On Friday, the Government Accountability Office released a new Report to Congressional Requesters on “Offshore Tax Evasion”, which warns that the “IRS Has Collected Billions of Dollars, but May be Missing Continued Evasion”. It provides more in-depth information about the characteristics of OVDP participants, and also reveals some details about the treatment of (and government attitude towards) people who make quiet disclosures.
For those U.S. Persons abroad too busy or in too good a mood to deal with the depressing drudgery of being insulted by the GAO for seventy-two pages, Stephen Ohlemacher of the Associated Pressreleases has helpfully regurgitated the contents of the report and all its fallacious assumptions, without bothering to commit any actual journalism such as, you know, interviewing actual “offshore” voluntary disclosure participants who have been well and truly screwed for daring to save where they live (as Amy Feldman did back in 2011), or breaking down some of the appalling statistics in the report.
Who were the actual OVDP participants?
The first question we all at the Isaac Brock Society have about OVDP participants: how many were home-grown Whales, how many were immigrants and immigrants’ kids with money in the old country, and how many were emigrants or accidentals residing abroad for decades? Well too bad, the GAO can’t tell you and they clearly don’t give a damn anyway. While the word “offshore” appears on literally every single page of the report besides the back cover, the word “immigrant” is mentioned on precisely two pages, and “expatriate” and “abroad” appear zero times. The sole discussion of immigrants:
In our case file review, we found examples of immigrants who stated in their 2009 OVDP applications that they were unaware of their FBAR filing requirements. We found they had often opened banks accounts in their home country prior to immigrating to the United States. IRS officials from the Offshore Compliance Initiative office stated that although there are several FBAR education programs, none are specifically targeted at new immigrants. Furthermore, these IRS officials were unaware of any IRS work with other federal agencies such as the State Department or the Department of Homeland Security to educate recent immigrants about their foreign account filing requirements.
Okay, so why not?
These officials stated that one of the challenges that they face in their office, which is part of IRS’s Large Business and International Division, is that taxpayer education and outreach is the responsibility of IRS’s Wage and Investment Division and that issues concerning FBARs fall under IRS’s Small Business/Self-Employed Division.
Yeah, that’s a really good excuse for ruining people’s lives: “not my job, I’m just following orders!”
Statistics on minnows in the OVDP
At page 13 of the report, in the table “Selected Penalty Information for 2009 OVDP Individual Taxpayers with Closed Cases as of November 29, 2012”, one of Just Me’s long-standing questions is partially answered: how much of the much-touted $5.5 billion collected by the OVDP consisted of actual tax owed, and how much was penalties? I reproduce the relevant portion of the table here, and add my own calculations of certain ratios (in italics) in the bottom two rows:
| 10th percentile |
25th percentile |
Median | 75th percentile |
90th percentile |
|
|---|---|---|---|---|---|
| Offshore account(s) balance | $78,315 | $190,365 | $568,735 | $1,595,805 | $4,054,505 |
| 2009 OVDP penalty | $13,320 | $35,670 | $107,949 | $310,476 | $793,166 |
| Additional tax owed, tax years 2003–2008 | $103 | $1,661 | $12,748 | $60,449 | $190,399 |
| Ratio of penalty to tax owed | 129 | 21.4 | 8.46 | 5.13 | 4.17 |
| Penalty as proportion of account balance | 17.0% | 18.7% | 18.9% | 19.4% | 19.5% |
This is Tax Justice, American style: just as the law prohibits both the rich and the poor from sleeping under bridges and stealing crusts of bread, both the rich and the poor paid between a sixth and a fifth of their account balances as Offshore Penalties for an indulgence against the unpatriotic sin of daring to save outside the Land of Milk and Honey, not even counting the extra tens of thousands of dollars of lawyers’ fees. We’re talking about retirees and people nearing retirement (over half of OVDP participants were above age 55) who in four decades of working had managed to save five figures and were expecting to be able to use it to enjoy their golden years, or for the younger ones to use it as a down payment on a house so they could start raising a family — not to pay thirteen thousand percent penalties to the government of a country they don’t even live in — in some cases, a country from which they had emigrated decades ago as teenagers or in which they had never lived at all.
