Liberty and justice for all United States persons abroad

The Isaac Brock Society

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The other day, Barbara put up this lovely comment:

“I wish to take the opportunity of this thread to thank the creators of and contributors to the Isaac Brock Society. Until a month ago, I was running scared, losing sleep, calling so-called US tax experts in London, the USA and Hong Kong, trying to get a clear picture of my husband’s and my situation and how to remedy our small “errors”. Each advisor I spoke to made me more frightened, and had me nearly convinced to fork over US$500 to submit “revised” back-year FBARs per year. The compliance condors had me by the short hairs.

Thank God I found this site at last, and figured out what the condors were doing. With the plethora of information, resources and advice available here–not always in agreement with each other–I have changed from frightened out of my wits to simply mad as hell.

A big warm thank you to everyone!“

 

First, it was great to hear that Brock is doing what it was meant to be doing; getting the word out so people could get the information they need to try and put an end to the fear and terror caused by the IRS and the condors.It got me thinking about the beginning of Brock and one of the earliest posts that was about this very subject:

“We can’t trust the IRS – But can we trust the accountants and lawyers?”

Since the publication of that post on December 12, 2011, there have been some changes; almost no one thinks about OVDP 2009 and the bait-and-switch regarding FAQ35 anymore and most people would likely enter Streamlined before they would consider simply following the law and submitting returns via the Fact Sheet 2011-13 (though it is still a valid way to come into compliance, and is how I did it over 3 years ago). One thing the post does do, is demonstrate how utterly terrifying it was then and any Brocker/Sandboxer who has been around that long might be forgiven for some of the “harder edges” in terms of anger, cynicism and driven determination to make this stop. Just read some of these (horrible) stories that are linked in the article; while the situation remains unpleasant, frightening, unfair and all the rest of it, it seems we are no longer hearing that people are losing everything they have.

I also began to wonder, how much has Brock/Sandbox education kept from the clutches of the condors? How much money may have been denied those who really did/do not have our best interests in mind? All of us have gained from Brock, there’s no question of that. And money might be part of it but I think most of us would feel that the site offered more important things. Just for fun, please take part in this poll:
You can vote for as many options as you like!
 


 
Now, back to the main focus of this post: showing how in spite of improvement, one aspect that has NOT changed, is that of whether we can trust the accountants and the lawyers. I would really like to hear your reaction as to whether or not you think things have improved; is there any difference in what is happening to people, or is there just as much fear-mongering as before? Are there more predicatable facts and outcomes? Or does the whole situation remain confusing and frightening?
 


 


 
Reposted from December 12, 2011

We can’t trust the IRS – But can we trust the accountants and lawyers?
 
The post is a comment responding to the blog post – IRS issues Fact Sheet For U.S. or dual citizens residing outside of the U.S., to which Petros commented :
 

They [the IRS] can’t be trusted when they talk about reasonable cause, because they don’t really indicate what reasonable cause is.


 

 As I said in the post – the trust issue is huge. But, the trust issue exists with respect to both the IRS and the accountants and lawyers who have been involved in this (often giving advice that was clearly of benefit to the accountant/lawyer and not necessarily to the client).
 
With Respect To The IRS:

The distrust of the IRS is richly deserved. Examples include their “bait and switch” (described above) tactics in the 2009 OVDI, There other examples of people being mistreated in OVDI. See:
 
http://hodgen.com/yet-another-ovdi-victims-story/

http://hodgen.com/a-real-life-voluntary-disclosure-program-participants-story/

http://hodgen.com/why-the-irs-is-pushing-to-close-all-2009-vdp-cases/

http://federaltaxcrimes.blogspot.com/2011/09/experiences-inside-ovdp-ovdi-91411.html

http://www.reuters.com/article/2011/12/08/us-usa-taxes-foreign-idUSTRE7B723920111208

http://www.expatforum.com/expats/expat-tax/93621-ovdi-program-information-updates-stories.html
 
The basis of the problem is a sense that the rules are not clear and even if they were clear one doesn’t know how they will be applied. The only thing one can be certain of – if you are an honest taxpayer, trying to come into compliance with requirements you didn’t know about it – is unfairness. But remember that OVDI is not premised on “reasonable cause”. It is premised on “criminality”.

