by David Kestenbaum – May 14, 2013 3:34 PM
…Other people who come forward aren’t even sure they’ve done anything wrong.
Marvin Van Horn and his wife live in New Zealand, where they have a checking account and retirement savings. They weren’t intentionally hiding anything from the IRS. But he heard a story on the radio about offshore tax cheats — and realized that the rules might apply to him.
So he decided to go through the IRS’s voluntary disclosure program. He learned he would have to pay back taxes for six years, which came to about $20,000. That seemed fair, he said. But then there was the penalty: $172,000.
Van Horn says the penalty would have gutted his retirement savings. So he appealed. And after 851 days (he was counting), the penalty was reduced to $20,000.
There’s a spectrum in these cases, attorneys say. There are people who went to great lengths to hide money, people who didn’t know they were hiding money, and a lot of people in between.
One other thing about the 39,000 people have come forward so far: They’re probably a drop in the bucket. Somewhere between five and seven million U.S. citizens live abroad. Fewer than 1 million of them declare offshore accounts, as required by law.
I love the comments! As for NPR, there is much room for improvement. It could expand on this:
Lois Lerner, the senior executive in charge of the IRS tax exemption department and the federal employee at the center of the exploding scandal over the IRS targeting of conservative, evangelical and pro-Israel non-profits, was given $42,531 in bonuses between 2009 and 2011… Her annual salary in 2009 and 2010 was $172,200, and $177,000 in 2011 and 2012. With the bonuses, Lerner was paid a total of $740,931 for the four-year period.
With scandals like that, it is no wonder that the US government needs to heavily fine the politically unrepresented!
“Somewhere between five and seven million U.S. citizens live abroad. Fewer than 1 million of them declare offshore accounts, as required by law.”
Now that they’ve scratched the surface, they need to dig deeper into “why”.
I feel pretty confident that Just Me is working on just that. Thanks Just Me for your hard work in getting this on NPR’s radar.
….the penalty was reduced to $20,000…… wrong – it was $25,000
Might not be the best thread for that, but look at this quote from John Boehner in this article, that announces Danny Werfel, the controller of the Office of Management and Budget as the new IRS acting commissioner:
http://www.reuters.com/article/2013/05/16/us-usa-irs-idUSBRE94F10Y20130516
“House Speaker John Boehner accused the Obama administration of “remarkable arrogance” and said the scandal might lead to jail time for IRS officials, pointing to a law that mandates up to five years in prison for government officials found guilty of extortion or “willful oppression.”
Loved it. Yeah Schulman should go to jail over OVDP. That perfectly describes this program. extortion and “willful oppression.”
This article/radio show is VERY BAD for US citizens abroad. Those on this blog are filtering it through your personal headspace – you know who U.S. citizens abroad are. But, the way the flow of this goes:
1. Who are these people who are “hiding” money
2. The lawyer confirming those hiding money includes criminals (although some are worse than others)
3. Then interviewing one U.S. citizen abroad (presumably an example of hiding money, even if unknowingly)
4. Closing with only one million of approximately six million accounts reported
The flow is such to get any and all homelanders to believe that the accounts of U.S. citizens abroad are “sacred instruments of tax evasion”.
Imagine how your basic homelander would interpret this. They would think you are a criminal.
But, maybe those at the Isaac Brock Society are delusional. Maybe all U.S. citizens abroad really are criminals – you just don’t know it. The crime – leaving the Homeland.
If I’m a criminal for leaving the homeland, then so be it, as long as I’m free.
Was Marvin’s penalty reduced to the amount of tax owed (20k)? Or was it the tax owed 20k +20k penalty=40k?
@Jefferson D. Tomas
My penalty was lowered from $172K to $25K I accepted it to end the ordeal.
@Just Me, so is the total that you had to pay $45k or 25k?
