102 thoughts on “Alliance for the Defeat of Citizenship Taxation (ADCT) announces CBT lawsuit”

1. @badger

   I can appreciate than many “are still lying low, sleepless and anxious, wondering what path to take and what further horrors are in store from the US government. ” Especially due to the fact that back then, the only examples to compare likely outcomes with were those who went through (or were going through) OVDP/OVDI. I find it impossible to convey the difference in the “terror level” to folks who came later down the line, after Streamlined etc. It simply is not the same ballgame. And I believe it is why some of us are angry on a level that may seem over-the-top to some people but which is completely understandable to those of us who lived it. As bubblebustin brings up, Shulman was simply a tyrant; all one could expect was penalties that were completely out of proportion to the crime for not filing a piece of paper (FUBAR). It was from Shulman, that the tax compliance industry drew their license to torment expats with fear and agony at any perceived failure at each and every turn. “What? No 3520 for a measly little TFSA that is really nothing more than a savings account with basic interest? Add $10k on top of all your unreported FBARs. Oh, and don’t forget another $10k for the 3520A. What? You are incorporated? Add another $10k for no 5421. Nevermind you owe no tax.” One would be crucified if one did a “quiet disclosure” and certain financial ruin for many if OVDI.The irony is the clear indication that one could file via 2011-13 Fact statement which people were afraid to trust because fear of penalties had been completely beaten into them. The contempt I have for anyone who took advantage of this simply cannot be put in words.
   Still have a question – was this a meeting actually sponsored by DA?

2. @Tricia Moon

   “I find it impossible to convey the difference in the “terror level” to folks who came later down the line, after Streamlined etc.”

   Tax terrorism.
   Unfortunately, the UN are keeping quiet about it…

3. @Tricia “The contempt I have for anyone who took advantage….”

   Took? If it’s better now, it isn’t all past tense. The carpetbagger condors still circle out there.

4. @Shovel

   I was only talking about the timeframe of badgers original comment… You are preaching to the choir my friend. 😉

5. @Tricia Moon

   You write:

   I find it impossible to convey the difference in the “terror level” to folks who came later down the line, after Streamlined etc. It simply is not the same ballgame. And I believe it is why some of us are angry on a level that may seem over-the-top to some people but which is completely understandable to those of us who lived it.

   You are 100% correct. Furthermore, it is important that those who lived through – what I call “Obama Tax Terrorism” NEVER allow this to be forgotten. I wrote a number of posts during this time period. Those who are interested can find a small number of them referenced here:

   https://renounceuscitizenship.wordpress.com/2012/01/05/the-taxpayer-the-irs-and-the-professionals-where-to-go-from-here/

   https://renounceuscitizenship.wordpress.com/2011/12/18/update-on-the-irs-fs-for-u-s-citizens-and-dual-citizens-living-outside-the-united-states-no-additional-relief-for-canadians/#more-714

   https://renounceuscitizenship.wordpress.com/?s=OVDI

   Those who are interested (and those who are new to this should be), I invite you to read this series of posts. Although the posts are now four years old, the history of what they reveal should NEVER be forgotten.

   What they reveal is:

   A U.S. Government who, with the help of the media and the “so called tax professionals” terrorized thousands of honest people to turn a good chunk of their life savings over to the IRS.

   That said, you must understand that the primary culprits were the lawyers and accountants of the time. They seemed to have NO CONCEPTION WHATSOEVER, that the OVDI was NOT the law. It was simply an invitation for the tax professionals of the day to step up to the plate as US Treasury/IRS “Bounty Hunters” (as is suggested by this very post).

   http://isaacbrocksociety.ca/2015/11/17/are-cross-border-tax-professionals-really-bounty-hunters/

   As bad as the IRS was, the compliance people were a thousand times worse. Here are a couple of examples that “shock the conscience”.

   1. At least one U.S. based law firm suggested that the first step (before even doing the taxes or considering whether the person was one for whom OVDI was intended) was to fax the Department of Justice to get clearance to enter OVDI. #Youcantmakethisup

   2. At least one law firm (and there were probably more) entered people into OVDI who had relinquished their U.S. citizenship years before.

   3. Many many many law firms and accounting firms conveyed to potential clients that OVDI was the law (which it obviously is and was not).