With Respect To The Accountants and Lawyers:

 
In my opinion this is an “infomerrcial” to encourage people to enter OVDI without determining whether their circumstances justify it. OVDI was part of “Voluntary Disclosure”. That means entry into OVDI was not required. The media during the summer of 2011 portrayed OVDI as mandatory. The media wrote many articles about OVDI without understanding it.

Next, it is clear to me that this is not an issue of completing tax returns. It is an issue of how to get into compliance (or not) with the laws of the U.S. (however insane they are). For this, you need a professional that specializes in this kind of work. It is quite obvious that many people sought advice from people who were not specialists. They will pay a heavy, heavy price for the advice that they paid a fortune for.

We are now is a position where the lawyers/accounts are not trusted either.

So, the problem remains in a context where: people don’t trust the IRS (as you point out, one can’t be certain what reasonable cause is), people do not have confidence in the advice of lawyers/accountants. Yet, the IRS laws and procedure are so complicated that people need lawyers/accountants in order to know how to proceed (if that is what they want).

Finally, the issue of costs of compliance. Very few people have the money to pay professional fees.

Conclusion: Even though the IRS (in my irrelevant opinion) is attempting to solve this problem, it may no longer be solvable. The distrust of the IRS, the lawyers, and the accountants, coupled with the legal and accounting costs may be too much for people. But, remember that this Fact Sheet directed to taxpayers living outside the U.S.(the subject of the above article) is NOT the same thing as OVDI. Perhaps different treatment can be expected from the IRS if you enter through the door that reads “I didn’t know about the FBAR requirement” as opposed to entering through the door that reads: “Presumptive Tax Cheats Enter Here”. Once again – this is not intended to be any kind ofadvice whatsoever – whether legal or otherwise.

It would be good if some others would “weigh in” on this.
 

16 thoughts on “Timeless Wisdom: The More Things Change, the More They Stay the Same”

  1. “The art of taxation consists of plucking the goose so as to obtain the most feathers with the least hissing.” – Jean-Baptiste Colbert

    CBT fails the the goose test.

  3. I have to confess I voted twice because there were two options that were too close to choose one over the other. Whenever I see that berg bird I think, “Man that’s an ugly critter!”

  6. The absolute worst thing anyone can do is take the advice of any compliance “expert” out there putting out the net waiting for the gullibles to swim in it.
    By God please do not fall into their trap.
    These people are the lowest of the low parasites on the food chain. The bloodsucking leeches who prey on the meek and weak.
    They thrive on the low hanging fruit this has created.

  7. The survey idea is good. There should be more surveys to encourage participation. As of this comment I see 183 votes yet 5 comments here. Sometimes it seems not many are commenting yet the survey shows that there are many more watchers.

    Agreed, lots of the frustration is lack of clarity of the rules and how they are applied. The culture of the IRS/Treasury promotes such lack of clarity/certainty, in my opinion, as they view part of a good compliance program is fear and terror of consequences if one does not comply – to prompt compliance. State sponsored financial terrorism is wrong.

    I am still out to work IRS Bill of Rights #10: Right to a Fair and Just Tax System. This from the IRS says there are more to the regulations than “the law is the law.”

    I saw those tweets about lawyers/compliance people. I was about to join in. Consider this please a rough draft as I did not tweet it in the end. Perhaps I did not feel appropriate for prime time Twitter, yet will run it by here:
    Q: what is a pity?
    A: A pity is a bus load of Democratic Congress people going off of a cliff and there being 3 empty seats.

    Surveys. I was not happy about this Greenback Tax survey as tweeted by ACA:

    Americans Abroad ‏@ACAVoice Mar 18
    Help us protect & promote the interests of Americans abroad by taking this 4-minute survey! http://bit.ly/GrnBackOpinSurvey … #expats #AmericansAbroad

    This was my reply:

    @ACAVoice Thumbs down on survey. It pretends that there is no double taxation on pension, different taxes, Obamacare NIIT, penalty risks

    You take the survey and you get $25 off tax advice, as if this will pay for anything. Then it kinds of hints about the OVDP and in my view has really dumb questions oblivious to the hurt and complication the US has caused for its US persons overseas. Sum: it is sales dressed up as a market survey, and tweeted no less by ACA. Hopefully ACA got paid for that Tweet. ACA is in tight with these compliance people for advertising dollars. I suppose they need to get their funding somewhere.

