June 4, 2013 by Ellen Wallace“Entrapment” by the IRS resulted in “ruinous penalties” for ordinary Americans
GENEVA, SWITZERLAND – American Citizens Abroad (ACA) has provided evidence “of the arbitrary and questionable IRS (US tax office) management of the Overseas Voluntary Disclosure Programs” (OVDP) to members of three US Congressional committees working together to investigate IRS abuses, ACA said Tuesday 4 June.
The Geneva-based international group says that the 2009 OVDP in particular was “extremely prejudicial to Americans living overseas who sought to become compliant with their taxes due to errors or omissions under the OVDP. Believing they could come back into the system by simply filing the appropriate paperwork and paying any outstanding tax burden, these individuals were later told they would be hit with a standard penalty of 20% of the highest value of their bank accounts over a five-year period.”
Category Archives: Issues regarding US persons abroad
FBI: 374 renounced citizenship in May 2013
Right on time as they do almost every month, the FBI has released their report on Active Records in the NICS Index as of 31 May 2013. NICS now has records of 22,197 renunciants who have been stripped of the right to purchase firearms in the United States. The FBI keeps uploading their new reports at the same URL as the old reports, making it rather difficult to do monthly comparisons, but this represents an increase of 374 records of renunciants since last month’s report, and 1,543 since the end of last year.
Accounting Today: Current articles re IRS: Acting IRS Chief Pledges Repairs & IRS Employee Interviews…
Accounting Today: Acting IRS Chief Pledges Repairs before Congressional Panel
“The agency stands ready to confront the problems that occurred, hold accountable those who acted inappropriately, be open about what happened and permanently fix these problems so that such missteps do not occur again,” Werfel told a House Appropriations subcommittee.
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“It seems we have a new misstep every day at the IRS,” said Representative Hal Rogers, a Kentucky Republican and chairman of the full appropriations committee. “I’m very troubled at what may come to light next.”
Rogers said Congress may further restrict the IRS’s funding with fresh constraints.
Congress Unveils IRS Employee Interviews about Tea Party Groups
The committee released excerpts from bipartisan transcribed interviews between Committee Investigators and Cincinnati IRS employees. In these interviews, Cincinnati IRS employees rejected the White House’s claim that the targeting was merely work of “rogue” agents and say targeting of conservative political groups came from Washington, D.C.
“As late as last week, the administration was still trying to say the [IRS targeting scandal] was from a few rogue agents in Cincinnati, when in fact the indication is that they were directly being ordered from Washington,” Issa told CNN’s “State of the Union” program on Sunday.
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In addition to the two hearings scheduled this week by the House Appropriations Committee and the House Oversight and Government Reform Committee he House Ways and Means Committee also plans to hold a hearing Tuesday in which lawmakers will hear from representatives of some of the conservative groups that had their tax-exempt status applications scrutinized by the IRS’s Exempt Organizations division.
FEARBar – “Foreign Email Account Report” – #Offshore email reporting – coming to an information return near you!
What if the US wants you returned to the Homeland? The conventional wisdom is that there is not much the US can do if you are not within their borders. This is a complicated question. There are at least two issues:
Assuming a violation of U.S. law, under what circumstances will an extradition treaty provide for extradition to the U.S.?
Lawyer: Becoming more likely that US gov can extradite people back to the US for tax crimes http://t.co/XhDawpKTAL – #FATCA enforcement
— U.S. Citizen Abroad (@USCitizenAbroad) June 4, 2013
As one U.S. tax lawyer writes:
Canadian snowbirds could join #americansabroad and face US tax servitude
U.S. law could be a Snowbird tax timebomb http://t.co/kb9oIrSAVj – Dont' fall for US tax and #FBAR trap!
— U.S. Citizen Abroad (@USCitizenAbroad) June 3, 2013
The above article appeared in the Toronto Star. Our friend Roy Berg is quoted. The article says that the purpose of the law is to encourage tourism. It appears that the article is open for comments. This would be a good opportunity to explain how U.S. tax laws hurt and will ultimately destroy the U.S.
USA threatens to smash Swiss banks with non-transparent demands
America is threatening the Swiss government to quickly agree to unspecified conditions if it doesn’t want for Swiss banks to be destroyed.
Die USA beharren darauf, ihr «Programm» zur Bereinigung von amerikanischem Schwarzgeld erst nach der Zustimmung durch die eidgenössischen Räte zu veröffentlichen.
http://www.aargauerzeitung.ch/schweiz/so-will-widmer-schlumpf-den-us-steuerdeal-retten-126669898
Translation: USA is insisting on revealing the details of their “program” to clean American black money only after Swiss councils approve it.
