this war is to defeat (in actuality) Barack Obama. Therefore, if you care about U.S. citizens abroad, I suggest that you encourage your members to vote for Romney. Romney has NOT declared war on U.S. citizens abroad.
On the other hand, if you and Democrats Abroad are just here to do Obama’s work in Canada (I thought this was Ambassador Jacobson’s job), then continue singing the “Let’s vote for Obama song”.
You need to decide what it is that you are trying to do. Are you a man of principle or are you a man of the Democratic Party?
Winston Churchill once said:
“Some people change their party for the sake of principle, and some people change their principles for the sake of party.”
_____________________________________________________________________
P.S. As an aside, I note with amusement your comment that:
Many of us living outside of the U.S. will likely need to continue to seek professional help for filing the various tax forms required of us. We have heard some pretty horrendous stories about Americans being fleeced by unscrupulous tax preparers, so we urge that you use caution in finding professional financial help.
Professor Green: The truth is that the accounting and legal costs of coming into U.S. tax compliance are so high that few people can afford to pay them. Some cannot pay them at all. Some are dipping into their retirement funds to come into compliance, but cannot pay them on an ongoing basis. People are forced to renounce U.S. citizenship for this reason alone. Renunciations of U.S. citizenship are soaring under Obama.
Some Thoughts On the Costs of “Cross-Border Professionals“:
Coming into compliance costs: Talk to anybody who has attempted this. The principle is this: the more one has tried to save for retirement the more expensive the costs of coming into compliance. For most people the costs will be in the mid five figure range (and some in the six figure range). You might talk to some of the people in OVDI about this!
Compliance on a going forward basis: It’s a tax on life. Canadians who are not U.S. citizens can use their money to invest, go on vacations, join fitness clubs, etc. U.S. citizens have to use that money for accountants. Think I am kidding? I explored this in an earlier post explaining why U.S. citizenship has been priced out of the market.
P.P.S.
Of course all of these problems could be solved if the U.S. would:
@swisspinoy, Thanks for the explanation. I thought that it was easier to register to vote from abroad.
Another argument against citizenship-based taxation is that Americans who reside in US territories usually do not have to file forms or pay taxes to the US, only to the territory where they live (even bank accounts there are not considered foreign for the FBAR). At the same time, they cannot vote in federal elections. No taxation and no representation either. Would you like this policy to be applied to Americans in other countries too? Maybe politicians would agree if we presented it that way.
@swisspinoy, It wasn’t hard at all to register and vote in Republican Alaska. They did not require that I file in Alaska, ha! To my knowledge, that state still doesn’t have an income tax.
@Petros..
No, Alaska still doesn’t have an income tax, and they are still handing out permanent Dividend checks each year. They remain one of the most subsidized citizenry on the Federal tit of any state in the nation. So much for land Sarah Paulins’ land liberty, freedom and rugged individualism.
While they didn’t get their “bridge to nowhere” (actually between the Ketchikan airport and the city on the mainland) from the Federal treasury, Uncle Ted, now passed on, was their patron saint in many other ways. You fly into Ted Stevens international Airport in Anchorage. Every last piece of groceries (soda pop and pampers) is delivered to the 115 plus small villages scattered around the state by airmail as by-pass 4th class mail subsidized by the mail rates in the lower 48, thanks to Ted. Great deal for the airlines and it subsidizes passenger airfare rates, but is an incredible loss for the post office.
It’s kind of old, but I just found this petition to repeal FACTA on the Republicans Abroad from Europe web site. Only 15 people signed it out of goal of 1000. Disapointing. I still think a small number of the 6 – 7 millions expats know about FACTA. I wished the US embassies/consulates would educate people more about FACTA. They are the ones who have lists and means to reach expats in big numbers.
http://www.republicansabroadeurope.org/fatca_petition
*A doubt that has been always with me is this: how come these six to seven million Americans Abroad, Dual Citizens and Green Carders are not more visible, protesting and joining organizations like ACA? I go to Americans Abroad site and raise these issues but usually I have very few answers. Help me to understand.
*@Marpinetree, I have always wondered the same thing, where are all the American’s Abroad?? If they were all protesting and joining in I think we would be heard..