In plainer language: thousands of middle-class immigrants and emigrants owed Uncle Sam less than three hundred dollars of back taxes per year, and for that the IRS put them through a nightmare involving tens of thousands of dollars of penalties and lawyers fees, and threats of criminal charges and jail time if they dared to exercise their right to opt out. This is not tax collection; this is asset confiscation, plain and simple. But don’t expect that the U.S. mainstream media will ever report on this; they’ve spent too long demonising everyone with “offshore accounts” as giant tax evaders living it large to ever go back and publish apologies for all their propagandistic lies.
This of course won’t matter at all to Homelanders, who will continue screaming for traitorous emigrants to be stripped of all their assets and thrown into jail over two and three digit annual income tax deficiencies. One wonders how many of those selfsame Homelanders have similar levels of use tax deficiencies — apparently quite a few, given the “internet sales tax” bill in Congress right now — and how many would agree that they should face five-figure fines for that.
Quiet disclosures
The other part of this report which may be interesting to friends of Isaac Brock: the GAO’s statistical tools for detecting Quiet Disclosures.
To assess IRS’s efforts to detect quiet disclosures, we used IRS tax return data from the tax years covered by the 2009 OVDP, tax year 2003 through tax year 2008, to identify potential quiet disclosures and compared our results with those from IRS. We also used tax return data from tax year 2003 through tax year 2010 from IRS and Report of Foreign Bank and Financial Accounts (FBAR) data from the Financial Crimes Enforcement Network (FinCEN) to assess other ways taxpayers may be circumventing some of the taxes, interest, and penalties owed.
At page 23, they go on to discuss why quiet disclosures are the root of all evil, and reveal that they have been able to detect a far higher number of Quiet Disclosererers than those lazy chumps at the IRS managed. (No word on the false positive rate of their methodology, nor the actual tax owed).
Quiet disclosures matter because if IRS does not identify them, it undermines the incentive to participate in the offshore programs. IRS’s offshore compliance enforcement efforts, including the offshore programs, deter taxpayers with noncompliance related to current offshore accounts, or offshore accounts that might be opened in the future. If taxpayers are able to quietly disclose and pay fewer penalties than they would have in an offshore program, the incentive for other noncompliant taxpayers to participate in a program is reduced. When quiet disclosures remain undetected, they also result in lost revenue for the government. Further, if quiet disclosures remain undetected, then IRS will not have information on the characteristics of these taxpayers and their accounts— characteristics such as bank names, country names, and promoter names—used to build cases against others.
We identified 10,595 potential quiet disclosures, a number much higher than the potential quiet disclosures identified by IRS.28 In a series of Questions & Answers that IRS first released on February 8, 2011 to announce the 2011 offshore program, IRS reported that it had identified, and will continue to identify, taxpayers attempting quiet disclosures. In the Questions & Answers, IRS stated that it would be closely reviewing amended tax returns to determine whether enforcement action is appropriate.
Of course, harassment of people making quiet disclosures — in a good-faith effort to comply going forwards without the ridiculous waste of money on tax lawyers to herd them through the OVDP — may also affect the incentives to come into compliance at all. In contrast it will greatly increase the incentives to “ostrich” behind a passport with a non-US birthplace or renounce and wave your middle finger at the IRS, while warning everyone you know about the dangers of moving to the US rather than any civilised country in the world which doesn’t treat immigrants who dare to keep money in their old countries as criminals — but don’t expect the GAO to understand such a sophisticated concept as “blowback”.
In a footnote in 8-point font, the GAO is forced to admit:
Only an IRS examination can determine actual quiet disclosures and there are many reasons why a potential quiet disclosure may turn out to be something else. According to IRS, these include taxpayers who had legally paid taxes on their offshore income, but had not previously filed FBARs, and who were paying additional taxes with their amended returns for reasons unrelated to the offshore accounts and newly filed FBARs.
But with that stupid little caveat out of the way, the demonisation can resume! Throughout the entire report, the GAO keeps pounding the table with the fallacious idea that everyone who dares to have an account outside of the US is gaining some unfair benefit at the expense of The Murican Peepul. This is best illustrated by Appendix IV, “Hypothetical Examples Comparing Account Balances, Length of Account Ownership, and Penalties Comparing Account Balances, Length of Account Ownership, and Penalties”, which compares the annual returns achieved by a person who pays U.S. taxes with a person who holds an “offshore account” and of course therefore pays no taxes whatsoever — since of course there is no other country in the world an “offshore account holder” might be residing in that would also levy taxes on bank returns.
