Hoping Mr. Mopsick will chime in on this, but it seems every time I read something and begin to understand it, it either changes or I cannot find the text for clarification.
My understanding of the Internal Revenue Code 6677, specifically title 26, was that the IRS could not penalize you for more than the account was worth (for failure to file paperwork). In other words, if the gross reportable amount of an account was 1000 dollars, the penalty would be 10k, or 35% of 1000, but in no case would said penalty exceed 1000 ( in this case).
It seems that an individual on one of the tax forms has been penalized 10k for a 1000 dollar account. Now…this individual does go on to mention that, when confirmed he did send a reasonable cause letter for his late filing of a 3520 form, the IRS agent told him on the phone to ignore the fine.
I have re-read the code…but find myself more confused than before as i cannot find the language that says ‘at no time shall the penalty exceed the gross reportable amount’….and it is driving me crazy because i DO remember reading that.
If this is not the case…does it not seem that the punishment does not fit the crime if the IRS is able to hand out 10k penalties for accounts with a reportable amount of 1, 100, or even 1000 dollars??
It seems to me that each form has a different penalty structure. In some cases the penalty is limited to the amount not reported, in others the penalty can be higher.
I fail in comprehending why an expat should be penalized for taxed income earned in another nation. That doesn’t make any sense.
*swisspinoy. This happens all the time. Let´s say, you receive a pension from your work done in another country where you reside and this pension does not pay taxes in the country. You will pay tax to the USA (with a few exceptions). Or, you invest money earned in another country in a Savings Account free of taxes in that country where you reside. The IRS wants you to pay taxes to them. Or, you pay taxes on earned income in another country but it is less than it would be in the USA. You will pay the difference. And that is it! The law. And… without representation… Is this American?
Sorry guys, just want to direct this post back on it’s track. My main thrust of this post is to clarify the IRC code for my own curiosity.
Here is your answer from Mr. Mopsick.
Thanks for the link renounceuscitizenship!
And a very big thank you to Mr. Mopsick for explaining it all to me…it makes sense to me now…thank you very much!
Mark, pinheiro lá é grande, aqui não. Eles não têm ideia dos impostos que pagamos aqui. Por causa disso acham que nós estámos morando aqui.. todos ricos.. como Jet 7.. ganhando muito dinheiro sem pagar nada. Mentira pura! Espero que você esteja conversando bastante com ACA. Se precisar de ajuda, estou aqui.
Já desisti de lá (dos EUA) mas tenho um filho que é “US Person” segundo as regras deles. Não tem como “renunciar” por conta dele porque ele tem apenas 2 anos. 🙁
Mark, we pay crazy-ridiculously high taxes in Brazil. I have a son that is 2 years old that is “technically” considered a US Citizen (even though I would prefer to go to HELL than register him at the consulate!). I hope you are working with the ACA to try to correct this great injustice. If you need any help, just let me know.
@MarkPinetree Not only taxation without representation, but also a violation of the sovereignty of the country of residence. Money is being taken out of the country of residence, against the tax policy of the country, which hopefully was designed to encourage investment and assure retirement of its residents.