Das Angebot gilt laut «NZZ am Sonntag» nur für 120 Tage. In dieser Zeit müssen die beteiligten Banken die Daten an die USA übermittelt und eine Busse ausgehandelt haben… Eine solche Busse könnte vor allem kleinere Banken an den Rand des Abgrunds und darüber hinaus bringen.
http://www.nzz.ch/aktuell/schweiz/die-sommersession-als-sondersession-fuer-die-lex-usa-1.18091798
Translation: The deal, according to “NZZ on sunday”, is only valid for 120 days. In this time frame, all involved banks must deliver data to US and negotiate a settlement… Such fines could push small banks to the edge and beyond.
«Um es ungeschminkt zu sagen: Ohne Programm ist keine Bank vor der Willkür eines US-Justizbeamten geschützt.»
http://www.tagesanzeiger.ch/schweiz/standard/Powerplay-um-den-Bankendeal-mit-den-USA/story/26002848
Translation: To say it nicely, without the program, no bank will be protected from the high-handed action of US justice agents.
“Wir wollen mehr Fakten. Dabei lassen wir uns nicht drängen – weder vom Bundesrat noch von den Medien.”
http://www.finanzen.ch/Nachrichten/CH-Steuerstreit–Breite-Kritik-und-Suche-nach-Alternativen-Zus-434619
Translation: We want more facts and we won’t let ourselves be pushed around – not by the federal council and not by the media.
«Kein vernünftiger Politiker im Parlament kann einem Gesetz zustimmen, dessen rechtliche und materielle Auswirkungen unbekannt sind»
http://www.tagesanzeiger.ch/schweiz/standard/Dringlichkeit-fuer-Notrecht-ist-nicht-gegeben/story/13684308
Translation: No sane politician in the parliament can approve a law whose legal and material impact is unknown.
Die Schweizer Regierung möchte den seit Jahren schwelenden Steuerstreit mit den USA ein für alle Mal beenden… Die Amerikaner wollen erst nach einem Beschluss bekanntgeben, zu welchen Konditionen Vergleiche möglich sind, also wie teuer es für die Banken wird… Die USA seien zu keinen weiteren Zugeständnissen bereit… Laut Schweizerischer Nationalbank könnten hohe Geldbußen kleinere Institute sogar in den Ruin treiben
http://derstandard.at/1369362360940/US-Datenhunger-laesst-Schweizer-Bankmitarbeiter-zittern
Translation: The Swiss government has for years been wanting to end the swelling tax conflict for once and for all with the USA… Americans only want to reveal the conditions and how much it will cost banks following approval… The US is unwilling to compromise… According to the Swiss national bank, high fines could ruin small banks.
“Sicherheit hat man bei den Amerikanern nie. Wie diese mit anderen Ländern umgehen, das hat mit einem Rechtsstaat wenig zu tun.”
http://www.cash.ch/news/alle/nzzaschsteuerstreit_cvppraesident_darbellay_bezeichnet_loesung_als_einseitig-3070865-448
Translation: One can never trust Americans. Their treatment other nations has little to do with a constitional state.
Die Regierung in Bern solle sich lieber verstärkt an der Erarbeitung internationaler Standards im Rahmen der OECD beteiligen. Ein solcher Standard müsse die Steuerhinterziehungsfrage lösen, aber auch den Schutz der Privatsphäre berücksichtigen.
http://www.handelsblatt.com/unternehmen/banken/josef-ackermann-schweiz-muss-die-us-forderungen-erfuellen/8290528.html
Translation: The government in Bern should rather be more involved in creating international standards in the framework of the OECD participants. Such a standard should solve the tax evasion question while also taking privacy protection into consideration.
Eine Ablehnung würde zu US-Klagen führen, was Ammann zufolge das Ende mehrerer Schweizer Banken bedeuten würde.
http://www.welt.de/newsticker/bloomberg/article116757815/Schweiz-stimmt-US-Gesetz-wohl-zu-es-droht-schlimmeres-Schicksal.html
Translation: A rejection would lead to US lawsuits which, according to Ammann, would mean the end of many Swiss banks.
The Bigger Perspective on EU #FATCA Public Hearing, Policy Laundering, Reciprocity and the Consequences
A economist friend, who I email correspond with, has made some broader salient observations and points about the recent EU FATCA meeting, which Victoria has eloquently blogged about here. As he points out, FATCA has greater impacts than just those on Dual Citizens and accidental Americans living in Europe that we all should be concerned about irrespective of our status.
I thought I would ask his permission to share his thoughts to add and expand the discussion. Rather than just bury them in a comment stream, here or here, I thought I would make a separate post as they are extensive. He wishes to maintain anonymity for the purpose of this post.
