By Amy Feldman
NEW YORK | Mon Jan 28, 2013 3:25pm EST
(Reuters) – When Andrew Winfield applied to become a U.S. citizen in 2011, he realized he owed taxes on accounts he had left behind in his native England.
So he paid what he believed he owed — $2,800 in back taxes, plus the estimated interest and penalties – and entered the U.S. Internal Revenue Service’s overseas disclosure program.
But when the IRS assessed its penalty in November, Winfield was stunned to learn that it would be $28,000 — 10 times the amount of tax he owed from 2003 to 2010.
“My first reaction was: ‘There’s no way in hell I’m going to pay that,'” the 39-year-old Wake Forest, North Carolina, resident says. “It’s kind of crazy when you look at the numbers and compare the penalty to the $2,800 (in back taxes) due.”
The IRS has been aggressively seeking out taxpayers with offshore assets, asking them to come in on their own to avoid further prosecution and requiring foreign financial institutions to send information about American accounts.
But the voluntary disclosure programs have lumped together overseas Americans and immigrants with relatively small accounts and those trying to evade taxes by putting their money offshore….
@Christophe
Okay I just read the article. There is only one thing that can be reasonably inferred from this article:
If a person willfully fails to file an FBAR, there “could” be a problem. There are very few people who don’t file FBARs because they are willful.
There is nothing in this article that could possibly suggest that something less than “willful noncompliance” could be an issue.
I would point out that, in the past the schedule B question has simply asked if you have a foreign bank account and then refers you somewhere else. It never even says that there is a requirement to file an FBAR. Even the IRS takes the position that the answer to the Schedule B question is only evidence of willfullness and is not determinative.
So, let’s say a Green Card holder has not been filing FBARs because he wasn’t aware of the requirement? Should this be remedied prior to becoming a citizen? I don’t know. If the non-compliance is the result of “ignorance” and therefore not “willfulness”, perhaps you can tell me what the concern is.
Is this a new “make work project” for lawyers. As Shakespeare said: …
@Shadow Raider, they say the crime of moral turpitude is having checked the wrong box on Schedule B, which a lot of people are “guilty” of.
I wish I had not been stupid enough to seek advice with my immigration lawyer who told me to enter OVDI, since I am not doing it…
We’ll see how things turn out for me. My green card is up for renewal next year. That’s what keeping me up at night. I am not planning on applying for citizenship just yet.
Here’s my comment, just posted now. But, don’t worry. It will get censured too:
SwissPinoy –
Some of America’s hunger for censurship appears to have even infilterated IBS
Comment much appreciated. Way too many smug Brock blockers. You are not one; you are one of the few who understands freedom.
I wonder why they even bother allowing comments on this story if it’s for censuring nearly all of them…
@christophe
At least one of ours got through, the only one on the entire planet! Pretty milk toast though, I have admit.
@usxcanada
Censorship cuts both ways.
This story on the New York times, is about immigrants going home, unable to obtain their greencards.
With No Shortcut to a Green Card, Gay Couples Leave U.S. http://nyti.ms/WRnAhW
On the Global Edition, there was the opportunity to do a little education via comments for those that don’t want to hear the message, that escaping the ‘Green Card” curse, probably wasn’t such a bad thing for this gentleman’s partner. He would not be saddled with the U.S. Person shackle. Of course, I got a reply it was garbage for me to make that assertion, but never mind. 🙂
@Just Me: And look which Senator features very prominently in that story: our old friend Chuck Grassley who wants to eliminate the FEIE and raise taxes on Americans in London so he can pay for more pork for Iowans.
To be fair a green card is not a bad thing if you actually want to live in the US. It is a problem when/if you want to leave. In our enthusiasm to promote the difficulty for people living abroad, I think we need to accept that some people do want to live there, and that is OK. It helps our message if we don’t get too caught up in the “America is terrible place to live” story, because it just gets us labelled as un-American, which doesn’t help us get sympathy from US residents. I for one live in Canada, not because I wanted to escape the US, but because my home is here.
….of course a greencard is not a bad thing if you want to work in the US – the problem starts when you sell everything and leave because you are done with the US and when nobody tells you about the 8/15 rule or that the date of abandonment of status as a lawful permanent resident means nothing with regards to your tax obligations – or a I-407 means nothing without form 8854 … exceptionts after exceptions – fair is something different !
