(This post requested by JC.)

By law, the National Taxpayer Advocate must submit two reports to Congress each year.

National Taxpayer Advocate’s Objectives Report

The first report (Objectives Report), delivered each June, contains the goals and activities planned by the Taxpayer Advocate for the coming year.

National Taxpayer Advocate’s Reports to Congress

The second report (Annual Report), delivered at the end of December, includes: A summary of the 20 most serious problems encountered by taxpayers; recommendations for solving those problems; and other IRS efforts to improve customer service and reduce taxpayer burden.

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Volume I: FY 2016 Objectives Report to Congress

1. PREFACE: National Taxpayer Advocate’s Introductory Remarks
2. REVIEW OF THE 2015 FILING SEASON
3. AREAS OF FOCUS
   1. The IRS Should Provide Victims of Identity Theft with a True Single Point of Contact to Help Them Resolve Their Account Problems and Obtain Their Refunds
   2. The IRS Agrees It Should Issue Refunds to Victims of Return Preparer Fraud, But It Has Been Slow to Develop Necessary Procedures
   3. The IRS’s Administration of the Affordable Care Act Has Gone Well Overall, But Some Glitches Have Arisen
   4. The IRS’s Implementation of FATCA Has in Some Cases Imposed Unnecessary Burdens and Failed to Protect the Rights of Affected Taxpayers
   5. IRS Procedures for Levies on Retirement Plan Assets Create Financial Harm and Undermine Taxpayer Rights
   6. As the IRS Migrates to More Self-Service Tools and Online Services, Low Income and Other Vulnerable Taxpayer Populations May Face Greater Compliance Challenges
   7. Additional Requirements for Appeals Access and Compressed Case Timelines Impair the Fundamental Rights of Taxpayers
   8. The IRS Approves Many Applications for Tax-Exempt Status Almost Automatically, Often Based on Insufficient Information
   9. International Local Taxpayer Advocates Would Provide Valuable Assistance to Taxpayers and Protect Their Rights
   10. TAS Continues to Work with the IRS to Implement the Taxpayer Bill of Rights into IRS Operations
   11. The IRS Must Have a Comprehensive Review Process for Guidance and Other Documents to Protect Taxpayer Rights, Improve Customer Service, and Operate More Efficiently
4. EFFORTS TO IMPROVE TAS ADVOCACY AND SERVICE TO TAXPAYERS
5. TAS RESEARCH INITIATIVES
6. TAS TECHNOLOGY
7. APPENDICES

Volume Two: IRS Responses and National Taxpayer Advocate’s Comments Regarding Most Serious Problems Identified in 2014 Annual Report to Congress

I celebrated New Year’s this year at a residence I rented in Maine, not too far from where I was born. My “pure Canadian” wife and I were joined by our two daughters and their husbands, as well as other family members including my mother who continues to live on Campobello Island where I grew up. The reason for the celebration in Maine was that my older daughter, who now lives in Texas and is married to a Texan, has applied for a green card and could not leave the US. She and her husband had originally intended to come to Nova Scotia and spend Christmas with us, but when her green card did not get issued in time, we had to settle on “Plan B”, which allowed her to spend some time with her grandmother and other family members.

When I opened my Christmas gift from my Texas daughter and her husband, it was a T-shirt with a depiction on the front of a star above a cannon and the words “COME AND TAKE IT”. My son-in-law, who is from Cuero, explained that the shirt was from the neighbouring town of Gonzales. He explained that back in the 1800’s, Mexican authorities had given the people of Gonzales a cannon to help protect themselves from frequent Comanche raids. Over the next few years, the political situation in Mexico deteriorated and several states revolted. The Mexican commander thought it unwise to leave the cannon with the residents of Gonzales and asked them to return the cannon. The residents’ reply was a defiant “COME AND TAKE IT”. The Battle of Gonzales was the first military engagement of the Texas Revolution.

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Picture a Saturday night, it’s extremely cold outside, and some friends have gathered over some hot apple cider, talking about what’s been on all their minds lately……..
 
