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….
The point is that from the perspective of the IRS there is NO good reason for any US taxpayer to have a bank account outside the US. If this weren’t so horribly unfair it would be funny.
No question: Form Nation is out of its mind.
This guy tried to “come clean”.
It’s bloody well time for the video. And now for something completely different (different version):
I see our good friend 30-year IRS vet is doing his work leading innocent people to the slaughter. Bravo. Whatever happened to reasonable cause?
The Monty Python Skit would be funny if it wasn’t so horribly true.
January 28, 2013 — Living With FATCA Uncertainty: What Should A Foreign Financial Institution Do Until A Bilateral Agreement Is Signed? http://mopsicktaxlaw.blogspot.ca/
@calgary411, The IRS should consider ignoring FATCA as unworkable, like it did with the inheritance tax on covered expatriates and like the INS/USCIS did with the Reed amendment.
*Nothing against government workers but I am a little surprised that any government workers would be putting in 12 to 15 hour days. I thought DC was pretty much a 9 to 5 place.
@Tim, It is, but I know a few government employees that work more than 10 hours per day. Still, 12 to 15 hours every day of the week sounds way too much.
*Shadow Raider
I think there is a lot of truth to what Mopsick says but I don’t know quite to what extent. I think Congress doesn’t so much not want to repeal FATCA as it simply doesn’t want to deal with FATCA.
I think no matter what FATCA is dead in the long term the question is how do we kill it in the short term.
@calgary411, and what about this; ….”the U.S. Treasury has pulled off something like a “bait and switch”
public relations coup! Consider what has happened in the last 12 months:
on the very same day the IRS announced Proposed Regulations previewing
some of the most invasive, horrendous, and burdensome provisions of the
Internal Revenue Code, (February 8, 2012) it also announced with great
fanfare, a pledge of cooperation from the G-5 who are eager to get a
piece of the action. In effect the US is saying to the world, “here is a
preview of how miserable we are going to make your lives once FATCA
kicks in. Want to avoid this pain? Just get your governments moving on a
bilateral agreement and we will leave you alone.””http://mopsicktaxlaw.blogspot.ca/
Yes, something to be proud of for sure. Shows the US up for what it is, an arrogant power mad extortionist.
And how can Harper and Flaherty sign Canada up to that deal and sell it at home? If even an ardent IRS apologist describes it as “invasive, horrendous and burdensome”?
@Badger
I believe our 30 year IRS vet has a lot of good-cop-bad-cop polarity about him. The environment in which he spent those 30 years probably has a lot to do with it.
Winfield should be talking to the Taxpayer Advocate. And, at what point, or ratio of penalty to tax owed, or account balance to FBAR fine, does an IRS penalty become egregious enough to be officially ‘confiscatory’ and possibly unconstitutional?
Will there finally be a case to test that one on? Will this case – where someone is willing to come forward and tell their story, finally get more traction?
Will it finally highlight a system where the wouldbe VP Ryan can forget to report tens of thousands on returns and get ZERO penalty, and the Treasury Secretary Geithner can ‘forget’ to report and pay tens of thousands of his taxes, AND get ZERO penalty, but the individual in the Feldman article is hit with a confiscatory penalty – because of a preexisting family account back home?
@Badger
We unfortunately don’t know the circumstances, but it would appear that he’s being railroaded, and yes, he definitely should talk to the Taxpayer’s Advocate Service. For self-preservation reasons, I suspect lawyers rarely recommend clients going to TAS who then will use the penalty mitigating provisions of the Internal Revenue Manual. Why recommend a route that a taxpayer go himself when you can charge thousands to it do for him?
@bubblebustin, not sure what he is really up to. And wondering how his appointment to that Tax Advisory Panel for American Citizens Abroad is going? Does he say things differently than he does on his blog? Does he describe FATCA the same way to them? Does he stand up for immigrants with pre-existing homeland accounts with his IRS friends – or only when they are clients?
@Badger
Like the IRS, shifting sands. Makes it hard to get a footing.
@bubblebustin
Scary – the very last victim in the Monty Python sketch is China, which is just about right. I always thought those Python boys were light-years ahead of their time.
@badger and bubblebustin,
All good questions — what does Mr. Mopsick say when advising the ACA? Will he realize and acknowledge to old IRS colleagues they, Congress and the US are arrogant, power-mad extorionists, as you say, badger? They indeed are.
@calgary411
Sometimes playing both sides of the fence results in a picket firmly imbedded in a delicate part of the anatomy.
@bubblebustin
“I believe our 30-year IRS vet has a lot of good-cop-bad-cop polarity about him. The environment in which he spent those 30 years probably has a lot to do with it.”
Hmm, here’s another possibility: perhaps 30-year is the real Gollum, complete with tragic good/evil Smeagal/Gollum dichotomy, desperately clinging to his 72,000-page Precious, even though he knows all too well it can bring nothing but misery and madness to all who touch it. Eventually, in a blind fit of rage he realizes the truth and screams, “Thief, Thief, Thief! IRS! We hates it, we hates it, we hates it forever!”
Okay, I’m done – you may return to your regularly-scheduled conspiracy programming 😉
@Deckard1138
Very creative story telling! I love it. What happens next?
@deckhard, the Gollum metaphor is an interesting one. It may very well be the only way that those in this longterm could possibly justify what they see happening, and also participate in it. Only a Gollum could actively live with the obvious and egregious contradictions.
I tried to comment on this story, but my comment hasn’t come out of moderation…
@bubblebustin
“What happens next?”
Oh, nothing much – just an interminable journey by a brave bunch of little people from the underground fighting one seemingly insurmountable battle after another, then a couple of really BIG battles with lots of heroism, tragedy, betrayal, redemption, fire and smoke (and mirrors), big evil eyes in the sky, invisibility cloaks that don’t always work, good and bad (financial) wizards duking it out, a bunch of really long false endings and other stuff like that. You’ll need plenty of popcorn to get through the whole thing.
One FATCA ring to bind them.