Note to Concerned Immigrant
A reader who nicknamed himself/herself “Concerned Immigrant” left me a message from the Contact page of this site.
Hi Concerned Immigrant. I sent you am email in response. It bounced because you gave an obviously fake email address.
Perhaps you just wanted to vent your anger at the FBAR stuff your parents face.
Anyway. Here is the gist of the response I tried to send you.
(1) Do everything correctly for 2012. Don’t miss this deadline.
(2) Get some competent advice about how to handle the past years. If the advice is OVDI, then stand up and walk away, swearing the mightiest oaths that a drunken sailor could swear.
(3) And yes. The IRS and its Streamlined Procedure. It is a steaming pile of . . . . Ahem. I digress. The Streamlined Procedure is useless. I will stop there. I’m heavily jet lagged and might ^H^H^H^H^H would probably lapse into ill-advised profanity if I continue. 
Greetings from Heathrow Terminal 5, BA’s lounge. Monday morning, after leaving Riyadh on a 12:40 am BA departure. I got off the plane singing Willie Nelson’s “Bloody Mary Morning” (YouTube) to myself.
It is an orange juice morning morning for me. I will see my own Mary later today. I’m happy about that.
Yet another FBAR minnow to the guillotine
I have permission to post this anonymously.
With regards to the US Government/IRS/FBAR/OVDI witchhunt/shakedown, I fit the mantle of victimhood at the hands of our so-called government for the people, of the people and by the people to a T.
Whether stupidly or not, I came forth this last March, because I did not disclose two or three of my [Country] savings accounts (I’ve lived in [Country] for almost 20 years) over my covered years (2003-2010).
I got a letter from the OVDI people in [recent month], to ask me to submit 1040X’s, submitted FBAR’s and their paperwork. The latter is essentially asking me to provide the rope to hang myself.
Tallying the results? I owe [under $200] in aggregate back taxes to the IRS, yet will very likely end up paying the 27.5% FBAR penalty of around $80-$90,000.
There isn’t much more I can say about the unfairness of all this. I am still reeling emotionally. My friend asked me to please control my anger, so I am doing it to keep this civil.
If there is a class action suit against the US Government, I would like to consider joining.
NB. Not our client. I don’t know his real name. The email is edited to disguise identifying facts. Why? Here’s my correspondent’s first followup email to me:
I am reluctant to use my real name at this time for fear of retribution. If they want to use any info I am to provide, as trailers for a witch-hunt, I am sure they will find things to make my life miserably – no matter how trivial or irrelevant to their supposedly mission of uncovering money laundering or unpaid tax [under a couple of hundred] dollars.
Then the second follow-up email:
I further changed it to say “under $200″ rather than an exact figure. I am that paranoid.
The paranoia is justified. A government speaker at the California State Bar Tax Section’s annual meeting said that Criminal Investigations is following up any inquiries they can to see if the taxpayer entered the Voluntary Disclosure Program. If not, expect a letter from Criminal Investigations.
From Tax Notes Today, 2012 TNT 215-1:
The IRS Criminal Investigation division monitors the information it receives under the Service’s offshore voluntary disclosure initiatives to ensure that taxpayers who inquire about the programs follow through, a CI official said November 3.
Rebecca Sparkman, CI director (operations policy and support), said that CI checks to ensure that taxpayers who undergo a pre-clearance check for acceptance into the voluntary disclosure programs follow through with disclosure. “Those [taxpayers] are suspect, and we are looking at those who decided not to continue to come through. Will it be Criminal Investigation? I don’t know; it could be a civil audit,” she said at the annual meeting of the California Tax Bar and California Tax Policy Conference in Coronado, Calif.
Sparkman warned that taxpayers who make only partial disclosures or don’t supply all the information about their offshore activity to the IRS will face severe consequences. “When [the taxpayer] is not truthful, yes, CI will come back in,” and the taxpayer may be criminally liable, she said, adding that the same is true if badges of fraud or lies are uncovered during an examination.
“I really believe that we are at the beginning of our work in the international offshore area,” Sparkman said, adding that the information received from the IRS’s offshore voluntary disclosure programs is fueling investigations into new banks and countries.
IRS chases another person out of the USA
A real-life story submitted to me today. Draw your own conclusions.