 
 
 
 
Marco said: Family education in progress…Today I informed my girls (12, 17 & 18) about the U.S. Governmen’s implicit intentions to stop them from living in Germany (their birthplace) and the same implicit intention of the U.S.Government requesting them to move to the U.S., if they would like to remain U.S. and German citizens and would like to remain financially unharmed. In short: I introduced them to Publication 54! One girl would have to file her first U.S. federal tax return next year and the minimum annual compliance costs to remain a U.S. citizen in Germany would be approx. $370 for her (if I wouldn’t do the paperwork). That would be 60% of one of her monthly paychecks. The fee to renounce is currently $2,350, so it would be cheaper for her to renounce after 6 1/2 years filing otherwise useless tax returns and other reports.
 
Credence said:
“When the time comes (my oldest kid with this problem is 9), the $2,350 will be a birthday present. Not that they usually get gifts anywhere NEAR that much, but since this is kind of my fault not theirs…. And now it’s back to work for me–if I can edit another 10 papers or so by the stroke of midnight on the 31st, I’ll have my renunciation fee.”

Marco: “You will *borrow* the child the money and make it a gift after everybody is free from the U.S. tax regime!”

Beverly: “You are allowed to gift 14K per year to each person on your gift list – usually your children – without paying taxes on the gifts, up to 1M (I think) over your lifetime. Don’t worry about the $2350-!!”

Andrew: “Better hope the fee is not raised again by then. In five years it went from $0 to $450 to $2,350. At that rate of growth it will be well over $40,000 by the time your kid reaches 18.”

Marco: “Maybe you could try to explain the German authorities that the U.S. CLN is too expensive for you! Germany would accept this if your current monthly growth income is less then $2,350 while the CLN is charged with more than 1.280€. The German Government believes that the U.S. price tag is an “unreasonable condition for renunciation” – I agree and I also believe it is maybe the only (bad) way to stop citizenship evasion on a larger scale.”

Denise: “My daughter has dual and when she has filed enough tax returns will be renouncing.”

Credence: “So I just sent my request for the documents and the appointment to the embassy!”

Marco:” I don’t think that all dual / U.S. families living abroad can afford such an amount and I don’t believe that they will follow the U.S. Governments wish to move to the U.S. to get away from the burdens either. We would end up with $9,400 in fees if we need to “extract” our U.S. citizenship from our lives in the near future. Since I made the mistake to surrender my girls lives to the U.S. administration by registering them in the first place, I would have to pay and I guess I will frame the receipts and certificates in my living room as a symbol of real freedom once it is done. I already started saving one year ago…”

Credence: “Four kids plus me here who will eventually have to pay that fee. Marco, I feel your pain!” (NB: At today’s rate, the renunciation fees for this family would be $11,785 USD)
 /strong>
everyone stopped for a moment…. mulling all this over in their minds… and then……….
 
Tom Paine: “What about establishing a charity called “Renunciation Fund”? It could be used to assist those who need to escape U.S. tyranny but can’t afford it. Perhaps DA could do a blast to everybody on it’s mailing list: “This year, give the gift of renunciation to somebody who can’t afford to buy their freedom”.

Marina: “Tom Paine I think I will share your suggestion on the DA FB page!” 😉

Marina went over……

I liked this suggestion: “What about establishing a charity called “Renunciation Fund”? It could be used to assist those who need to escape U.S. tyranny but can’t afford it. Perhaps DA could do a blast to everybody on it’s mailing list: “This year, give the gift of renunciation to somebody who can’t afford to buy their freedom”.” This would be a worthy cause and would help the strapped Americans who need to renounce with their children. The way it is now, it’s unaffordable for many. But try explaining that to people who believe we are all the fat cats abroad. Actually it’s the fat cats back home who hide their money abroad, not us!

Joanna: “Tom, that’s a great idea. It’s so ridiculous that the media would love it. If we all contributed a dollar we’d have $8,000,000.00!” Poor kids…….

Marco: “I would call it “Freedom Fund” because the main purpose would NOT be renunciation but freedom, otherwise not available…. but for money...”

