According to the latest news, Americans with Israeli bank accounts could face troubling tax season, the Swiss “Program” is now being forced upon Israel. Citizens of Israel living in Israel are now being pressured or forced into OVDP so that their retirement savings can be cleaned up by attorneys and US money grabs.
Here are some interesting clippings from the article which ring a bell:
- The banks are revealing the data because they are participating in a special program with the U.S. Department of Justice in order to avoid criminal prosecution themselves
- Americans with Israeli bank accounts may be in for a financial nightmare in just several months if they haven’t filed their taxes properly.
- Americans are able to take advantage of the Overseas Voluntary Disclosure Program (OVDP) for people who have violated the law.
- Americans with Israeli bank accounts really need to talk to an attorney
- OVDP is to give individuals who really did not know about the law a chance to make good, and to get people back into compliance and back into the system
National Taxpayer Advocate, Nina Olson, is being ignored.
The author quotes a lawyer from a very well known U.S. tax firm – a firm that has handled a number of OVDP cases:
This is an extraordinary statement.
Assuming the correctness of the reporting, there are two possible interpretations to this:
1. The purpose of OVDP was/is to confiscate the savings of innocent taxpayers; or
2. The lawyer doesn’t have a clue what he is talking about out.
Either way, the article makes it clear that the lawyers are as dangerous as the IRS.
If I were a member of this law firm, I would be pushing very hard to get either a retraction or clarification of the statement attributed to their lawyer.
The article itself is very confused and seems to be blurring FATCA and OVDP for Swiss banks. For example:
Of course, a second message is that you can’t trust what you read.
Far too many Jews I know think they can just ignore this and it will all go away. They don’t understand that their banks are and will throw them under the bus in the name of self preservation.
Of course, the larger problem is the American view of state ownership of it’s people as a source of income despite where they live, earn or consume services. Such slavery was not part of the founding of the country and only became a part of the American landscape with the advent of Jekyll Island and the creation of the Federal Reserve.
Once that dirty deed was done, it became necessary to create a means to extract money from the public to feed the beast. Thus the IRS was created. Many studies have shown that the income from corporate taxes and all other forms of taxation apart from taxes on personal income pay the bills of the nation. This includes defense, education, roads, and etc. The entire receipts of the personal income tax goes to service the interest owed by the government to the Federal Reserve.
Ruchelman sounds like past IRS commissioner Shulman when he stated that OVDI was the last and best chance to become compliant, a statement that misled me and many others like me into the program. What he’s really suggesting is that benign actors enter OVDP, then opt-out, something the NTA criticized the IRS for leaving people no other option to do, as quiet disclosures are now considered taboo by the IRS. Also, he wasn’t reported as mentioning Streamlined as an alternative.
I’m surprised by these statements, as C & D has shown more balance in the past.
He might be suggest an “opt out” once people retain the firm. At least the way this is reported, the article suggests that OVDP is the way to go. No mention of any other options.
The article and the advice in it are dangerous.
I got a similar letter form my ex-bank. I am a GC-holder, and have been living in the USA for 5 years. After immigration I had my foreign account, which, naturally, I didn’t close immediately. After 2 years I closed it, and transferred all funds to my US-account. It was a small account of <50,000 USD, which produced a miserable interest of maybe 100 USD per year. The letter I got shocked me. The bank insists that I enter OVDP in case I didn't file FBARs or declare my account, which I didn't. I didn't know anything about declaring foreign accounts and FBARs. The letter and the IRS site made me so miserable that I couldn't eat and sleep for a couple of days. I felt like a criminal. After reading this blog and all comments (thank you so much!), I was able to calm down. The IRS will probably get the information from the bank. Horrible!
When did you close your account? It’s surprising that the bank would send such letters to people who have closed their accounts years ago. Would you mind sharing your country of origin? Switzerland? Israel?
I am exactly in the same situation as yours, closed my account 2 years ago. My country of origin signed an IGA. But my bank hasn’t sent me such letter.
It was my understanding that closed accounts would not be reported (i.e. only accounts opened as of 2014 would be reported when they start information exchange in 2015).
When I learned about this whole mess, I also luckily found this site, educated myself, and file correctly since then. The status of limitation has passed on the taxes. Are they really going to dig 6 years back and assert non-willful FBAR penalties on minnows who chose the “go forward”?
Paranoid, it is in Israel. I closed the account in 2011. I didn’t declare my foreign account and interest for the year 2010 and 2011. The interest amount was maybe $200 USD in total. I am definitely not a person for the OVDP 2012 program since I don’t even have a foreign account anymore. It is absurd.
You are correct. Everyone is enslaved by the US Federal Reseve. Income tax goes to servicing the USG’s debt (Treasury bonds) to the Fed. Its the greatest scam in modern history.
@Sanjuro, I’m not up-to-speed on the sitation in Israel, but it might be similar to that in Switzerland. In Switzerland, a bank would have to pay the US a fine for your account unless you prove to the bank that you filed. Threatening you to join OVDP is the easy way for them to prove that you filed. As I understand it, the bank would not report you to the IRS if you did nothing (the case in Switzerland). It would simply have to pay a fine to “clean up its past”, as they call it. To help the bank and to be on the safe side of things, it would probably be best to do the steamlined program.
@SwissPinoy, Sanjuro does not qualify for the streamlined program. He is a green card holder living in the US.
I am surprised the bank sent him that letter for an account closed in 2011. It doesn’t really make sense…
What year are the banks support to report on when the reporting starts?
With the “Program”, banks pay penalties going back until 2008. With FATCA, I understand that banks will report going forward.
Swizerland, Israel, I wonder which country is going to be next. It seems like they’re getting the data based on the data mining they did from OVDI. Maybe India is next?
@Sanjuro, your tax statute of limitation has expired. Even if they audit you, you don’t owe them anything. At worst, they could possibly go after you for non-willful FBAR penalties, which should not be very high due to your small account. Google FBAR Penalty Mitigation Guidelline.
If you wanted to be totally compliant, you could file your past FBARs (the status of limitation is 6 years), but this might be more risky than anything else, since now FBAR filing is only electronic and people can’t provide reasonable cause letters anymore.
I think your gut feel is right.
@Paranoid, thank you very much for your response. I am very thankful for this community, and nice people. Without this community I would probably end up in the OVDI program, as my bank wanted. By the way, my bank is totally innocent regarding my bank account. I opened it many years before 2008 when I was not a “US person”.
Coming in late here –
As an ex-employee of Leumi (who lost my job because of FATCA) I know that they have been requiring foreign account holders at least (ie not resident in Israel) to sign a non-US declaration (w-8) for years. This was already part of the account opening protocol in 2009.
They saw the writing on the wall years ago and have been preparing for this.
Of course in Sanjuro’s case like he says they would not have any information at the time he opened the account as he was not a “US person” then.
Sanjuro can I ask which bank sent you this letter?
Sanjuro, I dont know all your facts but you might be better off doing nothing since it is likely that on audit you might get a low penalty and you might not be audited at all. Read some of Jack Townsend’s blog about whether you should join the program at all.
As to Israel, they might have some b—s left which the Swiss obviously don’t at least as far as people not resident in the US at the time of account opening who had minimal interest and clearly not egaging in “hiding” or “tax evasion” over $200 in interest. Heck, the cost of fees, mail to/from Israel probably wiped out the $200 anyway.
Mr. Ruchelman should read the article by Scott Michel and Mark Matthews of Caplin& Drysdale (!) written in Fall 2011 (2+ years ago) where the authors note that many of the new disclosures are from relatively benign actors.