Liberty and justice for all United States persons abroad

The Isaac Brock Society

“Quiet Disclosures” Creeping Their Way Back In?

Posted on by Posted in Issues regarding US persons abroad 42 Comments

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?

42 thoughts on ““Quiet Disclosures” Creeping Their Way Back In?”

  1. “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.”

    Sorry, Beth Thomas, you have got that totally wrong. Much more is known now in late 2014 than when all of this first came to light in 2010 0r 2011. Back then unscrupulous (and often ignorant) compliance industry people pushed panicked expats into OVDI as the only way to fix their delinquent US tax status. The IRS was licking it’s chops and it happily processed these hapless people as if they were hardened criminals. The IRS was on a roll and the threats and intimidation were flying freely. They knew these people were benign actors and could have opted them out or waived all the penalties but instead they royally screwed them. In the process the IRS squandered any remaining trust they had and it is now a thoroughly discredited organization.

    They had no idea that a simple QD would get them caught up on their filings and their so-called expert help did nothing to clue them in. Honest, law abiding people will always be at a disadvantage when dealing with a criminal organization like the IRS. They most certainly did NOT deserve the abuse they suffered. Their only “crime” was being totally unfamiliar with the byzantine tax laws of a foreign country.

    Your “gutless, ball-less moron who gets weak kneed” moniker is better reserved for Harper and his band of Conservative MPs who caved and signed this travesty of an IGA without so much as a whimper.

  2. @ US_Foreign_Person Immigrants, Green Card Holders
    You bring up some good points about immigrants that I have not thought about. I do know that many send money back “home” to aid their families. I wonder if these amounts exceed the allowed “gifting”. The Green card holders make no sense to me, especially those holding expired, worthless cards. Again the US needs to accept some responsibility in informing people of their obligations.

    @ Duality Why?
    I have wondered the same thing. You would think that most countries would be very protective of their assets within their country and this includes an individual’s assets since they generate taxes. The tax treaties help a bit and maybe at one time prevented most double taxation. With good treaties in place it would negate any revenue from CBT and make it pointless. This makes me think that just as CBT originated as a punishment, it is still used that way. Most countries just could not stand up to the bully I guess. Just like now.

  3. @heartsick

    Ex-pats & immigrants are the easiest target for the US… No representation… no voice… also… Immigrants & ex-pats are not organised… before the internet… no info could be found plus no one thought of taxes… whatever u make where u live is what u paid for… Canadians especially never thought twice about having the US taint.. border are so close… I use to go back & forth… no big deal… now having the US taint is the biggest secret… as a kid… someone use to say… ohh… I was born in the US… we thought that was cool… now no one will share that info… even people who we know have the US taint like us… when I tell them about this… they think I should be wearing a tin hat & sit in a dark room… cause it makes no sense to them… I warn all immigrants I met… go elsewhere & its not worth the hassle or money u can earn in the US cause u become a tax slave if u are not careful

  5. Beth Thomas,

    The world changes for those who have an outstanding tax liability, a corporation, dozens of reportable bank accounts, 8938’s to file, AND who’ve never filed before (as there is no statute of limitations on unfiled tax returns). There were few options in 2011 for someone entering the tax system as we did, and for our particular situation QD was an invitation for audit and massive penalties.

    Acting with so called guts and balls is easy when you have nothing to lose. Acting with guts and balls and gambling everything including your livelihood is just plain foolhardy,

  6. “when you have nothing to lose?”

    Excuse me? My wife and I have everything to lose, even though we may not have much in terms of finances. Every cent my wife earns as a result of her work in retail is eyed by the greedy sons-of bitches at the IRS and every cent needs to be accounted for. And they also feel like they have a right to view the mere pittance I manage to earn from my photography. Well… “acting with guts and balls” …means that I tell the IRS that they can go to hell when they ask me to cough up what amount I make or have saved up. I am a Canadian citizen, born in Canada, raised in Canada and before I married my wife, not affected with US taint. And I’ll tell any collector to *f-off” US laws don’t apply in Canada.

