Badger found and suggested a Brock post on this article. It’s very interesting in light of IRS’ punitive approach to US persons abroad who did not know of their filing obligations. Seems to me that if IRS would publicise — and apply — common sense remedies, like other countries do, they’d actually get people complying instead of getting sick with fear.
“IRS Never Told Taxpayers They Could Get Penalty Relief” Washington, D.C. (October 17, 2012) By Michael Cohn. “Approximately 1.45 million taxpayers who qualified for relief from tax penalties totaling close to $181 million never heard from the Internal Revenue Service that they were entitled to it and never received it, according to a new government report.”….. .”The report, from the Treasury Inspector General for Tax Administration, noted that the Tax Code imposes penalties on taxpayers with a filing requirement who fail to file a tax return or fail to timely pay the full tax shown on any tax return. The IRS waives those penalties for taxpayers who have demonstrated full compliance over the prior three years, but only if the taxpayers request penalty relief. The IRS does not widely publicize the opportunity to request this waiver, known as a First-Time Abate.”……
The IRS has a horrible reputation.
http://youtu.be/G56VgsLfKY4
(How do I embed the video here?)
We were told by the IRS’s Tax Advocate Service that the First Time Penalty Abatement is available under OVDI.
Since ij’s favourable results in opt out, there was someone else who posted on Brock who also opted out but received penalties. I’m sorry, I can’t remember who this was and what thread it was on, but I believe he/she was an immigrant to the US. I wonder if abatement was discussed with his TAS agent.
@ShadowRaider re: “The IRS has a horrible reputation” . And so very very well deserved.
In a most recent example, the IRS – who says it wants compliance; waited until well past this year’s filing deadline for the 2011 FBAR and 2011 return, and the first time filing for individual 8938 FATCA forms this year, not announcing until late June that the details for the ‘streamlined compliance’ procedure would take effect Sept. 1st, yet dragging out the announcement of the still-mysterious eligibility details until just before the 1st.
Thus, some of those who have been waiting since January for the process and eligibility guidelines to be released, and who didn’t file the most recent FBAR, 1040 return, and FATCA form (for those req’d), have now found that they won’t qualify, AND are now delinquent for yet another tax year.
Another group, also wanting to become compliant, who faced mounting uncertainty as the IRS delayed, in the face of zero information about how to proceed, and as dangerous deadlines came ever closer, may have cautiously gone ahead and filed the 2011 FBAR timely, and also the 2011 1040 return timely while waiting, only to find now that as per the finally published guidelines, filing the 2011 1040 return timely this year disqualified them from the new process.
If the IRS had come up with the promised process well in advance of the 2011 FBAR and 2011 1040 and 8938 FATCA form deadlines, more minnows would have been eligible for the new streamlined process, and fewer of those who didn’t qualify, would not have fallen into another year of non-compliance while awaiting IRS instructions.
Others, who might have filed only the 2011 FBAR, (in order not to be another year’s FBAR delinquent – and who couldn’t really say by now that they didn’t now know it was required) plus cautiously filing a request for an extension to file the 2011 1040 return, there is absolutely no clarity as to which actual 6 years of FBARs are req’d.
For example, do they file 6 ‘delinquent’ FBARs – including the expired 2005 year – so that it would be 2005-2010, plus the 2011 one already filed on time, OR, do they file only those delinquent and unexpired, 2006-2010, and include a note and copy of the 2011 one already filed on time?
Surely the IRS would logically anticipate that by dragging out the promised details of the streamlined eligibility guidelines from January 2012 until almost September 1st 2012, some minnows would go ahead and file for 2011 rather than fall into another year of non-compliance – without any way to know if failure to file the most recent forms would be held against them – or whether they would be forgiven that failure on the basis that no IRS guidance on the streamlined process had been forthcoming in time. The IRS causes needless confusion and complexity that then endangers those trying to comply even further.
Again, is compliance truly what the IRS and US wants? I’d say no judging by the recent streamlined process design and sketchy details. They just want penalty revenue.
If Michael Miller, or Roy Berg are reading here, we sure could use some informed commentary on this situation.
I just read again the law that establishes the FBAR and I almost laughed:
Considering the need to avoid impeding or controlling the export or import of monetary instruments and the need to avoid burdening unreasonably a person making a transaction with a foreign financial agency, the Secretary of the Treasury shall require a resident or citizen of the United States or a person in, and doing business in, the United States, to keep records, file reports, or keep records and file reports, when the resident, citizen, or person makes a transaction or maintains a relation for any person with a foreign financial agency.
http://www.law.cornell.edu/uscode/text/31/5314
Filled with irony ShadowRaider. Thank you for finding and sharing that. Truth is so much stranger than fiction.
It would be quite fitting to have the preceding post by ShadowRaider also added to one of the FBAR threads so that it isn’t missed.
@bubblebustin – I think you may be referring to Moby.
@badger, as usual, comments are dead-on.
@Shadow Raider, aw, c’mon, almost? LOL
@Bubblebustin, someone posted on Jack’s blog, that he was in a situation very similar to ij, opted out and the IRS maintained the FBAR penalty that he would have paid inside the program. Proof that you have to be lucky… He said that even though his examiner recommended no penalty, it was not agreed by the opt out comitee, or someone higher up in the hierarchy. I reposted his story on ij’s opt out success story post on IBS. Not sure the first time abatment applies to FBAR. Disapointing…
@nobledreamer
Yes, Moby, thank you.