In Appendix I, they finally get to their methodology for detecting Quiet Disclosures:
To assess IRS’s efforts to identify taxpayers who may have attempted quiet disclosures, we used the same datasets that we used to identify the 2009 OVDP population, as described above, plus FBAR data from FinCEN. To determine the reliability of FinCEN’s FBAR data, we reviewed relevant documentation, conducted interviews with FinCEN officials knowledgeable of the data, and conducted electronic testing of the data to identify errors or outliers. We determined that these data were sufficiently reliable for our purposes. To identify potential quiet disclosures we conducted a three-step analysis. First, we used IRS tax return data to identify taxpayers who filed late or amended returns for the applicable 2009 OVDP period.
We then used FBAR data to identify taxpayers who filed late or amended FBARs during the same time period to create a combined list of taxpayers. Finally, we removed from this combined list any taxpayers that we had previously identified as 2009 OVDP participants. The remaining taxpayers constitute our population of taxpayers who potentially “quietly disclosed” offshore accounts. From this population, we used data from amended tax returns to identify whether the amended returns had positive adjustments to income, and whether taxpayers filed amended returns for multiple years. We confirmed this methodology with IRS officials. The results of our analyses are shown in appendix VIII.
The most hilarious part: when you go to Appendix VIII, unlike the rest of the report you do not see any dollar amounts whatsoever, simply vague references to “positive change in tax liability” among people who filed late or amended FBARs. That tactic of lumping together late FBAR filers and amenders is itself rather amusing — by definition, an amender is someone who knew about the requirement to file before, whereas a late filer might be someone who heard about FBAR for the very first time in his entire life of living outside the U.S., and sent in the forms as soon as possible in a good-faith effort to “do his duty”.
But of course, actual facts must not be allowed to interrupt the drumbeat against evil Quiet Disclosererers. If you didn’t already understand the U.S. government’s attitude, well, as Phil Hodgen would say, consider this report a gentle tap with the clue stick.
@RoyBerg
Thanks for the clarification. What are your thoughts on whether those who HAVE filed tax returns for the last 3 years an file amended returns in the Streamlined compliance stream? (As per the discussion going on today).
@Eric
I have had some time in Sydney to really try to catch up on my reading of this report and the analysis.
I noted your comment.
Just Me’s long-standing questions is partially answered: how much of the much-touted $5.5 billion collected by the OVDP consisted of actual tax owed, and how much was penalties?
I am still struggling to find the complete answer in this GAO report. It doesn’t seem to be there, but I might get close in figuring it out.
One thing I can tell, is that in 2009, the OVDP penalties collected were $2.81B (bottom of page 13)
I can see additional tax owed by percentile, but no easy way to extrapolate that to total additional Tax. As they say in their note..
Ok, but what would have been so hard about publishing the total? They must have it. Are they deliberately leaving it out for some reason, or am I so blind that I am missing it?
I would just love to put total OVDP penalties and total OVDP additional taxside by side together for a simple and clear comparison, even if only for 2009 the program that I was most impacted by, and looking at the two charts between pages 10 and 13, I can do that.
That means is that I do know more than I did before this report.
The GAO provides total penalties collected just for 2009 OVDP, the penalties collected were $2.81B. If that is correct, and not a typo then the total represents 49% of total revenues which is $5.7B and more than the $5.5B they trumpet as their total program success from 2003 up to December of 2012.
Stated another way, penalties in the one 2009 OVDP period = 49% of total revenue in the 2003 OVDP, 2009 OVDP, 2011 OVDI, as closed out by year end of 2012. The 2012 OVDP and streamline program data was not available.
But now, I can go farther and extrapolate to totals based upon 2009 ratios.
I could do that extrapolation based upon data on chart on page10
Total collected (unpaid taxes, 2003 2009 2011
penalties and/or fees)
as reported by IRS $.2B $4.10B $1.4B
no data
Actual taxes collected.. $.2B $1.29 B ?