   4. Very few (if any) took the time to understand what a “quiet disclosure even was”.

   See the post: “The conscience of a lawyer and the FBAR fundraiser”.

   https://renounceuscitizenship.wordpress.com/2012/05/31/the-conscience-of-a-lawyer-and-the-fbar-fundraiser/

   In any event, @Bubblebustin sums it up in her above comment:

   http://isaacbrocksociety.ca/2015/11/20/alliance-for-the-defeat-of-citizenship-taxation-adct-announces-cbt-lawsuit/comment-page-2/#comment-6877155

   The IRS was warning against quiet disclosure as early as 2011, my earliest encounter with the IRS. Then IRS Commissioner Doug Shulman scared enough people into OVDI by stating:

   “As I’ve said all along, the goal is to get people back into the U.S. tax system,” Shulman said. “Combating international tax evasion is a top priority for the IRS. We have additional cases and banks under review. The situation will just get worse in the months ahead for those hiding assets and income offshore. This new disclosure initiative is the last, best chance for people to get back into the system.”

   Streamlined, as inadequate as it is, would not have come to be if it weren’t for the blood spilled by these early sacrificial lambs. Unfortunately, I don’t see any truth and reconciliation in our future – just another kick in the rear on the way out.

   By the way, at this time, the IRS was seriously considering subjecting the RRSPs or Canadians to the OVDI Penalty base.

   See:

   https://renounceuscitizenship.wordpress.com/2012/01/12/canadian-rrsps-and-the-ovdi-penalty-base/

   People should NEVER FORGET the last four months of 2011!

   And that by the way, is “change you can believe in”.

6. More on the 2009 and 2011 OVDI programs – must read:

   http://isaacbrocksociety.ca/2012/02/04/letters-to-shulman-or-a-case-study-of-ovdp-communication-attempts-with-the-irs/

   http://isaacbrocksociety.ca/2012/02/04/letters-to-shulman-or-a-case-study-of-ovdp-communication-attempts-with-the-irs/

   See this account of OVDP/OVDI:

   http://waysandmeans.house.gov/UploadedFiles/Patricia_Anderson_dAddario.pdf

7. @USCitizenAbroad

   I am reminded of this comment of yours:
   http://isaacbrocksociety.ca/2013/04/17/excellent-submission-to-the-ways-and-means-committee/comment-page-6/#comment-299075

   USCitizenAbroad says
   April 24, 2013 at 3:47 pm (Edit)
   @NotthatLisa

   Thanks for finding the Patricia d’Addario submission. It was not filed under International. For that reason, I suspect it was missed by many. I encourage everybody to read this and reflect on it.

   http://waysandmeans.house.gov/uploadedfiles/patricia_anderson_daddario.pdf

   She was in the 2009 OVDP. She is also obviously not the kind of person that OVDP was intended for. Yet, the IRS allowed her to stay in OVDP and was a willing perpetrator in the:

   – rape of this woman’s finances
   – rape of this person’s family
   – rape of this person’s health

   And, after their experience in the 2009 OVDP, the IRS continued with OVDI (2011), once again making no distinction between the minnows and whales.

   Then after continuing the 2011 rape and pillage, they reopened the program in 2012.

   As IRSCompliantforever says:

   “It can never be possible for any of us to ever get past the stage of anger and depression and into “acceptance” after reading Patricia d’Addario’s submission.”

   Last night I spent a very pleasant evening with some visitors from the U.S. The people in the U.S. are good, decent people. Their government is completely out of control, doesn’t represent any American citizen anywhere, and is on a collision course with the rest of the world.

   I also note, once again, the very familiar narrative of somebody calling up the “U.S. based lawyer” and being told to go into the OVDP/OVDI. Stay away from U.S. lawyers!

   When the history of America is written it might include the following excerpt.

   “In 2008 the people of America elected Barack Obama. He was a man who promised them “change we can believe in”. In a manner similar to the IRS OVDP “Bait and Switch Program” of 2009, the administration of Barack Obama delivered “change we could never believe possible”. This change included terrorizing disabled U.S. citizens abroad into turning their life savings over to the IRS for not filing forms they didn’t know about. Because of this and similar examples, the U.S. lost all credibility and become the object of ridicule, scorn and disdain.

   And that Dear Reader is how the United States of America ceased to be a world power. It still exists today and you can get a VISA to visit it. Make sure you visit the “PFIC Memorial” in Washington, DC.” Be careful of the U.S. residents begging you to take them with you when you return home.”

