June 4, 2013 by Ellen Wallace“Entrapment” by the IRS resulted in “ruinous penalties” for ordinary Americans
GENEVA, SWITZERLAND – American Citizens Abroad (ACA) has provided evidence “of the arbitrary and questionable IRS (US tax office) management of the Overseas Voluntary Disclosure Programs” (OVDP) to members of three US Congressional committees working together to investigate IRS abuses, ACA said Tuesday 4 June.
The Geneva-based international group says that the 2009 OVDP in particular was “extremely prejudicial to Americans living overseas who sought to become compliant with their taxes due to errors or omissions under the OVDP. Believing they could come back into the system by simply filing the appropriate paperwork and paying any outstanding tax burden, these individuals were later told they would be hit with a standard penalty of 20% of the highest value of their bank accounts over a five-year period.”
@shadow raider. Yes, this woud be good. Folks have Always been inconvenienced by USA taxes, but never felt trapped until FBARs & OVDI came along.
You’ll have to do some thinking about how to deal with their argument to severely punish real tax evaders in the War on Tax Evasion.
@Chris, I see that the US has deported people for causing a large loss of tax revenue, but I can’t imagine that it would deport people simply for not writing numbers on a piece of paper, with little or no consequence to taxes. I think that many tax lawyers and accountants try to scare people to gain more customers.
@Just Me, I searched for more recent news about immigrants and the FBAR but I only found that one from 2011. It doesn’t surprise me that they were dismissed by the IRS like you said. It would be great if the IRS would just correct itself, but I think that a better and easier solution would be to really change the law. Congress is slow but it listens.
@Mark Twain, Don’t worry, I have plenty of arguments.
@Shadow Raider
I agree that the Kawashimas was a really bad case that involved fraud a 100s of thousand of dollars of tax loss. But check out this story. That’s the one that really gives me chills.
http://www.pennlive.com/midstate/index.ssf/2012/03/salvatore_purpura_owner_of_joj.html
There might be more that we don’t know. But in a nutshell, that guy, purpura was convicted in 1995 for two counts of making false statements on his income tax returns for incorrectly stating on his 1990 and 1991 returns that he didn’t have any financial interest in bank accounts overseas.
He had bank accounts in Italy at that time, but it was determined that the misstatements on his tax returns didn’t result in any loss to the U.S. government.
He got a FBAR penalty of $4,000.
His deportation case arose after immigration officials questioned the old tax convictions when he returned from a visit to Italy two to three years ago.
In an unprecedented move, the judge (Rambo) that convicted him approved a petition filed by Gover and the U.S. Attorney’s Office that allowed Purpura to withdraw his 17-year-old guilty pleas in that case, stating that at the time, noone had foreseen the drastic consequences on his immigration.
Still, immigration officials are now citing those convictions as evidence of “moral turpitude” in seeking to boot Purpura out of the country.
The article says that since 9/11 the government has been in hyperdrive mode with immigration.
Maybe in their immigration refor, they also need to address moral turpitude.
http://en.wikipedia.org/wiki/Moral_turpitude
That leaves immigration officers the power to abuse immigrants and kick them out for minor offenses. They really have your fate in their hands. That’s scary…
How’s this for irony: Overseas Americans get lambasted as un-American, harassed, accused of being tax cheats, and bamboozled by the IRS for not paying their “fair share” of taxes for services they never receive, and Congress won’t give them the time of day. On the other hand, if you are an illegal immigrant, Congress bends ove backwards to treat you nicely, Obama wants to provide you with a fast track to citizenship, you get to send $150 billion overseas without paying taxes, you get free medical care and social benefits, even a drivers licence even though you are in the country illegally. And if you are a criminal, the IRS will send you money for your fake tax refunds.
Is there any wonder why the world seems upside down? Why would Canada, the EU, or anyone around the world want to follow America as a “leader” if this is what they are doing?
I requested meetings with 8 congressmen to discuss the FBAR. According to my experience, about 3 of them should respond. I also made another presentation, focusing only on the FBAR (for some reason, Google can’t display it online, but you can still download it and open in your computer). Comments are welcome.
@Shadow Raider. Great presentation. Thanks again for highlighting the immigrants case, often forgotten.
If you want a reference, you can refer to this article on Reuters:
The perils of overseas tax disclosure: An immigrant’s story
http://www.reuters.com/article/2013/01/28/us-column-feldman-immigrants-idUSBRE90R10Q20130128
also mentioned in this post on IBS:
http://isaacbrocksociety.ca/2013/01/28/the-perils-of-overseas-tax-disclosure-an-immigrants-story/
Also, while some Americans abroad might use the streamline program, nothing is avalaible for immigrants to come into compliance, except quiet disclosures, which are highly discouraged by the IRS.
Thanks again.