Note to Reader: When you watch, and/or read the testimony of the US Treasury guy, Mr Robert Stack ( Deputy Assistant, Secretary for International Tax Affairs, International Tax Council of the United States Department of Treasury) you will notice that there has been no mention of the IRS. However, he represents the face of the IRS for FATCA administration and enforcement. The IRS Commissioner reports directly to Treasury Secretary Jack Lew who reports to Obama. The IRS is NOT an independent government agency. The International Revenue Service (IRS), as guided by the Administration and Treasury are the ones that implement the Treasury FATCA IGAs specifically and 544 pages of FATCA regulations generally.
So, when you hear Treasury in the context of this EU public hearing, think IRS, as they are the ‘heavies” given the task, with full enthusiasm for the mission, I might add. The Economist commentary below used IRS terminology only, but I have included both for clarity, as it relates to this EU FATCA Public hearing.
What follows are his comments with a little editorial license:
Accidental US Citizenship — does it stay with you for life?
Further to USCitizenAbroad’s comment on my previous post entitled, We want to know once and for all, for sure: Is it true, legal policy, a CHOICE: the US cannot force anyone who is born outside of the US to acquire US citizenship?, I am posting his prior post. Yesterday he added the preface:
“U.S. citizenship is a problem to be solved.”
You may not need to solve it at all!
Hang in for a long read.
Accidental US Citizenship — does it stay with you for life?
More excellent questions and commentary from USCitizenAbroad. Thank you very much!
Soft/quiet disclosures are an IRS trap like OVDI?
Warning: Please read the first two comments to this post before accepting at face value the advice of Medic Blog (the editor).
After entering OVDI/P, American expats later learned that such was only meant for tax cheats and not for them. Now, it seems that the same may also apply to soft/quiet disclosures. Are soft/quiet disclosures considered to be a “trap” to punish those who filed old FBARs as being “tax cheats”? Is there anything that an American expat can do without being accused of being a “tax cheat”?
May 31, 2013
…John and Mary made the mistake of amending their past tax returns and filing their old FBARs. On these returns, they were required to put down account numbers and bank information.John and Mary fell into the IRS’s trap. Now the IRS has all the information it needs and if audited, the burden of proof is on John and Mary that they did not commit a willful violation of FBAR. A willful FBAR penalty is 50% of account value. And this can be assessed for multiple years.
What John and Mary must do right now about their soft/quiet disclosure
If John and Mary amended their tax returns and filed delinquent FBARs, they have provided the IRS with all the information they need to identify their tax accounts for a possible soft disclosure. Essentially John and Mary have raised their hands and said “WE ARE TAX EVADERS, HERE IS ALL OUR INFORMATION. PLEASE COME AND PENALIZE US AS MUCH AS YOU CAN.”
Then, it is just a matter of time before they will be faced with the most expensive and lifestyle changing bill of their entire lives.
Get into the OVDP — now!
Read more at Medic Blog
At what point does this become a human rights violation, or better yet, under which conditions is this not a human rights violation? In relation to Eritrea, the only other nation in the world with a diaspora tax, such behavior is considered as being a human rights violation.
On the basis of NRK information about harassment of Eritrean citizens in Norway, the Norwegian authorities consider taking this up with the Eritrean authorities as a possible violation of human rights, says Imerslund to NRK.
Source: Asmarino Independent
the collection of the 2% tax collected by the Eritrean government from Eritreans in diaspora as extortion is unlawful.
We want to know once and for all, for sure: Is it true, legal policy, a CHOICE: the US cannot force anyone who is born outside of the US to acquire US citizenship?
I am putting this informative comment into a post where it will garner more attention.
I wanted to share my brother’s and my experience today of applying for US citizenship at the Toronto Consulate. We are both Canadian born children of a US parent who is now deceased. Given the information we have taken from the internet, IRS and US citizenship sites, we came to believe that we had to obtain US citizenship (we were never registered as born abroad by our US parent). We completed all the paper work, obtained the documents and booked the appointment and attended for that today. We were to be granted US citizenship, however when we advised them that we actually did not wish to obtain the citizenship and in fact the only reason we had come was because we believed the US required it of us they were dismayed. We were told by the consulate officer and her direct superior that they cannot force anyone who is born outside of the US to acquire citizenship – it is a choice. When we pressed her further stating that this is not the information we are getting she advised clearly that we are not US citizens unless we willingly apply for and accept the citizenship. She stated we can say unequivocally that we are not US citizens unless we wish to be. We respectfully declined the offer of citizenship (to their amazement) and left with our refund and documents in hand. I will certainly sleep better and breathe easier! I hope this helps other Canadian born who are concerned about this.