09 ratio of tax to total rev 31.5%
Apply 09 ratio % to 2011ttls $.440B
Total tax by year $.2B $1.29B $.440B = $1.93B Total Tax
Total Penalty by year 0 $2.81B $.960B = $3.77B Total Penalty
Total Tax and Penalities $4.10B $1.40B = $5.7 B Total All
Penalty to total ratio 66.1%
Are you seeing anything I am doing wrong, missing or can add to that analysis. I think I have answered my question close enough for government purposes, thanks to this GAO report.
Why the GAO report doesn’t provide more straight forward clarity as to what the total total comparisons were, I do not know. Why couldn’t they didn’t break it out simply on their chart on page 10. Maybe that is not a message they want you to take away. But even without it, penalties appear to be way more than back tax revenues collected.
Let me repeat Penalties were 61.5% of the total collections (my suspicion from the start)
So, for all the talk of huge loss of tax revenue due to offshore tax cheats hiding earnings in secret accounts, could it be that if you do the analysis it might not seem so significant in light of this comparison? Just saying.
Then you add to this picture statements like this:
Those were part of the group that I guess we would call Whales, but even they don’t seem to fit the stereotype “Offshore Tax Cheats” that the American journalist like to shout in their headlines and the IRS likes to re-enforce with their press releases. Interesting analysis.
Finally, I was just reading Commissioner Shulmans’ statement back in 2010 on the OVDP.
This quote jumped out at me…
Even then, he liked to lump everything together for better PR impact, but when you look at that $200,000 figure and compare it to the percentiles in this report, what was he talking about? It wasn’t the Mean, and it wasn’t the Median as reported in the GAO report, but I guess that could simply mean their data was incomplete for this to mean much in context of what the GAO is reporting now.
The main point is, all along in this reporting process they are determined not to give you an indication of what is really being collected. I now wonder if that 2009 OVDP total tax collection number on page 13 chart wasn’t a slip up by the GAO and they really didn’t mean to include it.
Also, when you look at the Factors that influenced participation on the chart on page 10, it seems to me this gives evidence that good ole DOJ work coupled with media attention on using existing Tax laws is all that is necessary for compliance without GREAT BIG COMPLICATED GLOBAL SYSTEMS like FATCA/DATCA/GATCA.
I can’t help but speculate how much better the compliance would have been, had they dispensed with all their complicated FAQ and lengthy and expensive review processes and did not assess ‘one size fits all’ Draconian penalties; that compliance would have had even a better outcome in terms of total participants, and they would not be scaring the bejesus out of QDers attempts to get back into the system without life alternating penalties and forcing many to shed their citizenship. But, we will never know.
BTW, looking at page 10 and the charts of the various OVD programs, I have to ask, why didn’t I hear about the 2003 OVDP? They obviously did NOT advertise or promote it. Did anyone here ever hear of it back then?
I fear their take away lesson is, that harsh penalties work, although there certainly had to be other factors on why that program was not wildly successful. Maybe the biggest factor was that they didn’t have a comparable whistleblower gift that was dropped in their laps by UBS banker Bradley Birkenfeld. Also they had not been delegated FBAR penalties yet to really scare the devil out of the unwary, and Shulman hadn’t come to town on a mission on March 24, 2008.
There is certainly more you can glean from this report, but I do want to note that a lot of my long term questions my last questions for Shulman remain unanswered… although this report does help with some of them at the margins.
Here they were, Dear Mr. Journalist if there is ever one of you that reads this and wants to do some digging into the subject…
Q.1.
Of the total population of OVDP /OVDI participants, what was the Minnow to Whale ratio?
(Note: GAO would allow you to draw an meaningfully arbitrary Whale line based upon percentiles somewhere to the left of the Median, which means to me that Whales were probably only about 25% of the total. However, if you use the fact that the GAO reports that 378 participants generated 49% of penalties in excess of $1 Million than the Minnow ratio could be much higher depending on the characteristics of the participant (which would include other factors) or where you want to draw your dividing line)
To judge success we need to know what portion of the total joiners were your target UBS type evader Whales who was deliberately engaged in evasion schemes by hiding millions in secret accounts offshore? What portion was just the Minnow expats and immigrants who recognized their compliance failures and wanted to “do the right thing”? (Note: still not clear)
Were Whales 30% of the population or 70% ? Were Minnows 10% or 90% ? A Minnow to Whale ratio would give us and you a better an indication of the success of your VDP efforts. (From this report, it appears Whales were certainly less than 30%, but more analysis needed.)