What about this beast called “exit tax“ ?
@Canuckdoc
RE: “To be fair a green card is not a bad thing if you actually want to live in the US”
The problem, and I think you know this, that many do not understand the consequences of the decision they are making.
It is not part of any education or out reach program that goes with obtaining that GC. Show me where the State Department educates a new immigrant about the new obligations, or even where the IRS.gov web site has a front page link for obligations of new immigrants?
I think Mopsick makes a good point, that is not something they teach in any Citizenship lessons.
For many, the greencard is held up as the shining prize to be won. I understand the attraction, and if you have no intention ever to return to your home country, like many who once arrived by ship at Ellis Island, it was a ticket to more freedom and opportunity then they ever had. However, times have changed in our globalized world. We arrive and leave by Jets now, and are not as shackled by limited travel options inside the boundaries of our immigration choices.
I warn folks, because of the GC perceived value is so high. I feel people also need to be aware of the tax obligations and form filing requirements that come as the additional ‘fees and requirements’ with that membership. If the buyer of the GC is fully informed, as to future obligations, then who am I to criticize that they have made the choice? As you say, it may not be a bad thing for them.
Sadly as we know, the only way the IRS educates is by pulling old statutes off the shelf and hammering those that fail. Theirs is a T, P and F educational program. (Threats, Penalties and Fear ) Since the IRS jihad began, the most they have done is put up a link about obligations for Dual Citizens and expat Americans that is buried on their website somewhere. Go search for it.
http://lnkd.in/KtaZrt
So, I do think it is appropriate to give warning to those that aspire after the ‘U.S. Person’ designation, because, in 98% of the cases, I would argue, they do not know the meaning of the term and what this represents for their future. If not me or you, doing the informing, who will?
Choosing to get a green card is as much a “Buyer beware” decision as choosing to buy “Gold coins” from a hawker on AM radio. Each have undisclosed fees, hidden costs with markups way beyond what the market should be, and neither are the quick path to riches that the purchaser is lead to believe. If you know that going in, and still want to buy the product, then yours is an informed decision and that is the way it should be. IMHO
@Just Me
I agree 100% it is buyer beware. There is not enough education. It is important for people to be warned and they are not getting the information they should have. There needs to be a full and open discussion about the risks of a green card, but if we just talk about it as a curse, nobody will listen.
I thought, that your comment
“escaping the ‘Green Card” curse, probably wasn’t such a bad thing for this gentleman’s partner. He would not be saddled with the U.S. Person shackle.” implied that US residency was universally a curse, which I thought was not entirely fair. Far be it from any of us to know what is in his head about his desire or not to live forever in the US.
And, as I understand it, the biggest problems with Green cards is that you get caught up in all the messy stuff if you leave the country but don’t formally give it up. However, I would hope that if one knows about the risks, one would do the “formally giving up” thing, whatever it entails, and thus escape those problems. I don’t really know enough about it. Correct me if I’m wrong.
As they have moved themselves to the UK, and being , it appears, highly talented people, they will probably be successful there and never look back. They may even be eternally grateful for the push which got them moving overseas to a new life .
But the American half of the partnership will now have all of the “American’s overseas” problems which he would not have had to deal with if he stayed in the US, and which we know all too well. Life will not get any easier for him! He will also need to be educated about that.
@CanuckDoc
It agree with your assessment about the American half of the partnership, and I take your point on not implying that the GreenCard is a universal curse. For some, and would say still a majority, it is a blessing, compared to what they have either escaped or come from. That said, that blessing comes with strings, and my point is still, ‘Buyer beware.” Circumstances change, and we can not all foresee what the future holds for us, so you need to consider the implications of becoming a U.S Person. Many never learn any of these lessons in Civics classes, as we know. 🙂
It is a little bit like Marriage, I guess, where you are deeply in love and enter into a life long relationship, not thinking, it might not work out. If you knew there was no such thing as “no fault” divorce, you might think harder about it, but then, maybe not either. As they say, Love is blind, be it in the choice of a mate or a country to call your own. 🙂