@saddened, could it be that many have unofficially renounced already, and would prefer to ignore the problem? I personally know of many US persons who are doing just that, unwilling to open the pandoras box of compliance. Head down, keep walking, and I imagine in many cases: let others deal with the problem.
*@bubblebustin, I think you are probably right. I wish I had keep my head down, mouth shut and just ignored the whole thing. I am sure there are millions who have done nothing. They are the smart ones.
@saddened, as difficult as it has been for me, I prefer never having to keep looking over my shoulder. There’s only one sure way of getting them out of my hair, permanently (I hope!).
*@Bubblebustin, Well I have looked at that way as well, at least we don’t have to look over our shoulder, we may be broke but we did what was asked of us..Lets just keep our fingers crossed it will get better and not worse.
@saddened, yes they’ve gotten their pound of flesh. They will get no more from me other than disdain if they try.
*@Bubblebustin, I am sorry what you have had to endure. I am hoping you will get it all back. It is so ridculous what you have gone through. I hate to hear stories like this. I do hope it will turn around for you. Keeping my fingers crossed..
@BubbleBustin @Saddened123
The decision on whether to come into compliance is a very difficult decision. At the end of the day I suspect there are both logical and emotional components.
Emotional: It is a waste of a life to think and worry about this. Coming into compliance will protect you from MAJOR problems down the road. Bear in mind that it is now much more difficult to argue a lack of knowledge of tax responsibilities.
2. Logical: The end game for anybody who is being “logical” is to renounce U.S. citizenship. Some interpret this as carrying with it an obligation to be in tax compliance for five years. (See Phil Hodgen’s post on Why People Renounce)
But, the key point for most is to put all of this behind you.
The problem is that coming into compliance does open up a Pandora’s box of problems and in many cases huge costs. Do what you need to do to move beyond this nightmare.
*The problem most people have is that they do not know the meaning of coming into compliance at this time. And of course what will happen to them if they do. It seems that when you start coming into compliance you really do not know how this will end… Like “The Castle” of Kafca.
@saddened, thank you. Yours are very kind words. I’m sorry that I haven’t pieced together your story, but thanks for the attention you’ve given mine.
@renounce, what I really struggle with is if I’m going to pay this price, both emotionally and monetarily, wouldn’t I want to hang around to maybe get some return on investment? Being a US citizen is part of my identity, should I chop my arm off because someone is wrenching it? What the US government is doing is so wrong, are they not capable of realizing it?
But then, as in any abusive relationship there is a moment when you can’t lie to yourself anymore, to continue believing that the abuser will realize the pain they’re inflicting. Then there is the other ‘logical’ side that says to cut my losses and run. I guess I’m still in the bargaining/depression stages of grief not really willing to accept the ‘loss’ just yet. But I’m getting there.
@bubblebustin, it’s not an easy transition. Normally, one would use the vote to cause positive change. Yet, when the vote has no chance in creating positive change, then one may have to take extreme measures for one’s own benefit. Renouncing is like a vote, the last one, because it can create attention to a serious problem.
@saddened123, most Americans abroad have other things to worry about. They have their jobs, their families, their bills, their taxes, their vacations and so on. Thus, they may choose to ignore America, it being far away, until the demorepublican monarchy seeks them out and starts causing unnecessary problems. I only became more involved because of the death of a parent. Otherwise, I’d still be focusing on my life abroad with little or no connections to America. I would actually rather go for a bike ride than to criticize some democrats or republicans for not thinking beyond the US border.