By extension how many participants had overseas addresses and how many were relatively new immigrants to this country as compared to the “Homeland” evader demographic we think you were targeting? (Note: No idea from the GAO report and the IRS has refused FOIA requests in this regard.)
Q.2.
What was the actual increase in FBAR compliance as represented by a percentage?
(Note: No idea from the GAO report)
I.E., did we go from 3% to 4%, or 2% to 10%, etc? What compliance percentage would you consider successful? Are you targeting 10%, 30% or 90%? (Don’t know)
Any claims of success must show this. Surely you must have estimates of what the total population of FBAR filers “should be” that you can now compare to the increases that have occurred as a result of your efforts. What was the starting base line, and what is the 2011 FBAR compliance number now? Please provide us some hard numbers to calculate percentages.(none provided)
Q.3.
Was there a FBAR educational outreach effort you could have employed that would have been more effective in increasing compliance if that was the goal? (Note: From GAO report, answer is obviously NO!)
Did you follow any of the Enhanced Outreach and Educational Guidance, as issued in the Sec of Treasury Report to Congress April 24, 2003? (NO)
http://1.usa.gov/ILjYXb
There are 10s of millions of Expat and Immigrants that have normal funds in their home country or country of residence for many reasons unrelated to hiding funds from the IRS offshore.
Where was the educational effort? Why were so many caught totally by surprise at your sudden enforcement of an administrative form they had NEVER heard of. (NONE, just finger pointing in the GAO report)
Q.4.
Of the total revenues collected, what was new taxes collected and want was just FBAR or “in lieu of” penalties?
(My extrapolation from limited GAO data Taxes $1.93B Penalties $3.77B Penalties represented 66.1% of total revenues collected of $5.7B)
Are you being effective in getting new tax streams, or are you just co-mingling penalties and tax revenue with no recognition of the distinction? (Don’t know and yup) What portion of these revenues are just a one-off ? (Don’t know)What portion will be re-occurring? (Don’t know) I.E., if foreign tax credits from high tax countries offset U.S. taxes, then what is the re-occurring income tax R.O.I. for all this enforcement effort? (Don’t know)
Q.5.
What was the “cost vs benefit” analysis that you did prior to launching these VD programs to show that such extensive use of IRS examiner resources was a cost effective way to increase compliance?
(Note: From GAO report, no idea)
You say you are a BIG business, so that is what a BIG business would do! It seems like your VDP with all its ‘examiners’ has been very expensive to operate. How has the cost/benefit analysis compared to the actual cost of operating the program with its lengthy processing time?
(No idea)
What is the average processing time of a taxpayer from “get to go”? In my case it was 851 days. Am I the ‘mean’ or an ‘outlier’?(Don’t know) What did it cost the IRS to process me versus the TAS negotiated reduction you took from me for a benign failure? (Don’t know)What is the average processing cost per participant? (Nothing indicated in GAO report)
Well, that is enough for tonight. Thanks @Eric for stimulating me to look again at my questions and the data GAO provided provided in their report. I have only scratched the surface, and really a shame the direction it has taken with its focus on squeezing more out of the QDs. Time and time again, the bureaucrats, be they from Treasury, IRS or the Congressional technocrat kind, their focus always off base and directed towards more punishment or coercion as the only instrument in their tool box to make a voluntary program work better. They will never learn.
@Eric
Sorry the alignment of the numbers doesn’t remain columnar in the comments. Before I hit enter, they were nice and neat, but sure you can figure it out. It was a very simple analysis. Bottom line. Penalties as high as 66.1% of all revenues collected.,
I don’t really see the point of analysing QDs unless they want to assess FBAR penalties. That’s the only way to squeeze more from those who have corrected their SOLs for tax returns.
It seems those who chose the “go forward” are more at risk, because they’re the ones who still owe back taxes. Either way, both groups are now compliant. The IRS achieved what they wanted.
What’s the point of harrassing those people. This is persecution.
The whole thing sickens me even more. It just shows they are desperate for money.
I can’t wait till we have a new IRS commissioner. We can count on Nina Olso to go at it again with the new guy and try to put some common sense to that insanity.