I am a foreigner that lived and worked in the US under a work permit. (Not even a green card)
I struggled the past years to make a living, because I was self-employed under an employee that had few jobs, and under the rules of a work permit, you can legally work only under your US employee, in the US.
In 2009 I learned via the Internet about the fbar requirements, and the vdpi.
My tax accountant that I contacted about this said that it would have nothing to do with me, as I am a foreigner and not an American citizen.
I learned again through another Internet article, that also America “persons” are required to voluntarily disclose. I checked the definition of an America “person” and realized, that is me.
I emailed my tax accountant again, forwarded again the article online, and he said that as long as my home money was just sitting there. That I don’t need to file myself to the programme. He was also the one that had never checked the box in my income return that I had assets in my home country. He had never asked me if I have one.
I called the IR to verify, and filed myself voluntarily, after they said I must do so, to come ‘clean”, and after they promised that a person like me would not be what they are looking for and I would be treated fairly.
Since than I went through hell. I learned that they would take 20% of the highest amount of my assets I ever had on my home countries’ bank account (which I opened when I was 20 years younger) away from me. And an additional 80 000 Dollar for the 8 years I hadn’t filed the fbar. Even so I was not aware about any of these requirements.
I was also not aware that in the vdpi it didn’t matter that I had that money on my home account before I even put a foot in this country, and that this money was mine, as I had paid all taxes due, in my country, where I had earned that money with hard work!
It also didn’t helped that I could proof that even my tax accountant had no idea about these requirements. So how should I know, not an expert in tax law?
I learned that in the vdpi each sub-account back home was defined as an account, counting again with it’s highest value.
In my case, I had over the years many sub-accounts, for better interest rates, at the same bank, upon advise from my bank to cover the bank fees (interest income tax for that filed in my home country). Those sub-accounts amounts went back, for example after 2-3 month being fixed, back into my main account Meaning, even so I had only 50 K in its entire, in some years it counted as if I had 250K, because I had “several (sub) accounts” that are considered by the IRS as individual accounts. So, in on year my assets have been as high as 250K. 20% of that I was to pay to the IRS. Even so I had only 50K in savings in reality.
I went through psychological torture and hell because of the following:
- I found nobody to advise me.
- I was poor, because I had for 2007-2009 no real income because of the economic crisis that started earlier than 2008 in my job-field, (remember it was illegal for me to work elsewhere and not under my employee that provided for my work-permit, but had no jobs to forward to me)
- The assets I once had back home on my account I had long time already wired to my US account and had lived from it, paying rent, and food and transportation.
- I spend 12 hours per day, distressed, desperate, for 2 years to search on the internet for help and information, to find CPA’s, and Tax lawyers
- I tried to find others in my situation, help groups, forums that share real information, only to learn that there wasn’t any useful, and those few with email addresses that I contacted seemed to be too scared to be “investigated or caught “ via the spying tools of the powerful US / IRS mechanisms that we all know violate privacy rights. That was the response that I got, if at all.
- I didn’t had the 20 to 30 000 retainer fees the Tax lawyers demanded to take on my case
- The lawyers that I consulted gave me information where I knew after 10 minutes that I knew more about the vdpi and penalties than they do. I had to pay them, even so I would not know where from, my last savings dwindling
- The IRS had no information, cruel and heartless I was left alone and scared
- I was offered to opt-out. I researched about that, and realized that people in similar situations like mine had been hit even harder with more penalties and costs than under the vdpi.
At the end, I realized one thing. I am poor. I can’t pay lawyers. Didn’t find lawyers anyhow. This is too big for me to handle, the costs would ruin me to a point that I would never ever in my old age recover. That I am not willing to pay for penalties so absurd, so unfair and therefore in my view really criminal.
This vdpi was a high price for me to pay, my true love for this beautiful, special land, and it’s people, remains intact, but my faith in the state is broken. I turned my back to the US.
I left the US, and will never go back. Now I am still in stress, because I don’t know how save I am from the claws of this country. So, my life has been partly ruined, because I lost my live in the US, many dreams, and now I am feeling as if I am still not save, even outside, and again I search for information, and it is difficult, again I seek advise in regards to what the US could now do to me, might do based on my case, and what best I should do to be protected from them.
