http://federaltaxcrimes.blogspot.ch/2013/01/warnings-on-continued-government.html
A Tax Notes Today article reports that the Assistant Attorney General for the
Tax Division, Kathy Keneally, has warned that amnesty for offshore account
evasion will not last forever…
What disturbs me about this article is that bone fide residents abroad appear not to be addressed.
I appreciate Jack Townsend’s nuanced comments rather than Kathy Keneally’s Sabre rattling. But that is all the IRS knows how to do.
I love this comment:
Shall I translate that for you? 🙂
No need, I am sure.
Speaking to Ostriches in his title…
@Just Me: … is enticing foreign jurisdictions…
http://en.wiktionary.org/wiki/entice
Perfect for what they’re really doing. I wonder if the IRS knows the true meaning of “entice”, or if they’re just using it “myopically”?
@Watcher
You can always depend on a bureaucrat to use the exact opposite word for what they are doing….
When the stick is bigger than the carrot, it is Extorting rather than enticing. 🙂
http://en.wiktionary.org/wiki/extort
I love the description about ostriches. No mention about how ostriches are damn fine runners though. A better description for me would be a chicken with its neck on the chopping block.
The IRS just loves to brandish their axes, don’t they?
7,000,000 criminal indictments coming?
*I’m going to guess that they’ll focus on resident tax evaders and perhaps a few egregarious cases of Expats and accidental abroad but am instinctively cautious so am not willing to personally risk not being compliant. However, they may make a random selection of expats just to keep everyone on their toes.
I’d guess that this will start happening about a year after they first get their FATCA data which I believe is March 31st 2015 for information from 2013 onwards. I know other Americans living in the UK who don’t take my warnings seriously even though I’ve tried to explain it to them. They think I was a mug to make a disclosure to the IRS which is what I find so frustrating. My spouse knows some much wealthier Expats who are more or less sticking two fingers up to the IRS as well!
I’ve thought more about it and actually think it could look even worse to the IRS for these rich people to have not even been filing than to have filed and inadvertently under-reported investment income such as from what are our tax-free investment/savings vehicles in the UK. I would think that they’d be more likely to believe that a minnow might not have known about their filing and reporting requirements but would expect someone worth worth a few million to be more aware, especially as they’d assume that such people should be able to afford the professional advice, whether it be for financial planning or tax preparation.
I’d guess though that they won’t be super aggressive with Expats trying to comply who live in countries with IGA’s because they’d not want to risk a diplomatic incident. However, people who haven’t been reporting large accounts will probably start getting letters by 2016, I’d guess…
they are looking for people with Money. These people are left with the determination of who is rich by the criteria they share with their executive leader. The question to US filers is if this is the $10,000 (FBAR), $50,000 (FATCA), $200,000 (form 8938), or the Classic magic-million boundary—or whether it is totally to the whim of the agent. Obamas decision makers were chosen for their belief in that concept and for their ability to zero in on that number according to order.
*@Mark, yes, I think that if they zoom in on expats they’ll focus on the wealthier ones. I agree that we have no way of knowing what the magic number might be though would have thought $200,000 and more likely at least $1,000,000 would be about the minimum because of budget restraints. I don’t think it’s going to be worth their bother to aggressively chase after a genuine expat with merely $50,000 or even $250,000 in an overseas account where they live.
But I also wouldn’t be surprised if they decided to randomly audit ordinary expats to keep them on their toes. It’s part of why I think the IRS uses such threatening language regarding possible penalties because it is trying to use fear as a means of obtaining voluntary compliance. It certainly gave me enough of a fright whereby I concluded that I’d have to do something.
It will be intriguing to see how things develop. They could, however, regard it rather like the War on Drugs in that they may want to go after a few expat minnows as well just to prove a point. I could see especially see this happening if they were sticking two finger up and refusing to cooperate. But like I said, I’m risk-averse and didn’t want to take any chances, especially as I knew things could really be different this time due to the huge deficit and desperate ways to raise funds.
I’m guessing that they’ll use 8938 to enforce harsh penalties rather than FBAR because it’s a Title 26 vs a Title 31penalty and thus more easily enforceable by the IRS. In fact I beleive it’s one of the main reasons why they’ve added it to their arsenal.
At least one good thing that’s come from all my compliance is that it should make it easier for me to renounce if I decide to go ahead and do that.