I just learned today that I’m supposed to check the flag on some schedule that I never filled out before, given that the free-filers never had me fill it out and given that the interest was less than inflation, bank charges and the minimum requirement for reporting (if I understand it correctly). So, now I’m off to finding that checkbox so that I can check it, file and liberate myself from this system once and for all.
Here’s the first link on the topic of the checkbox:
http://www.avvo.com/legal-answers/correcting-foreign-account-checkbox-by-amending-ta-707747.html
A local savings account with a less than 1% interest is a “Foreign investment”? Only in Amerikana la la land.
Gotta love first the answer:
“Criminal charges”? “tax evasion”? “tax lawyer”? This is mad.
@ SwissPinoy
a growing tendency in the US, where the law is about legalities and
justice is only an accidental result of the sysyem
http://www.cato.org/policy-report/…2010/criminalization-almost-everything
That link didn’t work, but this one might: http://www.cato.org/events/criminalization-almost-everything
@Calgary, @Swisspinoy and @Patricia, the U.S. system is set up so that the government can use legalities to nab people they don’t like. All this has certainly been a disturbing eye-opener to me too. It was one of the main reasons I decided I only wanted British citizenship even if there eventually is major tax reform. After all, even if they improved the tax system for expats, there’s nothing stopping them from changing it back again…
@monalisa1776, I know what you mean. The last time that I lived in the US, I found myself being rather politically active on various US issues. When I then came to Switzerland, I found myself being rather content with the situation while having no real need to be politically active. Then, my mother passed away, forcing me to read on US issues, following with me coming to IBS with the hope of learning from the rich more, and now I find myself, again, being critical of the US government from Switzerland. That’s honestly the last thing that I want to do, but I must admit that it is rather entertaining for now. Yet, I don’t really want to be telling Americans how they should be running their country. It is really not my problem.
@Swisspinoy, I admire how people on here are becoming assertive in voicing their opinions to government. I must admit though that my gut instinct is self-preservation. I am wary of becoming too visible on various comments all over the web and was admittedly too frightened to write a detailed letter to the Ways and Means.
I wouldn’t put it past them to make scapegoats of certain people. I think one of the reasons why someone like Just Me can be so open is because he has officially cleared his name with the IRS. I, on the other hand, had a situation that was more nuanced. My accountant fortunately believed I had reasonable cause as I had taken ‘ordinary due diligence’ and had always filed timely. However, I am wary of sticking my neck out, especially now that I’ve actually renounced and still have several years of open Statutes of Limitation.
Perhaps in five or six years, I’ll feel more confident about coming out more into the open about how I feel about this whole fiasco; but I suspect that by then that I will have moved on. I feel a mixture of huge relief, bewilderment, grief and bitterness about the whole thing. I have suffered a substantial financial loss, many LCU’s and have had to give up my birthright. I will always resent the collateral damage. But this is not Paradise; my pastor points out that I can one day be a citizen of Heaven, *lol* .
I am not an America-basher though; however, I am a realist and agree that you have to have your wits about you when dealing with all the legalities and anomalies their system throws at you…I want as simple a life as possible.
@monalisa1776, well, for me it is like this. I have limited savings, so there is not much that can be taken from me. If something is taken from me, then it might be what little remains of my 300+ years of American ancestry. In that case, I would have no problem with cutting all ties to America and never flying over America again. I also believe that an American abroad should be able to free-file and be politically critical. So, if I am slammed for free-filing and expressing opinions, then others will hear about it. I’ll be just fine without America, but America won’t be fine without expats. 🙂
@Swisspinoy, I like your spunk 😀
@Swisspinoy, regarding your comment
http://isaacbrocksociety.ca/2013/05/16/who-hides-money-outside-the-country/comment-page-1/#comment-345902
I made that post on avvo. Another reason why I freaked out a couple years ago when I found out. But with the help of you guys at ISB, Michael Miller and my reading of Jack’s blog, I hope I chose the right decision for me. Nonetheless, I won’t feel safe until the SOL expire and my green card is renewed next year. Isn’t that sad?