US expat tax and FBAR: Discussion thread (Ask your questions) Part Two
Please ask your questions here about US Expat tax and FBAR.
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NB: This discussion is a continuation of an older discussion that became to large for our software to handle well. See US expat tax and FBAR: Discussion thread (Ask your questions) Part One.
@Aussie Jones
That’s a wonderful letter, can you think of anyone who would read it?
(I’m not being sarcastic, that’s a real question)
Thank you for stepping in here as I’m hopless at these things.
Shunrata, try sending the letter to your elected representatives in Parliament — your Member of Parliament (House of Representatives), and your Senators.
It’s their job to listen to the concerns of their constituents. It is possible they may not be fully aware of this issue, until alerted to it by a constituent.
Amend the letter as you see fit.
Great block and information from tdott – I was just wondering if it is possbibel to file 5 years of taxes and 6 years of FBAR’s at once under streamlined. Program’s requirements are met. Thank’s again for sharing your experience.
@Ines
Yes, you can file more than 3 years of returns. Kevyn Nightingale says:
See http://www.mnp.ca/en/media-centre/blog/2012/9/2/details-on-new-irs-streamlined-relief-for-americans-in-canada
Phil Hodgen also talked about filing 5 years of returns in a phone seminar he had a while back.
My Story,
Came to US, around several years back thinking to work here for 3 year and go back to INDIA. But it got postponed once I have started green card and kids started going to school here. I used to transfer part of my salary to my INDIAN account on a regular basis. I did not know how long I will here in this country since I was working here on a work VISA.
I used to transfer money on a regular basis without knowing anything about FBAR and global taxation. It has generated some interest in my account over the period and At the same time I have lost considerable money in Indian stocks. I never reported both. All the account i have is opened before coming to USA and also I have few life insurance policies.
This year, My CPA mentioned me about FBAR and for form 8938 in his questioner. I have just googled FBAR. My life has devastated after coming to know about FBAR and its penalties and OVDP. It has spoiled my professional and personal life. I constantly thinking about this and it is impacting heavily on my social interaction with my friends. I stopped calling my friends and relatives. I am feeling sick and I stopped my daily activities and lost interest in everything I do. Some time I cry myself thinking why I came to this country and become part of this mess without knowing anything about this disclosure.
I have a wonderful family and had peaceful life so far in US. I have suffered a lot in my child hood. Struggled a lot to get education and to come to this stage. All of my dream got shattered after reading about FBAR law and its penalty and its complexities. I have read many articles and suggestions by tax professional and Attorneys. Most of the people seem to suggesting joining OVDP. That means I need lose everything if I join OVDP. Have saved money in Indian account to construct a house in INDIA and to for my kids’ education and support my family in INDIA. I know how it is difficult to earn the money after crossing certain age. I am feeling very sorry for my family for bringing them to this country. We would have had peaceful life if not sufficient money.
I always used CPA to file my taxes. He never mentioned about Global taxing and FBAR filing. I was sending him W2 via email and he used prepare tax return and I used to review it before he e-files my tax. Mine was very simple tax filing all these years. Just felt like sharing my story. I am sure there are millions of people like me. Hope fully Government will realize some day and take appropriate step to protect people like us.
Thank you for sharing your story, MyStory. You are far from alone, but that is no consolation, I am sure. We’ve all had our lives shattered, especially when the American dream turns to nightmare, as it has in your case. I hope that the US realizes that it’s isolating itself treating it immigrants in such an underhanded way, and begins to show some leniency toward people like you, especially when the professional advice you relied upon was wrong.
@MyStory You have come to the right place. There are many of us here that have stories similar to yours. I am a retired senior and FBAR will bankrupt me. I just found out a few months ago, I also had a US accountant that never mentioned anything. (Not even last week!!!!) You just take all that sadness, bundle it up into rage and start fighting. We can/will fight and win this, just hang in there and join everyone here at Brock in whatever pursuit our magical leaders advise.
@MyStory, you’re not alone. Many are in the same boat… and most do not know about it.
You basically have 2 choices
1) If you intend to stay here longer, consider what they call a quiet disclosure (file 3 years of amended tax return and 6 years of FBARs, or simply file correctly going forward). I would avoid OVDP. The IRS will try to coerce you into paying 27.5% of your max balance. Do the math, but you’ll likely get a better outcome if you’re audited outside of OVDP. Look up mitigated FBAR penalties in the IRM manual.
If you need an attorney’s advice, I would recommend Michael Miller.
http://www.robertsandholland.com/MMiller
It will cost you a bit for advice, but he will help you pick the right way to become compliant and won’t scare you into OVDI, unlike many others.
Read the thread
http://isaacbrocksociety.ca/2012/01/28/the-ovdi-drudgery-for-minnows/
2) Decide to go back to India earlier than scheduled. Forget the green card process and return early.
MyStory avoid OVDI. It’s meant for criminals. You are not a criminal.
@MyStory
This might be of assistance to you.. I just saw it tonight on Forbes…
Foreign Accounts? Don’t Rush Into OVDP
and then you might get comfort from IJs story. He made the mistake of entering the OVDI, but finally extracted himself without penalty. He was from China…
http://isaacbrocksociety.ca/2012/09/16/a-minnow-opts-out-of-the-irss-ovdi-and-gets-the-correct-result-a-simple-warning-letter/
and sadly, expect nothing to change from the IRS for immigrants. They have had 6 years now since they started their jihad to make the procedure of compliance easier or less threatening for you. NOTHING!. I see no sign that the leopard is changing its spots.
@MyStory –
That is heartbreaking. And there are so many like you, most don’t even know what is waiting for them.
You’re in the right place for information. What you do in the end is up to you but people here will help as much as they can.
