An interesting reference to a pay-walled issue of Tax Notes Today{2014 TNT 216-3 (11/7/14)} on Jack Townsend’s blog:
“Regarding so-called quiet disclosures — when taxpayers file amended returns and delinquent foreign bank account reports without coming in through the offshore voluntary disclosure program or the streamlined program — Best [senior adviser to the deputy commissioner (international), IRS Large Business and International Division] said, “The IRS recognizes that a quiet filing is a choice that the taxpayer has.”
But Best added, “We would prefer that taxpayers come in through one of our programs so that we have tracking mechanisms, information gathering mechanisms set up, but ultimately it’s up to the taxpayer.“
Given the fact that this statement has been given by an IRS representative and there have been noticeable improvements over the past three years in the efforts of the IRS to address problems, perhaps we are seeing the end of this prolonged torture. Mr. Townsend indicates he has been of the opinion that he has viewed QD as a real option. The only downside is the possibility of willful FBAR penalties which would seem unlikely for most minnows. I wonder if anyone would feel safe enough to go ahead with this? Or is the damage done by all the penalties, vicious threats and slanderous labeling of expats undermined all possible trust of the IRS?
Seems like an acknowledgement of what has been known all along, QD is probably the best option.
In fact, this might even be read as “quiet encouragement” of QD.
@YogaGirl
Exactly, along with Fact Statement 2011-13, a lot of hoopla over….nothing?
Someone pointed out a while back that the original December 2011 Fact Sheet is still up on the IRS website. This is the Fact Sheet that invited delinquent US taxpayers who lived abroad to file what were, in effect, quiet disclosures. The Fact Sheet went on to explain that the IRS would not assess penalties in cases where there was no evidence of wilfulness. Of course, the primary reason for being delinquent would be if the taxpayer didn’t know they had a filing obligation. The IRS reserved the right to determine if wilfulness was involved.
The following summer, they announced the first Streamlined program which was more formalized but essentially the same thing although it included that stupid questionnaire. Even under streamlined the IRS still can determine wilfulness or not; i.e. the risk of penalty is still not zero.
Even though the IRS is pretty disorganized, I doubt it’s an accident that Fact Sheet is still up. I take that to mean a QD is still considered a perfectly viable way to fix things, and to hell with the silly programs for those who for whatever reason need/want to get compliant. The risk is the same. In fact, for a minnow, going in the back door may well be safer than going in the front door. Quiet disclosures aren’t creeping back in, they never went away.
I did a QD myself (3 years +only 1 FBAR) with nary a peep out of the IRS before I finally got so pissed off I relinquished and dusted my hands off for good. So now they know two things about me; I’m a minnow and I hate their guts. If I had known then what I know now, I’d just relinquish and call it done. The main thing is to stop being a US person. That’s the only real fix for all of this. The IRS has totally squandered what little trust they once had.
@Yoga@Tricia. I’m going to have to work on typing faster, LOL.
Given the terrible treatment of expats through OVD and the restrictive initial offer of an alternative in the form of the first Streamlined program, I would think there would be little trust in the IRS. The new Streamlined looked promising but with the recent changes in the forms to be filed to protect your Cdn RRSP, this program is now questionable as well. And the new forms incur penalties if not filed, how is that better? If the older forms cannot be used and the new option can only be used by compliant filers, where does that leave the Streamlined program for those with RRSPs? If this was an oversight, where is the correction? The IRS has been silent. I see this as a roadblock to compliance using this program, along with the willfulness issue. The issue of the difficulty of obtaining a SSN when you have lived out of the US for decades has also not been addressed. One only has to look at the heavy penalties charged to realize they are in the business of collecting penalites, not taxes. There is little expectation of fairness, maybe those doing quiet filings are hoping the IRS will be too busy to notice them.
@maz57
Don’t knock over that cup of coffee while you speed up those digits!
I have been posting about the Fact Statement on and off for about, forever. LOL
I did my filing that way (mid-December 2011) without any issues and had just as much to fear about FBAR penalties as anyone, since there were NO clear assurances they wouldn’t be assessed.
The Fact Sheet was even updated this past February which I certainly took to mean that it was still valid. And why I kept posting about it.