@markpinetree, Why are Americans abroad not more visible? We were talking about this over at Curtis Poe’s blog (he was looking for Republicans) http://www.overseas-exile.com/2012/07/i-still-cant-find-republicans-abroad.html
My best answer to this is that most Americans abroad are not “joiners”. Over the past 20 years I’ve met quite a few of them in Europe and Asia and the vast majority are not members of ACA, AARO, Democrats/Republicans Abroad and so on. Here in Paris I’d say the most popular expat org is probably AAWE (Association of Americans Wives of Europeans) and that’s because we have dual citizen kids and want cultural events/opportunities for our Frenchlings to speak English. As swisspinoy so rightly said most of us have other fish to fry and only hit the US Embassy once every 10 years or so to get those passports renewed. American long-term residents also tend to blend in very well in their host countries – call us “stealth migrants” 🙂
The Dems abroad thing really raised my blood pressure. I contacted them months ago and asked what the hell they were doing to get this fixed and asked what could *I* do to help? I was ready and willing and had time on my hands (and was highly motivated to get those hands dirty) fighting citizenship-based taxation, the FBAR fundraiser and so on. En bref, the answer was “we are working hard on your behalf behind the scenes. Be patient.” So I sat on my hands and gave them a few months before giving up in disgust (I wrote to them and said “take me off your membership list.”) Glad I did since the result of all that work behind the scenes is NOT satisfactory to me and I am NOT grateful for their efforts. Too damn little, too damn late. And if the best argument they can come up with is “Romney would be worse”, well, that’s hardly inspiring and forgive me if I am not convinced. I am not only not going to vote for Obama but I am busily sending money off to a senate campaign in my home state in order to get the incumbent senator (signer of FATCA) out on her ass. I will vote in the next election and I hope that others will vote too. I wrote a post for the Flophouse yesterday to that effect and tried to address some of the common reasons my compatriots abroad have given me for not voting:
http://thefranco-americanflophouse.blogspot.fr/2012/07/why-americans-abroad-should-vote.html
I can crosspost if anyone thinks it might be useful here as well. (yep, feeling better here – those lovely injections I got a few days ago really did the trick 🙂
@Bubblebustin
“@renounce, what I really struggle with is if I’m going to pay this
price, both emotionally and monetarily, wouldn’t I want to hang around
to maybe get some return on investment? Being a US citizen is part of my
identity, should I chop my arm off because someone is wrenching it?
What the US government is doing is so wrong, are they not capable of
realizing it?”
My understanding is that you are in OVDI (a decision made as a result of selling your house). What OVDI will do for you is guarantee tax compliance from 2003 – 2010. I take it that you have filed properly for 2011. You have also made comments about the relationship between the Bush tax cuts ending and the logic of renouncing quickly. Your comments indicate that you have and are continuing to suffer great pain and anguish over this. I am assuming that your are sort of “middle aged” (this is the group primarily affected by all of this) and that you have lived in Canada the major part of your adult life (that is how I read your posts). This is only my opinion so ignore it if you like. But, it seems to me that the return you get on coming into compliance, is that you have cleared one hurdle, that you need to renounce. I assume you are worried about the Exit Tax. I don’t blame you. But remember that payment of the Exit Tax will save the Estate tax later. Also, you haven’t said whether your spouse is U.S. or Canadian. If he/she is NOT a U.S. citizen this will create more problems should you want to transfer assets.
Up until a couple of years ago, I was a very patriot American. I gradually began to see the errors of my ways and how much U.S. citizenship has COST ME! I now believe any kind of Patriotism is a bad idea. It will cost you dearly. I cannot understand how anybody who has been what you have been through would, for even one second remain a U.S. citizen. The only possible answer I could see if this Exit Tax for you is so high, that it makes it somehow worth it to stay.
For most people, I think the question is: how much am I willing to pay to get rid of U.S. citizenship?
But, I am going to ask you a simple question:
Five years from now, do you want to be living under the kind of anxiety that you are living under today?
If yes, remain a U.S. citizen.
If no, renounce.
And I see that you ask: is the U.S. government capable of seeing what they are doing is wrong? How about this for an answer: They think what they are doing is right! As I have said in post after post, they are not capable of seeing the world in anything other than their narcissist way. Does a narcissist change? They have been told and told and told about this. They will NOT provide assurances that one can come into compliance without penalties.
You need to do what is right for YOU! If you were advising somebody else, you might ask them: what is the benefit to you of retaining U.S. citizenship? It’s not that there is zero benefit, it’s just that the costs outweigh the benefits.
In closing: I don’t know if you have children or not, but if they are U.S. citizens, and are NOT covered expatriates, you should have a major talk with them.
Anyway, those are my thoughts. It is not advice. Feel free to disregard and/or ridicule any part of it that you think is misguided.
@ThatIsMe
*”The problem most people have is that they do not know the meaning of
coming into compliance at this time. And of course what will happen to
them if they do. It seems that when you start coming into compliance you
really do not know how this will end… Like “The Castle” of Kafca.”