@Aussie Jones,
Will do so! Thanks for the permission to use your letter, you are much more eloquent than I am.
I agree, Just Me, there doesn’t appear to be any consideration of culpability when it comes to US residents with offshore accounts – yet.
The problem with the IRS’s so called amnesty programs is that they aren’t really amnesty programs. The penalties really complicate things in that all kinds of regulations kick in once they are introduced into the equation. Better to do like Canada does when they say “Come forward before we find you’re hiding something, and as a reward for your effort, we won’t penalize you unless something indicates you’ve been especially bad.”
In the absence of this approach, minnows in the US who wish to report foreign accounts either must enter OVDP (and be severely punished), or report going forward (to face prolonged uncertainty). Would a minnow in Canada feel terrorized to the point that they’d consider fleeing back to the country where they earned a few dollars of interest on an undisclosed foreign bank account, rather than report it under Canada’s amnesty program? I doubt it.
The article you point out, Just Me is interesting, but he ruins everything at the end, saying that if you prepared the taxes yourself and didn’t check the box, you’re likely to be found willful. And his examples are BS.
It didn’t reassure me much, as I could identify with one of them whom he advised to enter OVDI.
@noone…
I agree with you. When I posted it last night, I had just seen it, and was encouraged by the headline, but reading farther later…, I thought, ‘oh is is standard lawyer talk’…. I would NOT be paying this guy for advice…
@noone, Just Me
It’s like he’s pulling a bait and switch.
DOES US CBT VIOLATE THE MULTILATERAL CONVENTION?
As I think about my big post of 11 May, I think where it says that US citizenship-based taxation would appear to violate the Multilateral Convention is potentially a huge point. US CBT would appear to violate sections a, b, e, and f of Article 21 Paragraph 2 (copied below).
If US CBT violates provisions of the Multilateral Convention, then non-US governments need not enforce US CBT. That is, the US IRS could ask non-US governments to collect US CBT on the IRS’ behalf as per the Multilateral Convention for intergovernmental cooperation on tax debt collection, but non-US governments could refuse on the basis that the request violates the Multilateral Convention. Thus, we would be safe in our own countries. Canada could also use this as another legal basis against collecting US CBT on Canadian citizens.
But then I thought, if US CBT violates the Multilateral Convention, surely that would have been noticed already and written up somewhere (!), so I must be wrong to think that it does.
So may I ask, does anyone agree that US CBT would appear to violate the Multilateral Convention?
Because if yes, isn’t this really important?
———————–
The Multilateral Convention on Mutual Administrative Assistance in Tax Matters AMENDED BY THE 2010 PROTOCOL, available at http://www.oecd-ilibrary.org/taxation/the-multilateral-convention-on-mutual-administrative-assistance-in-tax-matters_9789264115606-en.
“Article 21 – Protection of persons and limits to the obligation to provide assistance” Paragraph 2: “the provisions of this Convention shall not be construed so as to impose on the requested State the obligation:
a. to carry out measures at variance with its own laws or administrative practice or the laws or administrative practice of the applicant State;
b. to carry out measures which would be contrary to public policy (ordre public);
e. to provide administrative assistance if and insofar as it considers the taxation in the applicant State to be contrary to generally accepted taxation principles or to the provisions of a convention for the avoidance of double taxation, or of any other convention which the requested State has concluded with the applicant State;
f. to provide administrative assistance for the purpose of administering or enforcing a provision of the tax law of the applicant State, or any requirement connected therewith, which discriminates against a national of the requested State as compared with a national of the applicant State in the same circumstances.”
@Aussie Jones
Good Work. I can see that it may violate (e) if the requested state considered CBT to be “contrary to generally accepted taxation principles”. Having said that, so far, the mantra that spews from these governments is “we respect the sovereign right of the US to tax its citizens as it sees fit.”
I don’t think (f) can be necessarily be relied upon as you are entering the realms of discrimination based on national origin. In the case of New Zealand, they have already stated that FATCA does not discriminate based on National Origin and is “consistent with the NZ Bill of Rights”. I don’t agree but it would have to be tested in the courts, like the Canadian Charter challenge.
I am unsure about (a) and (b).
There is another aspect to this which relates to those countries that have “reserved” against Article 11 (Recovery of tax claims). The latest data on this is here: http://conventions.coe.int/Treaty/Commun/ListeDeclarations.asp?NT=127&CV=1&NA=&PO=999&CN=999&VL=1&CM=9&CL=ENG
Australia and New Zealand have not reserved, but Canada has, so no recovery claim can be made against Canada under this treaty. Of more interest is that the United States has reserved:
I cannot recall where I have seen it but I believe there is a “rule” or protocol that countries do not need to take action on behalf of another state if that state has reserved against the corresponding Article.
If the US were to remove their reservation against Article 11 that would be a sure signal that they intended to pursue claims using this treaty. Either way it is a huge grey area that can be altered or amended at any time. Governments should be pressed to make public their position on recovery of US tax claims, information return penalties, FBAR penalties and exit tax claims.
@All, well the 8854 form has gone off in the registered post this morning so I’m done, finished, finito. My tax preparer is filing my final FBAR so that’s it. Totally free of the US. I can finally put all the paperwork away and get on with other, more important things in my life.
@MedeaFleecestealer
Congratulations on reaching the end of your journey!
MedeaFleecestealer
What a relief that must be! Life without U.S. forms and penalty threats! Oh, how sweet it is!
Indeed it is Just Me. Thanks osgood. My journey hasn’t been as long as many others here, but it still gives me a feeling of accomplishment that it’s finally all wrapped up.
@MedeaFleecestealer
Nice – congratulations. 🙂
@MedeaFleecestealer
Congratulations on your Freedom. I know the feeling. I received my CLN 2 weeks ago. I treasure it.