  8. I missed this piece of legislation from September: the “FRUGAL Act”. Carl Levin may be retiring, but it looks like there’s half a dozen more Democrats who want to carry on his legacy. Some politicians clearly don’t like the fact that quiet disclosures are an option and that not everyone with an evil “offshore account” goes into the OVDP:
    https://www.congress.gov/bill/113th-congress/house-bill/5652/text

    Not later than 1 year after the date of the enactment of this Act, the Treasury Inspector General for Tax Administration shall … conduct an analysis designed to measure the extent to which taxpayers are reporting existing foreign accounts and circumventing the 2003 Offshore Voluntary Compliance Initiative, 2009 Offshore Voluntary Disclosure Program, 2011 Offshore Voluntary Disclosure Initiative, and 2012 Offshore Voluntary Disclosure Programs and the extent to which taxpayers are properly utilizing offshore voluntary disclosure initiatives,

    The list of sponsors:
    Raul Ruiz (D-TX)
    Pete Gallego (D-TX)
    Annie Kuster (D-NH)
    Patrick Murphy (D-FL)
    Eric Swalwell (D-CA)
    Kyrsten Sinema (D-AZ)

    Fortunately this looks almost certain to be left to die in committee. Unfortunately all of these critters except Gallego got re-elected, so they’ll probably try again in the 114th Congress.

  10. @Eric

    That’s quite an unexpected action. As far as I am aware, it is not law that one must enter one of the programs. If passed, would this bill amount to making it so, short of an additional piece if legislation?

    Proof positive of the viciousness with which expats are viewed. However, they would make more money by allowing for QDs and upping the penalties. OVDI puts a cap on such. Maybe that pesky little item known as the 8th amendment could finally be used in the way it was meant to.

    Would be nice to see this type of action applied to the wastefulness of the Congress instead of this endless refrain regarding tax evasion.

  11. Here may be an example that demonstrates how confusion and fear-mongering began back in 2011 and continues to this day.

    Summary of Issues Affecting Snowbirds & US Tax Issues
    http://bit.ly/1xfiVIi #OVDP #FATCA #FBAR Warning: conclusions may b fear-mongering

    https://taxconnections.com/taxblog/the-hunt-for-snowbirds-is-on-a-summary-of-the-irss-faq-on-amnesty-programs-for-non-compliant-taxpayers/#.VGpZtflpdJ8

    At least the article should make very clear that the court rulings are cases for whales, not minnows.

  12. @Tricia

    It would be nice if John would decipher that snowbird article – the author seems to think that a snowbird is a dual citizen!

  13. @Bubblebustin
    I have read it thoroughly to try and make sure I could answer questions at the upcoming Nov 30 meeting in Toronto. I posted something from my phone which doesn’t seem to have come through. So here’s my attempt to decipher (comment just posted on the current Forbes article):

    The US is now engaging in trying to trap Canadian “snowbirds in a way that is quite hideous. The general misconception is that one can stay up to 180 days per year without becoming a resident for US tax purposes. I would have no idea how many people are unaware of the real way to count those days or of filing form 8840 which establishes closer connection with other countries. That aside, there is now something new. And especially dangerous if one is a dual or green card-holding CDN.

    Should one be so unfortunate as to be cast into the U.S. taxation net, the Streamlined Program might appear to be a way out. Even better, recent IRS indications are that they will presume that those outside the U.S. were non-willful non-filers, which will eliminate penalties. What could be better? Canadians will assume they are eligible for the foreign Streamlined program. In order to establish non-residency, one must reside in a foreign country for 330 days per year. However, in order to qualify for the non-U.S. residence status for foreign Streamlined, one must not have spent more than 35 days in the U.S. for any of the past three years. What happened to the substantial presence test? It doesn’t apply in the case of the Streamlined program. Okay, so only one year is needed to comply. Let’s say there are two years where one is short and one where there is exactly 35 days. No problem! However, stay one extra day and you will be a US resident for tax purposes. Okay, then there is the domestic streamlined program. Still couldn’t be as bad as OVDI. However, snowbirds will not qualify as one of the requirements is to have filed US tax returns for the past three year. Gotcha!

    It is impossible to look at this as anything but a deliberate attempt to entrap people and I would hope all the Canadian politicians who rolled right over will realize just exactly what kind of people they are dealing with.

  14. “I was referring to monetary loss, and loss of livelihood.”

    And THAT was exactly what I was referring to as well. In order to protect my family, I will go and tell the IRS to “~bleep~ off.” <— you can refer to that as acting with guts and balls. I don't intend to set foot over the border, and after my wife digested the fact that her country was acting the way it was, she doesn't either.

    My response is "come and get us… ~middle finger~"

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