I have been in contact with a victim of the current IRS OVDI who is living in Europe. I have been asked to share some details of this person’s situation plus a copy of a recent letter that has been received from President Obama. This was written in response to a letter sent to the White House petitioning for redress of the current IRS OVDI program for minnows.
As a preface to that letter, what follows is an Executive Summary of the situation I am writing about. I have been asked to share this, while maintaining anoymity which I am respecting.
Dual national resident outside of US ~25 years.
Lives in a high tax European country.
No family or friends left in the US.
No contacts with Americans in country of residence.
6 days spent in US in last 6 years – transit only.
Only ties left to the US are emotional – from a childhood spent there.
Filing taxes faithfully for all the time out of the US thinking they were done correctly.
Posterchild for Nina Olson’s statement in the 2011 Taxpayer Advocate Report to Congress: “The complexity of international tax law, combined with the administrative burden placed on these taxpayers, creates an environment where taxpayers who are trying their best to comply simply cannot.”
‘I filed my taxes faithfully in both the US and my country of residence for all those years. Never had any problems with either country until I realized I may have made an omission in the US taxes and failed to file the required FBARs. I wanted to correct it and pay any taxes if owed. I did not think I owed anything. Taxes owed to the U.S, over 8 years, were de minimis. I was even entitled to some refunds that I never got because I had no clue about them.”
Joined upon advice from a U.S. tax practitioner as the ‘only option’ when client sought advice about FBAR compliance problem. Has already been charged big fees to produce nicely bound documents to send to the IRS. Attorney now wants client to sign the 906 when it arrives. The advice being given is to just pay the OVDI penalty which, after practitioner fees, doubles the compliance cost. Estimated fees for attorney to handle the Opt Out would be as much or more than the current OVDI penalty.
Reason petitioner is sharing this information:
“I want to contribute to the effort to raise awareness of the unjustness of the treatment in OVDI. We should not go it alone. There are many of us who have been affected, and we can contribute our voices to help each other. The Isaac Brock Society and Jack Townsend blogs have been important information sources that have helped me to realize that there are others like me out there. If other people had not been public about their suffering and experience, I would probably still be thinking I was the only person in the world who had made a paperwork foot fault. I would still be thinking I deserved to be indebted to the IRS for the rest of my life for that failure.
Thank you for what you all have contributed to help me see that I am not alone. “
Reasons petitioner wrote Obama:
Wanted to highlight to President Obama the suffering that OVDI was causing normal people, and point out the need for a better way of handling “minnows” to make compliance easier.
“I was gullible in that I still believe that the ‘little people’ can make a difference. I believe that politicians might listen even if you are not a Big campaign contributor. I believe in mutual respect between government and citizens. I don’t want my belief to turn into a past tense.”
What was expected from Obama:
“I wanted some recognition that there are U.S. citizens overseas. I was looking for some statement of what President Obama was going to do to address the issue of innocent overseas citizens who had entered OVDI and were being treated as criminals.”
What was received from Obama:
This is the letter. You are welcome to click on the link below and read it yourself. What you think?
How was the letter perceived by petitioner?
“Honestly, I did not expect anything more than some standard response, but this response makes me feel worse than if he had not answered at all. At least I still had some hope when I did not receive an answer. What I got was a bland, previously composed political statement. It does not address any of the concerns I expressed.”
My (Just Me) Opinion:
This appears to be a 100% re-election campaign statement. It is nothing more than “principles”, with no specifics and only vague promises. Even the first two lines are crafted to apply to anyone writing about any “tax” issue. In my opinion, some staff person looked at the letter and then selected from the menu of pre-programmed form letters prepared for the campaign. I would bet, that every response sent out from Obama on any issue from now until Election Day will be framed around a campaign issue. I would further wager, that this is SOP in the White House for both parties. Very disappointing, but sadly not unexpected!
If anyone else has written President Obama (or even a Congress person) and got an answer back that was as unsatisfactory as this one, I would ask you to share it here. I think the reality is, all we are going to see is campaign related responses from now until November, rather than anything that indicates that a petitioner’s pleas were heard. I hope there are some examples that prove me wrong.