Another fear I have (but that may be paranoia 🙂 is that is we ultimately see FATCA fail, the IRS will come back with a vengeance at those QDs and GFs sort as a retaliation for not being able to get more names easily with information exchange, because yes, QDs and GFs are easy to detect, as the GAO pointed out.
@Chris
There’s no SOL for those who’ve never filed before, why not extend that rule for all tax filers? Mark Twain just posted an article that states that in 2008 a law was passed to eliminate the 10 year limitation on the collection of Social Security debt. Could income tax be next?
http://www.usatoday.com/story/news/nation/2013/05/06/mother-social-security-debt/2138219/?morestories=obnetwork
@Just Me: Your analysis looks right to me. Which is weird, because if I look at things from another angle it seems very unlikely that the numbers could add up to have penalties be as low a proportion as ~60%.
At p.56 they actually look in depth at about 30 of those top 6% who accounted for 49% of the revenue; this is only place where we get to see an average penalty for a population and not just a median penalty. And out of what they paid, more than 80% was penalties and less than 20% was taxes. And from p.13 we already saw the trend that minnows paid a far higher penalty-to-tax ratio than whales (though we only get the medians not the means, even the median penalty for the whales was 80/20)
So just from those numbers I don’t see how the overall penalty/tax ratio could have fallen all the way to 66/33 let alone 60/40 by December, unless between March and December they closed a bunch of cases with extremely high tax owed both in absolute terms and relative to their account balances (i.e. they were getting very good ROI on the funds in their accounts), which cases they for some reason hadn’t been able to close before then.
Has anybody thought of bringing the GAO report to Nina’s Olson attention?
@Chris…
I can’t imagine that she is not aware!
@Eric
Good points, but without actual totals, everything is just meaningfully arbitrary assumptions and projections. Still, at 66.1% with all the caveats, it still shows that taxes and interest which covers 8 years or more represented on 33.9% of the 5.7 billion total, and really shows this off as a FBAR fundraiser that it is. At the 80/20 for that high end percentile it is even more so blatant.
@Chris…
Re ur: What’s the point of harassing those people? This is persecution.
But don’t you know, that is what Tax Justice is?
BTW, this was an interesting tidbit I got from an immigrant I know who has opted out of the program and had a favorable response after all the time, anxiety and effort. He is one that would be in the 10th percentile.
He had just got an email from someone he was helping through the process. I have to think that his must be a common theme of people who have been impacted by the IRS jihad. A need to help others avoid or extract themselves from the OVDP compliance quagmire.
He says….
Message from one he is helping
And they probably told him that if he opted out, he might be fined $10,000 per account per year, amounting to even more than the $27,000 inside the program. I wonder if he entered on the advice of a lawyer, or because of the fear of the IRS hyperbole. Looks like he’s going to be fine on opt out though. The part that I don’t understand is why the IRS doesn’t realize that this is such a huge waste of time and readjust the message for minnows. I hate when people do things that don’t make sense.
@Eric…
Is this you?
http://federaltaxcrimes.blogspot.com/2013/05/guest-blog-analysis-of-data-in-gao.html
BTW, what is your guess of the number of people in the 10th Percentile… 10% of identified 19,337 in the 2009? as stated on page 12 note 14?
Interesting article regarding the GAO report:
http://articles.economictimes.indiatimes.com/2013-06-04/news/39740791_1_offshore-voluntary-disclosure-program-patel-law-offices-rahul-ranadive
“I think the GAO’s report is more interesting in what it doesn’t say explicitly, but hints at. The impact for Indian Americans is profound given the GAO’s specific reference to the situation of immigrants, many of whom probably shouldn’t be in the OVDI/OVDP programs,” says Rahul Ranadive, a tax attorney with Florida based Global Tax and Estate Counsel LLP.”
Ranadive strongly believes that the quiet disclosure option is not yet out of bounds. “I think silent disclosure remains a viable option for some taxpayers, but it remains to be seen whether IRS has the resources to pursue GAO’s recommendations on how to screen and audit more silent disclosures. So, silent disclosures will remain a viable option still, but it will be a far rockier road for those going down that route,” he says.
“I have consulted with hundreds of clients regarding their offshore compliance issues and some clients have been able to tolerate the risk of a quiet disclosure. In some cases, after a full legal analysis, we have suggested a quiet disclosure a possible solution.”