Great for you that you were able to relinquish! You’ve been in this battle as long as I can remember!!
One of the things John Richardson has often said in the Info Sessions is, it is the law you have to file but there is no law that says you have to enter one of the IRS programs.
I would never be able to trust any of them, ever again.
They need to get rid of expat filing altogether. The 300 million folks living in America, along with the millions and millions of hopeful immigrants to America, need to learn to accept responsibility for US jurisdiction taxation without harassing the unrepresented who lives in other nations.
My QD appears to have gone smoothly even though my open statutes of limitations for 2008 and 2009 will not have technically closed till June 2015 and June 2016. I was not only terrified of possible FBAR penalties but also being aggressively audited over the numerous PFIC calculations.
However, my accountant explained that she had never known of a minnow to be audited more than three years after a silent disclosure when there hadn’t been any evidence of willfulness. So far, so good. I believe she has a lot of ‘street sense’.
In other words, I am quite optimistic that the vast majority of Expat minnows could get away with making a QD.
Would be nice to have a link to “that fact sheet”
One of the other tax bloggers was stating that QD going forward was better than any of the Streamlined BS, primarily because of the signatures required under perjury. Some of these guys go to meetings where they meet IRS officials and get information that differs from what is given to normal citizens. This is part of the hand to mouth feeding between govt and govt-dependendent compliance industry.
I suspect that the risk goes higher as the amounts go higher. And the amounts go higher the more that one has prepared for retirement.
If a couple of 8938 years have passed by without getting attended to, the risk goes up in any of the programs.
@Mark Twain
Link to the 2011-13 IRS Fact Sheet
http://www.irs.gov/uac/Newsroom/Information-for-U.S.-Citizens-or-Dual-Citizens-Residing-Outside-the-U.S.
@Mark Twain, my accountant admitted as such that they have contactscontacts within the IRS here in London and have had regular meetings with the tax attache attached to the Embassy. It is indeed a racket.
I just consider myself fortunate not to have been intimidated into the OVDI, as that would have ruined me; it’s because I’m not wealthy but just unfortunately had an anomalous situation with having held a large number of small holdings in PFIC funds that both my accountant was confident that she could resolve my situation with a QD.
On the other hand, had I had a higher risk tolerance, I was told pro nobody by a tax lawyer that I could have in fact probably gotten away with not only a QD, but a silent disclosure just going forward and declaring my investment income as dividends and interest and ordinary capital gains instead of all the complex PFIC forms….especially as Publication 54 for Expats Doesn’t even mention PFIC issues and form 8621…
I thus could have saved close to $40,000 in combined accounting fees and double taxation, especially as I wouldn’t have even owed any taxes via ordinary dividends and interests/gains….in fact, I now believe in retrospect that I would have still had a very strong case for arguing reasonable cause for not having known about PFIC taxations, especially as it’s not general knowledge outside tax accountant circles.
I still thus feel like I’ve been badly screwed but at least I have more peace of mind if audited, though this full disclosure may have ironically raised even more red flags.
I also wish that my accountant had better eexplained my options to renounce back in 2011 instead of dragging things out till 2013. I suspect sshe was hoping to keep me as a customer and thus dependent on her services. So she helped me albeit with her own agenda.
“They need to get rid of expat filing altogether. The 300 million folks living in America, along with the millions and millions of hopeful immigrants to America, need to learn to accept responsibility for US jurisdiction taxation without harassing the unrepresented who lives in other nations.”
Hear, hear, SwissPinoy! Nothing less than this is what is required.
Amen! I second the motion proposed by SwissPinoy!
I wouldn’t have even heard of the PFIC issue just being a self-filer, relying on Publication 54 for general assistance for Expat international taxation filing. I only learned about the FBAR and PFIC problems by accident on the internet of all places!!
There’s another issue I have to point out: that in some ways ignorance is bliss because knowledge brings accountability; had I been oblivious, I would have just amended my returns as ordinary interest,divs, gains, etc. But having awareness of having to declare all the passive income as as PFIC income/gains put mean a bind because to not have willingly corrected the omissions would then have become willful.