You raise a good point, I am going to offer my opinion here on what it means to come into compliance. Coming into compliance means complying with your obligations under the law – whatever those may be. At a minimum it would mean compliance going forward. The IRS is NOT obligated under law to levy penalties with respect to past problems. But, you are obligated under the law to file returns (tax and information). Since the IRS is not required to levy penalties, you then argue for the “abatement of penalties” (if they do).
There is no guarantee how it will turn out. But, if you do NOT make a decision you will be living this despair for the rest of your life (and it will be a shortened life). So, the decision is do I come into compliance or not – and if so, in what way?
We are dealing with two groups of people:
Group 1 – Those who have been filing tax returns, but may have discovered that they didn’t know about PFICs, Subpart F, sale of principal residence, FBAR etc. Now, you can’t change the returns that have been filed. But, on a “going forward” basis you must do better. With respect to past years you can take your chances of an audit or file amended returns. Again, get some decent advice though. I believe very strongly that you must do your best on at least a “going forward basis”.
Group 2 – Those who have never filed. This group should seek legal counsel and explore their options. Up to them. It seems to me that this is the group that has the more difficult decision to make.
Just realized I haven’t said anything that you don’t already know. But remember: the IRS is not required to levy penalties.
@renounce, we have no worries about paying the exit tax, unless of course the US dollar depreciated by about 50% (Petros?)
I would be flattered if you read my story published here on Brock.
@BubbleBustin
Just read it and know remember reading it a long time ago. It doesn’t say whether you had been filing returns (and just missed the 2008 capital gain and FBARs) or were never filing returns or FBARs.Did you have a tax advisor who neglected to tell you about Mr. FBAR. (Obviously you need not actually answer these questions, but you can tell from the fact that I ask the questions that these things may matter).
What are you planning to do? Pay the 5% “in lieu of” penalty or opt out? I urge you to get a couple of opinions on your possible grounds for “reasonable cause”.
If you moved to Canada in 68 you have lived 44 years of your life in Canada. Only a true Canadian would be in contact with her MP. I take it that you are either not subject to the Exit Tax or it is small enough so that you don’t mind paying it. Just think of what 30 years of inflation could mean in terms of an Estate Tax down the road. God, if it were me, and there were an easy way to avoid the estate tax …
@renounce, we were unaware of any obligation to file US taxes. We’ve been in touch with TAS and they gave us hope that the tax penalty could be eliminated within the IRM (both tax and penalty payment has been submitted) The FBAR penalty, well, now that the IRS has admitted that many could have been unaware of an obligation to file US taxes…
Anyway, TAS can’t do anything until we get a response from our submission. Our nice agent said that they are negotiating penalties within OVDI, which was a surprise to me (expediency perhaps?)
Rest assured, my mind is to the future in all of this.
The majority of people seem to be falling at the edges—many have less than 10,000 in the European banks. Many others have never filed and may never go back. Others have been working for an international company and have been filing FbaRs. Many are short term expats and will be back in USA before any IRS agent comes looking.
There are also options of never filing FBARs or 8938’s. With the IRS workload coming with the health care penalty/tax, they will be overloaded. Some banks will not be able to report as FFI’s due to their laws and some banks will not be trying too hard to find people. And what is the difference between succumbing now versus being found out later?
There are lots of exposed people who don’t think a minute about it all—–just look at all the happy members of Democrats Abroad.
If one is able to keep assets out of USA, then I cannot see how penalties could be collected.
The only detriment would be that it would be difficult to visit USA.
However, renouncing removes the possibility of living and working in USA (although visitation rights remain). And now, renouncing is not an option until one has fessed up (succumbed)
*Would it not be easier if the IRS started the FBARS with an general amnesty to all Americans Living Abroad to start doing the FBARs up to a certain date after this requirement is clearly spelled in the form 1040 of the IRS Return? Perhaps just a statement in some place: “Please be sure to send your FBARs before June 30th if this form applies to you.” And then add the web address for the Form.
*Thatisme, FBAR shoud be integrated into 1040 with all Americans being treated equally on the matter. Isn’t that what “citizenship-based taxation” is all about? The equal requirement of all to report their retirement savings?