    I am not sure if the deVere group does compliance but I like their approach by just stating that FATCA is communism. http://tiny.cc/FATCA-Communism. It is a good approach for compliance firms to take instead of just saying the law is the law.

    Finally, @Tricia, any report from the European Meet Up tour? I am curious about what ADCS learns from these. Obviously ADCS is going for a global appeal and not just Canada (perhaps with maybe some preparation for a tilt at CBT in the US once the current lawsuit has done its magic).

  8. To be honest I trust the average IRS person before I trust the average compliance industry person.

  9. @JC

    The Information Meetings are not a function of ADCS. This is a completely separate function of John Richardson’s Educational Outreach program.

    There was an attendee in London UK who wrote
    this     after this year’s meeting.

    We have put writeups before (such as Lynne’ s synopsis
    from the London ON session on Feb 8, 2014.

    Generally, since it is the same material (as it is designed to address expats who are just learning about all this), we don’t post a write-up after each meeting. If there is a write-up, it should come from John as it is extremely important that the information conveyed is correct. 🙂

  11. That’s an interesting comment, George.

    We figure the IRS’s incompetence cost us an extra $5K in accounting fees, just by misplacing documents and a general lack of continuity that required additional hours for our accountant to rectify. At least when compliance condors screw up you have recourse, when the IRS screws up and costs you extra legal and accounting fees, there’s nothing you can do to recover those fees. When our accountant complained on our behalf, all the IRS agent had to say was that he wished he could bill by the hour.

  12. The IRS cannot be reformed. There must be a system that cannot be subverted. Any kind of income tax will be subverted and as long as there is one system that politicians can milk for donations, they will milk the system.
    A sales tax might be subverted once but the very next transaction you are back to being taxed at the legal rate. ”K” Street Washington D.C. must be put out of business and people who are physically present in the country the only ones taxed.
    If every person who is concerned about citizen based taxation would simply contact their representative and tell them they will only vote for people who support the FairTax, we’d have a new tax law that expat wouldn’t have to worry about.
    Under the FairTax: 1. No IRS 2. No compliance experts 3. No paying taxes for services not received 4. No loopholes for those who hire the ”K” St. Lobbyists. 5. The poor will get a 37% pay increase the first day of the FairTax law 6. Tourists who visit would pay the taxes for items they buy 4. 5 million tax preparers and 3 million IRS agents will have to find real employment.
    The benefits run on and on so why not help us help you.

  13. @Bubbles….I say what I say because anectdotally the IRS receives far less in tax from expats that condors receive in fees.

    I now know of enough people who are being or have been directed into streamlined by condors who owe zip zero nada to the IRS but have compliance bills of $10,000 plus…….

    The condors are thriving on fear, pure fear……to make money…

  14. LOVED the survey. And I immediately checked “Confirmed I was not crazy.” Back in 2011 It seemed like everyone I talked to around FATCA/CBT – family, spouse, other Americans in my host country – thought it was a big ado about nothing and just didn’t want to talk about it. Thank God for Peter who found me and encouraged me to start writing about it.

    Now that I’m settled in Japan and talking to people here looks like awareness is pretty low. So far in one month I’ve had 3 queries and private conversations with US Persons who have woken up and are having their OMG moment. I think there is work to do here, folks. If anyone is already doing it, please pass along their coordinates so I can get into the fight. If there isn’t then I’m going to see what I can do to start one. 🙂

  16. Hi Calgary. I will check out the comment and yes, please tell any others in Japan or in neighboring countries like Korea to feel free to contact me. As I said awareness is pretty low here from what I’m seeing. That’s fixable, right? 🙂 To that end I have a FATCA post up today and I think I’d like to go back and start from zero for people who are just joining the conversation (or figuring out that they are in a world of shit). I’m also learning that all the different strategies for fighting FACTA/CBT are not as well known as they should be. I talked to a guy in Paris before I left who was very aware the issues but had no clue anyone was doing anything at all. I said “lawsuits” and he perked right up. “Really?” he said. Yep. 🙂

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