@monalisa1776
What is the rationale to stay a USP and spend the rest of your life paying someone $2K+ a year to assist you in dancing through a minefield of tax compliance for a country that provides you with…?
I wish that the country in which I was born valued me and treated me with dignity, at least enough to for me to justify some kind of allegiance toward it. All I get is a deaf ear and $2k a year to dutifully file US taxes and to receive threats of greater reprisals. The United States of America punishes its citizens for moving beyond its borders-and they have a word to describe people who like punishment: masochists. Please, anyone, tell me how I can benefit from being a USP, short of moving back to the US, and I will consider it in my decision.
*@Bubble, I’m agreeing with you! I’be actually already sent in an application in hopes of being able to expatriate. It’s just I wouldn’t put it past them to ignore it, though others have reported that London’s pretty good, so touch wood. 😉
I’ve come a long way from summer 2011 when I first started posting on Expat Forum; At first, I considered the idea of even considering renunciation as essentially a treasonable act because, at that time of my understanding, it seemed so extreme and self-serving; to do so seemed like selling out and placing love of money and convenience above love of country.
I dreaded the realisation that to do so would mean permanent exile from my country of birth (and happy childhood) which is still heart-breaking even now. Eighteen months ago, I’d been too scared to even discuss the possibility with my family back there because I believed that they’d have been appalled; I didn’t want to cause disgrace to the family, especially as so many have done exceptionally well (doctors, naval captains, congressional lobbyists, ambassadors, judges, etc.) They are all so thankful for what America has offered them so believed they’d think I was really letting the side down.
I’m old-fashioned enough that I would have dutifully respected their wishes had they absolutely forbidden it; after all, no one had forced me to move to England so had blamed myself for not having kept better informed about my filing and reporting responsibilities. I felt I’d been a neglectful American so blamed myself for whatever might happen.
But as time went on, I came to realize that, while not happy with me, my family were more understanding than I thought they’d be. It was now more a case of being terrified that renouncing with still open statutes of limitations on my amended returns and FBARs could raise red flags and thus the risk of the mother of all audits.
I have since received more advice and have been warmed that this is indeed still a possibly though not very likely. As time passes, I grow less afraid and actually more angry about the whole compliance industry. I’m actually now more wary of the cross border professionals than the IRS in many ways. It’s set up to be deliberately complex so that we have to rely on an accountant. It’s all a racket.
Anyhow, I’ve come full circle and agree with most the other Brockers on here in that I’d feel so relieved to finally be free from all this and agree that It’s completely unfair for genuine Expats, especially when they have taxation with no effective representation. It irks me that we haven’t been listened to, even after Nina Olson spoke out for us.
So still heart-wrenching but need this albatross off my neck, especially as truthfully can’t afford ongoing compliance costs of realistically $2500 + per year, not to mention all the burdensome reporting requirements which seem a breach of my constitutional rights to privacy. And, the stress of worrying about huge fines for unintentional mistakes. So, yes, if I can get out of Dodge, I’m going to do so!!
A year ago, had hoped that we’d be listened to with hopes of reform but until then, which doesn’t seem any time soon, we’ll continue to suffer as second class citizens where we live if we retain the blue passport. As I’ve lived abroad for almost 25 years, I realise that I’m not realistically going to be ever moving back so feel It’s best just to simplify my life.
@monalisa1776
Thank you for sharing your thoughts. I think many of us, like you, have experienced a change in perspective over time, shaped by the events over the last several months that has led many of us to hold little hope that the situation will improve especially since things are appearing to get so much worse in the US. I struggle to find peace and the route to finding it, as the route will often involve self-sacrifice, as it does when we sacrifice for our families, jobs, future, nation, and for the things that fulfill us as human beings. To sacrifice for a nation that in doing so puts those priorities in jeopardy, and worse, for a nation that claims to cherish the values of family and the rewards of hard work is every day becoming more and more in conflict with my pursuit of peace.
I’d like to hear more stories from our relinquishers/renunciants about how they feel now that they’re on the other side, wouldn’t you?
@monalisa,
It has been amazing for me to see the changes in your thought process, from what appeared to me your being a passive victim caught in a bad relationship with the US you had so long ago moved from — to your emotions changing to anger. That anger, I think, has spurred you on to stand up for yourself and help you make decisions that may better affect the rest of your life. You’ve taken control of your own situation vs being controlled.