These are heartbreaking stories. Remember this person’s story when you read the next gloating press release from the Internal Revenue Service. Shameful.
FBARs and Delays in Detroit
I know I promised that I wouldn’t blog about FBARs anymore. (This stuff chews up too many Life Credit Units, as Just Me calls them.) But I wanted to share something with all of you that may help you make decisions.
From a correspondent by email today:
Just a quick update. I called the FBAR 1-800 number to check if my delinquent FBARs for 2005-2009 that I sent in October had been received. The lady informed me that they are not in the system as they have probably not yet been processed. She said they had millions of documents and they were still processing July.
This tells me that if you are a normal person with unfiled FBARs, now is the time to dump them into the system. Your delinquent filings will be compared against the cohort of other filings entering into the system. In your favor you have IRS overload and you have a very large bell curve distribution of taxpayers.
The hard decision is to guess how you look compared to the expected pool of filers. Among those “millions of documents” what will yours look like? You hope that the IRS behaves like Foghorn J. Leghorn. The person who opens your envelope merely glances at your FBARs, and snaps “Go, I say, go away, boy. Ya bother me.” (Sound file)
That decision is where you need to talk to someone smart and experienced.
Obligatory
This is not legal advice to you. You’d be a damn fool to make important legal decisions with serious consequences just because you read a blog post by some yutz (that would be me) on the inter webs. Especially a yutz who likes to watch cartoons with his kids.
New website with offshore bank account, expatriation information
There is a new website that launched several weeks ago that I highly recommend: www.isaacbrocksociety.com. The engines behind this site are people I know and it has good, first-hand information about
- expatriation (as in giving up U.S. citizenship); and
- cleaning up paperwork problems for undisclosed bank accounts.
Offshore Bank Account Cases
I have done a LOT of work in the “clean up the undisclosed bank account” arena. I commend to you an article published today, titled “The OVDI Drudgery for Minnows.” What the author says is 100% true. This is from a tax practitioner (that would be me) who has handled many, many dozens of cases with the IRS and has advised an undisclosed but much, much larger number of people to find alternate ways to handle their affairs. I am very expensive. I suspect other tax lawyers experienced in this arena are also very expensive. Part of the expense is due to the difficult work, but his point about drudgery — endless hours grinding through the paperwork — is also spot-on.
FWIW I now only take on offshore disclosure cases with EXTREME reluctance. The absolute poop (this is an item of technical tax jargon and is somewhere in the Internal Revenue Code, I just can’t put my finger on it right now) the IRS put my clients through has utterly soured me on the experience. It chewed up Life Credit Units for me as the lawyer, as surely as it chewed up Life Credit Units for the clients.
My suggestion to those of you out there in the real world — first, get experienced, competent advice to decide whether you have a money problem or a jail problem with the IRS. It is well worth over-paying for that kind of advice.
After that, if you don’t have a jail problem I would be extremely reluctant to consign myself to oblivion as defined by the IRS’s now semi-permanent voluntary disclosure program. I am writing this blog post from the Al Faisaliah Hotel in Riyadh. U.S. persons living abroad almost cannot help but screw up one obscure IRS paperwork problem or another and thus risk massive penalties. But give the IRS 27.5%? NFW.
I must say that many OVDI cases that have opted out are being dealt with sanely. Some not.
I don’t want anymore of these cases. I know people. Call me and I will refer you to them.
In the meantime, read The Isaac Brock Society to get some education.
Expatriation
The reason I am in the Middle East is to talk to people about canceling their U.S. citizenship. Massive, massive interest in this.
Again, The Isaac Brock Society website is extremely useful. I especially like the first-hand reports of the exit interviews at different Consulates. This will really help you to know what to expect when you show up at an Embassy or Consulate to renounce citizenship.
Logging out of the citizenship/permanent resident status is the easier part. The tax part is more complex. For most of the authors who tell their stories on www.isaacbrocksociety.com I suspect they don’t have complex tax issues to solve when they expatriate. Our office more often than not lives squarely in “complexity” land.
Anyway
I’m out of here. Headed up the road to see a friend who’s office is across from the Jarir Bookstore on Olaya Road here in Riyadh. I’m back in the office next week.
Carry on.
Hello to “Just Me” and Petros of The Isaac Brock Society.