   *****
   I will post her complete submission in a sec…… (link no longer works)

8. Patricia’s letter is no longer available at Ways & Means site. Here is where it has been saved:

   https://app.box.com/CitizenshipTaxation/9/3414062298/28632171378/1 (p 9)

9. Now that we’re going down bad-memory lane, much of it can be recalled through articles written by law firms like Caplin & Drysdale in Washington:

   OVDI Is Over — What’s Next for Voluntary Disclosures?
    
   Date: 10/17/2011
   The IRS’s second voluntary disclosure initiative for American taxpayers with unreported foreign  accounts ended on September 9. That marked the closure of an extraordinary 32-month period dating back to February 2009, during which more than 50 years of IRS voluntary disclosure practice underwent a sea change. The many practitioners working in this offshore compliance ‘‘industry” over the last three years have managed a wide array of intriguing clients, both domestic and foreign, and their emotions ranging from palpable fear to understandable anger and confusion. We have moved from a period of true partnership with the IRS in the summer of 2009 to a greater distrust of some IRS policies and penalty positions, and we now face substantial uncertainty about the IRS’s plans for the future. However, the end of OVDI gives the IRS an opportunity to reap the maximum benefits of its and the Justice Department’s significant enforcement victories over the last three years, reestablish a more productive relationship with professionals, and continue compliance gains if the voluntary disclosure program (VDP) is put on a stable, predictable footing.

   http://www.capdale.com/mobile/showpublication.aspx?show=2658

   …and this, a year later:

   …”Practitioners were wary of the 2011 OVDI after experiencing unexpected obstacles with the 2009 OVDP. In 2011 tax bar members Scott D. Michel and Mark E. Matthews wrote of ‘‘policy changes and reversals during 2009 and 2010’’ that led practitio- ners to question the IRS’s fairness during the 2011 OVDI, as well as whether disclosure through the program would best serve clients.”…

   …”The 2011 OVDI resulted in a slew of disclosures from so-called benign account holders: those who were U.S. citizens by birth but had spent their entire lives abroad, and other technically U.S. persons who had little to no actual connection to the United States. (For prior coverage, see Tax Notes, Jan. 9, 2012, p. 162, Doc 2012-258, or 2012 TNT 4-1.)
   Taxpayers with Canadian retirement accounts have experienced frustration. Those taxpayers, many of whom were unaware of their U.S. tax reporting obligations, sought guidance on their 2011 OVDI applications on how to minimize their potential penalties — whether by requesting relief under reg. section 301.9100-3 or applying for a private letter ruling.
   The IRS’s guidance came in amended frequently asked questions nearly six months after the 2011 OVDI’s extended deadline and stated that the tax- payer should wait to file for section 9100 relief until being contacted by an examiner. But many taxpay- ers are still waiting for that contact. (For prior coverage, see Tax Notes, Sept. 3, 2012, p. 1113, Doc 2012-18254, or 2012 TNT 169-1.)
   Last week the IRS finally issued a questionnaire and instructions intended to streamline the process for taxpayers with a low risk of noncompliance. The primary beneficiaries of the new process are tax- payers with Canadian retirement accounts, but practitioners have complained that other low-risk taxpayers likely will not have access to the process.”

   http://www.capdale.com/files/7659_1%20Year%20Later%20Frustrations%20Remain%20for%20OVDI%20Participants.pdf

   …resulting in the birth of the original Streamlined.

10. I always think of Patricia’s penalty as $80k which is not really correct. It’s $78k plus the accountant fees of nearl $24k Imagine paying $102k for not filing FBAR even though you were tax “compliant” (as if anyone could actually know what that is……) so a person living basically on CPP/Social Security is looking at a $102k debt and pays $1909 per year for 22 years to file for nothing owed.We also know the toll it has taken on her and her husband. I get mad all over again.

    @Bubbles

    I just re-read that article-I can remember that being one of the few places where real info about OVDP could be had; that plus Townsend’s blog.

    Do you remember how Jacobson said those who were unfairly penalized in the 2009 & 2011 programs would get their money refunded? Does anyone know if that is true?

    Here is an example of someone who had relinquished and was put in OVDI due to incompetent advice.
    https://vimeo.com/124155908

11. I remember that, Trish. I suggested at the time through another Brocker that knows Patricia personally she take advantage of the refund, but she was so badly burned she didn’t want to deal with the IRS at all any more. Sad.