However, a quiet disclosure must be a calculated decision. There are numerous factors to consider in electing between the OVDP program or a quiet disclosure including banks involved, source of funds, number of accounts, magnitude of assets, and risk tolerance of the taxpayer. Do consult your tax advisor and make an informed decision.
Also with the impending Foreign Account Tax Compliance Act (FATCA), regulations relating to foreign accounts are only going to get more stringent. “Our law firm expects unabated aggressive enforcement of the US tax laws, including increased criminal prosecutions and civil audit examinations. We have been advising our clients to expect the unexpected (and the worst) in their tax treatment and disclosure of offshore assets.” Patel concludes.
Although, from the previous comment,
…it’s all a crap shoot to know what is best to do for ourselves and our families — there is no easy way to be an unaffected free US Person Abroad unless the US Person Abroad is just damn lucky / undetected (but now having to hide for the rest of our lives). We are all criminalized one way or another.
The IRS hates Quiet Disclosures (QD) and they really mean it.
…unless, perhaps “Excuses, Excuses”
I expected better out of Charlies Rettig
IRS FBAR Voluntary Disclosure Program: Taxpayer Interviews.
http://www.forbes.com/sites/irswatch/2013/06/12/irs-fbar-voluntary-disclosure-program-taxpayer-interviews/
All Homeland Whale directed ….That is his audience
GAO Report. Recently, the Government Accountability Office (GAO) issued a report based on a review of the 2009 OVDP (IRS Has Collected Billions of Dollars, but May be Missing Continued Evasion, GAO-13-318, March 27, 2013). See http://www.gao.gov/products/GAO-13-318. In part, the GAO recommended that the IRS explore different methodologies to evaluate filed amended returns outside the OVDP that have the potential to include reporting of interests in foreign financial accounts. The GAO Report asserts that a failure by the IRS to identify and pursue “quiet disclosures” will undermine the integrity of the OVDP and the incentive of others to participate in the IRS offshore programs. It should be anticipated that the IRS will pursue examinations of these amended returns in some manner.
Our friend Mopsick has an interesting post,, where he says that the time it takes from CID to approve people for OVDP has gone up from 24h to 72h.
http://mopsicktaxlaw.blogspot.com/2013/06/the-irs-fatca-nsa-and-international.html
Wonder what the reason is…. sequester or more scrutiny…
@Just Me, Jack also picked up on the story and has a blog post on the subject:
http://federaltaxcrimes.blogspot.com/2013/06/quiet-disclosures-that-dont-stay-quiet.html
Who is GD right for?
Chris..
That was kind of a strange posting. I think a lot of it was his attempt to be humours and was a spoof to goon Conspiracy theorist. But, you don’t need to have a conspiracy to have bad policy and actual bad impacts. There are many in the compliance complex that have to be uncomfortable in their role of adding to the roundup of Big DATA and would rather NOT make the connection to NSA efforts to crack AES protection of all financial transactions. They are a big portion of the whole effort, and I think they would rather not raise their eyes and gaze upon the reality, that they are Big Brother’s co-enablers
@Just me, perhaps Wednesday is smoke-a-bowl-of-crack day at Mopsick Tax Law.
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Eric…
Your analysis has had impact… 🙂
Just Me says
June 26, 2013 at 7:07 pm (Edit)
Note this new entry on Jack’s blog. Sound familiar?
New Taxpayer Advocate Discussion of Problems with IRS OVDI/P Program (6/26/13)
The Taxpayer advocate has issue a new report. The portion relate to the IRS’s OVDI/P initiatives is here. I cut and paste some of the discussion (footnotes and tables omitted):
A Government Accountability Office (GAO) analysis shows that the offshore penalty paid by those with the smallest accounts (i.e., those in the 10th percentile with accounts of $78,315) was disproportionate – at least 575 percent of the tax, interest, and penalties on their unreported income. It was also disproportionately greater than the amount paid by those with the largest accounts (i.e., those in the 90th percentile with accounts of more than $4 million) who paid 86 percent or less. Moreover, the IRS initially processed applications from benign actors who are expected to opt out much more slowly than others, though it has recently begun to process them more quickly, as shown by the following table