@Monalisa–it will cost them next to nothing to match unreported accounts from FATCA data (SS#)/reports from the banks vs form 8938. I’d expect it to be no more difficult than when they receive a 1099 from a source of income and someone forgets to report. Easily expect correspondent (mail) audits to automatically be dispatched. Instant $10,000 fine rising and rising if you fail to deal with it.
*@Ben, what you say doesn’t reassure me but agree that especially from April 2015, many Expats may start receiving correspondence audits for unreported accounts being reported via FATCA. I’d imagine that at first these non-filers will just be given stern warnings to get filing their tax returns and FBARs; but certainly by 2017, it will have become household knowledge that everyone has to file, regardless of whether they’ve been living abroad for years and years. I’d guess that fines will start being issued in late 2015 and actually enforced by 2017 with it becoming harder and harder to argue reasonable cause.
@monalisa,
Re
Yes, there is another great US industrial complex being formed (similar to those of US MILITARY, BIG PHARMA, HEALTHCARE, HEALTH INSURANCE, AGRICULTURE — the US IRS FATCA Compliance Industrial Complex, coming to a country near you (and me).
You’re right, it is set up to be deliberately complex and over-reaching / punitive — but that is by US Congressional legislation. As I see it, the cross-border and US tax professionals did not create this monster. There will be, as we have seen, those who will use this new industrial complex as a business opportunity, without the requisite knowledge.
Many of us will need competent professionals to help us get through this (as I did). My education consists of high school and the common sense I’ve learned in the school of hard knocks; my husband is a talented musician and jack of all trades. Neither of us has financial / US tax expertise, so it needs to be hired. Many will have the expertise and smarts to do this on their own (I don’t). It is up to each of us to research, do our own due diligence to determine who to hire, to spend our limited funds wisely. I want someone competent to help me through this maze so I don’t find I have un-planned for further consequences. I am paying for their years of specialized education, their experience, their hand-holding at times and their ethical reputation. The Canadian Certified Accountant that does my Canadian taxes and who does much international work as well will no longer take US Person clients. With the new FATCA Form 8938, she does not want to pass along to her clients the absurd cost she would have to just for that one form. She has enough clients seeking her services without taking on the further US complexity and penalty landmines. I would be surprised if there are, right now, enough really qualified professionals to help all that may need it, especially in smaller communities.
I absolutely resent having to pay one penny of my hard-earned savings and retirement funds to HAVE TO DO THIS. I abhor that anyone without any financial means to hire professional help is left stranded to deal with this on their own if they don’t have the knowledge to do so themselves. We are all in a frigging mess, lulled into denial by our own complacency and the US turning a blind eye for decades. It is unjust we are collateral damage and that we may be further damaged by the buy-in of our own countries to FATCA and intergovernmental agreements.
I want and NEED to protect myself; I want to protect my family and anything I may leave for them when I’m gone; I want to not to have to think of this after I have checked out of the US properly. The only way I’ve been able to do this (for me only) is to hire professionals I have determined I can trust. So far, that has worked for me. Soon I will get on to more valuable use of the rest of my life.
*@Calgary, exactly! I’m not personally blaming my accountant; in fact, I will always be grateful to her that she had enough common sense and decency to amend my returns quietly and keep me out of OVDI. And even so, I will have lost over some $45,000 in total when combining all the professional fees and double taxation. That’s still pretty dire when we’re on limited incomes. And all from money ultimately sourced from my fully British husband who had put assets into my name to protect me in case he has another stroke with the local authority spending all his savings to pay for longterm care. From investments that were fully legal, tax-efficient and correctly declared where we live From what I gather, OVDI could have been over $250,000 because of the added attorney and accounting fees plus miscellaneous FBAR penalty. I’m not kidding when I say it would have bankrupted me.
I realise that she has hopefully saved me from financial ruin and likely divorce. It’s all been such a terrifying time because I can solemly swear that it had never ever been my intention to evade U.S. tax. I had just been a young woman in my early 20s when I first arrived in Britain so hadn’t been aware that I’d create so many problems for myself by doing my planning like other Brits, especially as I was permanently settled and even had dual nationality. Had no idea about PFIC taxation or foreign granter trusts, or the saving clause in the tax treaty.