    “Subsequently in 2011, the IRS announced the second OVDP. This time, the highest penalty was 25%. But there were also two lower slabs – 5% penalty and 12.5% penalty, if the taxpayer fulfilled certain conditions. Since these slabs were not offered in the 2009 OVDP, the IRS decided to refund penalties to those individuals who, in 2009, would have been eligible for the lower penalty structures.”

    http://articles.economictimes.indiatimes.com/2012-05-24/news/31827561_1_ovdp-offshore-accounts-irs

12. @Bubbles

    Yes, I remember the article. I did not remember that it had to do with the 2011 5% & 12.5% penalties. I thought Jacobson promised that…..But I am not aware of anyone getting those penalties back.

    http://www.theglobeandmail.com/globe-investor/personal-finance/ottawa-seeks-leniency-for-canadians-in-us-tax-hunt/article557952/

    http://canada.usembassy.gov/ambassador/news-and-speeches/18-october-2011-ambassador-jacobsons-remarks-to-the-canadian-club.html

    Ambassador Jacobson

    There are two particular problems with the operation of these rules here in Canada. First, there are so many dual citizens, typically by birth, probably more than a million. So this issue is much more common here than in any other country in the world.

    Second, the penalties — at least in a theoretical sense — can be quite severe.

    So you could have a situation where some 70-year-old grandma:

    was born in the US;
    moved back to Canada as a young child;
    never earned any money in the US;
    has no assets in the US; and
    dutifully paid all of her taxes in Canada.

    She didn’t file a US return because she didn’t think she had to. And because she didn’t owe any US taxes. Nonetheless, grandma could be theoretically subject to serious penalties. To my knowledge we have never gone after a grandma in those circumstances.

    I would think Patricia’s description of herself, would disqualify Jacobson’s comment about grandmas hands down.

    http://business.financialpost.com/personal-finance/u-s-campaign-to-catch-tax-cheats-snaring-canadians
    Esther & Betty Thompson

13. http://www.theglobeandmail.com/globe-investor/personal-finance/taxes/us-taxman-to-go-easy-on-american-residents-in-canada/article554625/

    The policy shift will come in the form of new guidance from the IRS, expected to be issued before the end of December. U.S. officials said the statement will make it clear that:

    If a U.S. citizen files tax returns late and owes no taxes, there are no penalties for failure to file.

    – U.S. citizens who were unaware of the bank account reporting requirement can file previous reports now, along with a statement explaining why they’re late. No penalty will be imposed if the IRS determines that there is reasonable cause.

    – Individuals who took part in earlier amnesty programs this year and in 2009 can reapply and get back penalties already paid.

    What is sad is nobody trusted this program because “reasonable cause” was not easily definable. I filed several years and renounced several weeks later. I am so glad I kept hearing “Renounce and rejoice” every time that creeping doubt “Am I doing the wrong thing?” Thanks USCitizenAbroad!

14. Trish…

    Compare Jacobson to today’s US ambassador Heyman. He wouldn’t peep FATCA if his hair was on fire.

    I wonder how many people are still sitting tight? I know I got pretty tight some evenings in anticipation of what the US was going to do to improve the situation.

15. Tricia
    The definiton of controlling person by ownships is as follow
    from Guideline
    Controlling persons

    “10.41 Article 1 of the Agreement defines the term “controlling persons” as

    the natural persons who exercise control over an entity. In the case of a trust, such term means the settlor, the trustees, the protector (if any), the beneficiaries or class of beneficiaries, and any other natural person exercising ultimate effective control over the trust and in the case of a legal arrangement other than a trust, such term means persons in equivalent or similar positions. The term ” c ontrolling person” shall be interpreted in a manner consistent with the FATF recommendations.

    10.42 For greater clarity, only individuals fall within the definition.

    10.43 Financial institutions can give effect to this definition by reference to the PCMLTFA and related regulations. Therefore, whether an individual is a controlling person is generally determined by reference to the ownership thresholds of http://www.cra-arc.gc.ca/tx/nnrsdnts/nhncdrprtng/gdnc-eng.html#Toc390079689 and applicable KYC requirements as set by Canadian financial regulatory authorities. Relevant provisions include section 11.1 of the PCMLTFA Regulations.”
    http://www.cra-arc.gc.ca/tx/nnrsdnts/nhncdrprtng/gdnc-eng.html#Toc390079689

    under http://www.cra-arc.gc.ca/tx/nnrsdnts/nhncdrprtng/gdnc-eng.html#Toc390079689

    you link

    “11.11 (1) The following persons or entities are not eligible for registration with the Centre:
    .