I suppose my accountant was thus also in a bind to do all the amending fully technically correctly, especially as she is licenced by the IRS as an official enrolled agent. The tax lawyer who gave me the pro bono information emphasized that he never could legally advise clients to not be fully tax compliant but could nonetheless explain that many other Expats we’re filing returns not only quietly but also in the simple form.
So in some ways, knowledge spread by Isaac Brock and similar could make it subsequently more difficult for Expats to argue that they didn’t know about what is expected of them in terms of tax compliance. But it’s very wrong how we’re essentially being exposed to entrapment too due to the lack of transparent information.
At the end of the day, I just want to escape from all the artificial complexity and expense of tax compliance with the US. I find it ironic that HMRC just wrote to me last week, explaining that I would no longer even have to be filing self-assessment any longer, as all my income is either PAYE or with tax deducted at source at my building society, or insufficient ISA
So in some ways, knowledge spread by Isaac Brock and similar could make it subsequently more difficult for Expats to argue that they didn’t know about what is expected of them in terms of tax compliance. But it’s very wrong how we’re essentially being exposed to entrapment too due to the lack of transparent information.
At the end of the day, I just want to escape from all the artificial complexity and expense of tax compliance with the US. I find it ironic that HMRC just wrote to me last week, explaining that I would no longer even have to be filing self-assessment any longer, as all my income is either PAYE or with tax deducted at source at my building society, or tax-efficient ISA account!!
Anyone who entered into the OVDI is just a gutless, ball-less moron who gets weak-kneed at the thought
of the IRS. They trusted the program only to find out they were abused to the last cent. They all deserve what they got.
@Beth, I don’t agree. People trusted their accountants and attorneys, believing they knew the ropes and would guide them safely through. Others with less sympathetic tax preparers realized that there was no unringing of the bell once it had been rung, especially as these accountants could have threatened to whistle blow if they wanted to withdraw from proceeding.
The general atmosphere was more ominous back in 2011. Others just went on what the media we’re saying, believing OVDI was the way to get back into the system. They also believed that the IRS would be more reasonable with minnow Expats and make a distinction between them and resident tax evader whales… I think of Bubblebustin who imgenuinely wanted to do the honest thing and is still waiting to hear back from the IRS (after almost three years!!!) and facing a huge capital gains tax on the sale of her primary residence.
@ beth thomas People did not deserve what they got in OVDI. Many people are naturally honest and were trying to do what was right, what they did not understand was that the US does not adhere to the same obligation. These people may have been scared but they thought this was a way to become compliant, obey a law they may have known nothing about. There was an abuse of trust. OVDI was an amnestry program for criminals, not those who had no idea they had filing obligations to the US. Their lawyers and accountants steered them in the wrong direction. The US has truly taken advantage of law abiding people who cannot possibly be expected to keep up with the ever changing citizenship and tax laws in a country they do not live in. FATCA is just another tool to continue the abuse.
beth thomas,
What a harsh and unfair statement you make. People that went into OVDI trusted their advisors and in hindsight that was the problem — they were not criminals and never should have been entered into such programs. Our ignorance does not make us gutless ball-less morons, weak-kneed at the thought (of the threat) of the IRS.
@heartsick
**law abiding people who cannot possibly be expected to keep up with the ever changing citizenship and tax laws in a country they do not live in**
Even immigrants living in the US do not know the rules… why would anyone think… things owned by non-citizens in their home country would be taxed by the US. I know many immigrants including myself who pay taxes if due to the home countries on things that are made in that country… Worse yet for immigrants… many things owned are generational things… hand me down from previous generations that the US now wants a piece of it… Things stolen during a war… family got back… now the US says we owe them for it… why?
Expired and/or current GC holders are now considered fake citizens… all the rights of a citizen without voting rights & representation in gov’t… So basically… we are the group who are screwed the most… both the US gov’t & our home countries… US don’t want to hear from the immigrants… our home countries washed their hands of us. Who do we turn to for help… As I said many times… I should have gone to the US illegally… wouldn’t be in this mess now…
One thing I just cannot understand is why the world has allowed the United States to tax their citizens this way all these years (even before FATCA and FBAR). Why?…
@Trish, the link for the quiet disclosure info ended up being an error. Do you have another?
Sorry Tricia I spelled your name wrong.