Joanna: “Yes!! Very catchy title. Americans and the media love anything with the word “freedom” in it. Freedom fries, etc.

Marco: “And the best: if we find a way to make it tax deductible for the donator in the U.S. and/or others countries, everybody will benefit (except the governments granting the tax deduction, governments supporting FATCA, IGA’s and the deriving burdens for U.S. people)”

Beverly: “Seems to me that at a cost of about $1000 per year for accounting fees to remain compliant, the renunciation fees will pay for themselves in just a couple of years!”

So they all guessed all that had to be done was…..
 

 
And just whoooo might those background singers be?
 

cross-posted from ADCSovereignty WordPress Blog

This is a post that I began to write on August 20, 2015. The post was in response to the death of Dr. Marcio Pinheiro.  Trish Moon wrote a tribute to Dr. Pinheiro at the Isaacbrocksociety. I urge you to read both the post and the comments to that post.

Another Brock Warrior Down – In Memory of Marcio V Pinheiro https://t.co/vrmCqBvFBu – a story of persecution of #Americansabroad

— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) January 2, 2016

Dr. Pinheiro was a “naturalized U.S. citizen” who was living in Brazil. There is NO DOUBT that the attack on Americans abroad, which was orchestrated and prosecuted by the Obama administration, made the last years of his life a “living hell”. Marcio Pinheiro was a victim of Obama administration policies that began in 2009. These policies  shaped the finals years of Marcio’s life. For those who are NOT aware of the origins of the fear and anger experienced by Americans abroad, I invite you to read: “Never Forget What Happened in 2011” and the comments (also by Trish Moon).

Never Forget What Happened in 2011 https://t.co/10bKtUDhFA – understanding why #Americansabroad feel such anger, betrayal and terror

— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) January 2, 2016

I am motivated to finish this “dormant” post, by Trish Moon’s superb “It’s NOT the Taxes, it’s the Effect on Real Lives, Stupid” post which she published on December 31, 2015. That post is destined to be become a “classic”. The main purpose of the post is captured in the language:

By governments not addressing what the tax laws actually mean–in the life experience of those affected (including their immediate “alien” families) they are disabling a whole class of citizens from participation in the normal opportunities available to other citizens, based upon nothing less than a U.S. claim of ownership; due in most cases merely for having been born there.

This is what we have somehow failed to communicate clearly enough. Perhaps it will take a couple of more years before the damage begins to be more obvious.

The story of Dr. Pinheiro is NOT a story of taxes. It’s the story of the extra-terroritorial application of U.S. law. It’s the story of how the provisions of those extra-territorial laws destroy the lives of those who reside outside the U.S. and are deemed by the U.S. to be “U.S. Persons” (primarily based on place of birth).  It is also a story of the role that the media, the tax compliance community, and now other governments (via FATCA IGAs) play  in the enforcement of U.S. law on the  residents and citizens of other nations. Remember that Dr. Pinheiro was a citizen of Brazil living in Brazil. Remember also that the vast majority of people affected by FATCA and the application of U.S. tax laws in Canada, are Canadian citizens living in Canada.

There is no evidence that Dr. Pinheiro owed the U.S. Government any taxes. The evidence is that his concern was his  failure to file the FBAR (“Foreign Bank Account Report”). He was required to file the FBAR to disclose to the U.S. Government the bank accounts that he used to manage his life in Brazil. The belief prior to 2015 was that: the failure to file the FBAR could have subjected him to penalties that would exceed 300% of the value of the bank account. (The IRS has only recently clarified its position on this.) Think of it: a man’s life destroyed because of fear of penalties for having not disclosed his local bank accounts to the U.S. Government (when nobody even knew of the patently absurd requirement to do so). Are Homelanders required to disclose their local bank accounts to the U.S. Government? (Those who are “Looking for Mr. FBAR should read here and here.)

Remember this. Dr. Pinheiro lived in a state of terror NOT because he didn’t want to comply with U.S. laws. He lived in a state of terror because he did want to comply with U.S. laws. Hmmm….