    (e) an entity that is a corporation in respect of which a director, the chief executive officer, the president or a person who owns or controls, directly or indirectly, 20% or more of the shares has been convicted on indictment of an offence under this Act or the Proceeds of Crime (money laundering) Act, chapter 26 of the Statutes of Canada, 1991 or has been convicted of an offence under the laws of a foreign country that is substantially similar to an offence under either Act;
    http://laws-lois.justice.gc.ca/eng/acts/P-24.501/page-6.html#h-9
    It sound like 20% ownership is the cutoff based on CRA regulation

16. @George III

    I am sorry but I can’t follow your most recent comment with regard to what we are talking about.

17. People have mentioned that 10% ownership is enough to be a controlling person.
    Using the Canadian Guidelines & it use of definition in KYC money laundering regulation it is 20%. If you have less than 20% you are not a controlling person. Those I quoted from goverment website above.
    from the FATCA IGA page 30
    “4a) For purposes of determining the Controlling Persons of an Account
    Holder, a Reporting Canadian Financial Institution may rely on information collected and maintained pursuant to AML/KYC Procedures”
    http://www.fin.gc.ca/treaties-conventions/pdf/FATCA-eng.pdf

18. @GeorgeIII

    OK. But I still don’t understand what this has to do with talking about anger from those of us who came to this situation in late 2011.

19. @All

    I’m curious–during the time period you are referring to–did you have any faith in the ability of your own (Canadian) government to defend you? If not, why not? This appears to have been well before the signing of the IGA. I’m a bit confused.

20. @Dash

    If you are referring to late 2011, let me think…yes, well before the signing of the IGA (Feb 5 2014). For perspective, my renunciation was Jan 20 2012, a full 2 years before the IGA signing. FATCA was not yet much of a focus. The ONLY focus was how to avoid humongeous FBAR penalties. I don’t recall any sense of expectation that the Canadian government had any ability to protect us-the message was SO strong that the IRS was coming at us. I would have to check more fully but think the message of “The CDN govt will not collect FBAR penalties: didn’t come until much, much later. The feeling was that you might wake up the next day and it would be too late-the IRS would have your info and you could be ruined, then and there. Nothing less than pure hysteria and uncertainty. We had yet to do our research about citizenship and tax. The compliance industry and the media were incessant about how we had to “come clean” and if we didn’t we would be destroyed as well as unable to see our families ever again. We didn’t yet have the expat defence that we have now- we built it.

21. @All

    The unexpected turn of these comments regarding the past prompted me to get to a long-intended set of posts see: http://isaacbrocksociety.ca/2015/11/24/never-forget-what-happened-in-2011/

    I would like to move the relating comments over there, unless anyone has an objection

22. @Tricia Moon

    Thanks for your reply and yes–I was referring to those “early days” in 2011. I also think that your “Never Forget What Happened in 2011” post is a very important post–including the quote from @RenounceUSCitizenship. It might not be a bad idea to make that post–“Never Forget What Happened in 2011”–a “sticky” post that stays near the top of Brock for awhile. It helps to convey the perspective of everyone in 2011 when this movement was just getting started–which is necessary IMHO to show just how evil FBAR is. It should also be very useful to multiple groups of people–including supporters who came along later, the media, and the politicians who may check out Brock.

23. @Tricia, re http://isaacbrocksociety.ca/2015/11/20/alliance-for-the-defeat-of-citizenship-taxation-adct-announces-cbt-lawsuit/comment-page-3/#comment-6880219 the US tax information mtg I described was directly created and run by the DA – held in Toronto, in early 2012.

    It started with an update from their FATCA FBAR task force, included rah rah content about electing Obama, getting the vote out, and how the timing wasn’t good until after the election to push further for change to the ways in which the US Treasury was treating those ‘abroad’ – in Canada and elsewhere.

24. @Dash

    Thank you for your kind remarks I will look into possibilities for keeping post visible. It is Part I of several posts to follow so at the very least, for starters, it will link to this post.

25. @badger

    Thank you! Seems I may have been hearing something similar this very year………LOL