When I first learned in early 2011, I felt so betrayed: not just by the U.S. but also Great Britain because it seemed almost like entrapment. I kept asking myself why the HELL the financial sections of the papers, the local mutual funds I had invested in or even the British investment magazines hadn’t given a clearer warning about the perils for Americans and U.S. persons, of whom they’re are many living here.
But at the same time, I’m sure that these attorneys, tax preparers and dually- compliant certified financial planners have lobbied Congress to maintain the complexities so we have to continue relying on their expertise. Wouldn’t it have been such a relief to have easily been able to use helpful software and e-filing instead?
I’ve concluded that I’ll be so relieved if I can make a clean break from all this so I too can get on with the rest of my life without having to worry about what might turn up on the doormat…
@ calgary411
You probably realize this but you had one good thing going for you — Calgary! You live in a large city and therefore you stood a chance at finding a competent professional to guide you through the IRS form maze. Unfortunately we live in a small mountain town now and rarely make the trip back to Calgary anymore. It’s a beautiful drive to Calgary that we have always enjoyed but if we had to make that trip with pockets full of cash and a box full of bank statements to visit a US tax professional (there is no such beast where we live) it would feel like we were going down the road to hell. We have no choice but to plod through our IRS mess on our own and this is the same problem everyone has who doesn’t happen to live in an urban centre. At any rate, you will soon be leaving the stench of all those forms with all their complexity behind you and then our mountain breezes will carry the sweet scent of freedom to you. The rest of your life will be as it should always have been, dedicated to the happiness and well being of you and your family. 🙂
*Indeed, Em and Calgary! It’s so sad that It’s come to this but seems the realistic way to survive, especially if you know for certain that you never have any desire to return to the U.S. to live there. And yes, Bubble, It’s taken me a long time to come to the same conclusion. I don’t feel clever enough to become trained as a cross border professional though will admit that the idea had crossed my mind once or twice.
How can I blame people for wanting to get a piece of the action in what will be a vastly growing industry, especially when other jobs are becoming ever harder to find?
@monalisa1776 & all
You have to wonder how many of the current filers are filing just to renounce, 20, 50, 75%? Many of the compliance complex will have these clients only until they renounce, but even at that I’m sure it’s enough to pad many an accountant’s retirement nest.
Actually, as the USP abroad goes extinct, so goes the cross-border tax specialist!
Yes, Em, I count among my blessings that I live in Calgary; amazingly to reach the professionals I hired, I walk across a bridge to downtown, a 20 minute walk. I absolutely know how lucky I am to have had that; to have moved to Canada and raised my family here in the first place and so much more here. (My cost now might be a small price to pay for the difference in the simple but productive life I’ve enjoyed here compared to what it would have been in the US, just taking into account my family’s medical conditions.)
And, just think of the difficulty presented for US Persons in so many other countries.
Relief but not realistic. I think both yours and mine and many others’ US tax compliance requirements, monalisa, are beyond the simplicity of helpful software and e-filing, but perhaps some young innovative IT minds are working on that. As it stands now, we would be paying later in resultant penalties assessed. Sort of like ‘Pay me now or Pay me later’.
*@Bubble and @Calgary, too true. I often wonder if renunciations really surge if the U.S. Government will become really obstructionist as in making it almost impossible to book expatriation appointments pretty much everywhere. I feel more and more that I’ve got to try and get out ASAP before it could be too late!! So so sad that It’s come to this.
I agree that there are simply too many pitfalls to beb able to a DIY filer any longer.
I fly to the U.S. on Monday to visit my folks; I just hope and pray that my name will not have been forwarded onto some sort of list via the renunciation department of the U.S. consulate. Still nerve-racking times…
@ Mona Lisa,
I wouldn’t worry about visiting the US. Everyone who’s reported to Brock and Maple Sandbox about entering the US (land or air) after renouncing, whilst awaiting or after having received their CLN, has reported no problems at all, and that information is reported on a database accessible by DHS. I doubt that enquiries about renouncing are reported.
This is such a stressful situation in our everyday lives. I hope the trip and being with family will give you some temporary relief from the stress. Have a great — and relaxing — time!
@monalisa,
That’s fantastic that you’re making a trip to see your folks. Put worry out of your mind — I’m sure you will have no problems on your trip. Relax and fully enjoy quality time with your family!
(And, stay firm in your decision. It is the right one, the one that will set you free from the absurdity.)
Bon voyage!