That’s worth repeating. This time I think I will bold it:

Remember this. Dr. Pinheiro lived in a state of terror NOT because he didn’t want to comply with U.S. laws. He lived in a state of terror because he did want to comply with U.S. laws. Hmmm….

Now continuing where I left off in August of 2015.
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Opened my email today to see a one from Kat Jennings CEO at Tax Connections and noticed the headline:

“Check out the top 20 Tax Blogs in 2015! “During 2015 readers of Tax Connections Worldwide Tax Blogs arrived from more than 200 countries and spent an average of 12:45 during each visit. These are mighty numbers…”

Interestingly, of the 20, at least 10 of them, dealt with issues that affect us.

Delighted to notice:

at #2) How To Live Outside The United States In An FBAR And FATCA World by John Richardson

at #4) Fighting FATCA “Tyranny” by Lynne Swanson (will include in a future post….)

I read John’s post again. These excerpts stick in my mind:

Your problem IS actually attempting to live as a “tax compliant” U.S. citizen outside the United States. It’s easy to live as a U.S. citizen abroad who is NOT “U.S. tax compliant”. What is very difficult is to live as a “U.S. citizen abroad” who IS “U.S. tax compliant”.

U.S. citizens, regardless of where they live in the world, are subject to exactly the same provisions of the Internal Revenue Code. At first blush you might think this is fair. No.

The problem is that the U.S. tax code imposes punitive taxes and reporting requirements on “all things foreign to the U.S.”. As a U.S. citizen abroad, your life is completely “foreign to the U.S.”. Therefore, your life will be subject to punitive taxes and reporting requirements. You will learn this as you become more and more U.S. tax compliant.

 
This situation is not about tax.
Those drawn up in this mess do not have tax problems.
They have compliance problems. Once filed, THEN they WILL have tax problems.
 
So what say the accountants and lawyers. You won’t owe any income tax. Unlikely to receive penalties, fines, interest. So what’s the big deal?
 
By governments not addressing what the tax laws actually mean–in the life experience of those affected (including their immediate “alien” families) they are disabling a whole class of citizens from participation in the normal opportunities available to other citizens, based upon nothing less than a U.S. claim of ownership; due in most cases merely for having been born there.
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This just out from Republicans Overseas:

Yesterday [29.12.2015] Mr. Bopp filed his 36-page Plaintiffs’ Memorandum in Opposition to Defendants’ Motion to Dismiss in the US District Court for the Southern District of Ohio. DOJ lawyers asked Judge Rose to dismiss our lawsuit.

Mr. Bopp argued the lawsuit is justiciable for three reasons: plaintiffs have standing, the Anti-Injunction Act does not bar plaintiffs’ claims, and plaintiffs Eight Amendment claims are ripe for adjudication.

Mr. Bopp further argued plaintiffs should be granted relief requested based on their claims for four reasons: the IGAs are unconstitutional sole executive agreements, reporting requirements violate equal protection for Americans living abroad, the challenged penalties violate the Excessive Fines Clause, and reporting requirements violate the Fourth Amendment.

Now we are waiting for Judge Rose’s ruling not only on this matter, but also on Plaintiffs’ Motion for Leave Amend Complaint. We expect both rulings will be handed down in 2016. This only means our fight to defend 8.7 million overseas Americans’ constitutional rights continues. Happy New Year!

Link to Republicans Overseas Facebook Post (thanks to Keith Redmond): Mr. Bopp filed his 36-page Plaintiffs’ Memorandum in Opposition to Defendants’ Motion to Dismiss in the US District Court for the Southern District of Ohio

The entire pleading may be downloaded here: Plaintiffs’ Memorandum in Opposition to Defendants’ Motion to Dismiss

Related IBS posts about the “Bopp” lawsuit:
Judge Rose denies plaintiffs application for injunction in the Bopp FATCA Legal Action Lawsuit.

Finally the Bopp suit has arrived

And as a reminder, link to the FATCA Legal Action site if you would like more information or to donate towards the effort:
https://fatcalegalaction.com/