is this the OVDI tipping point?

This article has more than 300 comments. Finally Mr. Shulman has hit the mainstream consciousness, but not in the way he anticipated.

Canada holds the moral high ground here. This may mark the tipping point at which diplomacy and sanity force Mr. Shulman’s retreat. I hope so.

Go Canadians.

Oh by the way. You Canadians in the OVDI. Prepare to give Mr. Shulman 25% of your RRSPs. How does that make you feel?

Thanks correspondent D.


  1. As of ~5pm PST today, it’s only 331 comments. Did you add an extra digit by mistake?

  2. I have now emailed 20 plus reporters and news organizations, and still working down a list trying to get some light on this issue. Thanks for pointing this out, as I will add to my links.

  3. Good grief more concerned Canadians says:

    Bravo Margret Wente for going public on this madness.

    FYI – this was the top-rated comment on the blog; a prelaw student going for the A in a case law research course…

    6:36 AM on September 20, 2011
    My aunt was born in US, but lived in Canada as a Canadian citizen most of her 60+ years. She was scared of being arrested by American agents or losing much of her retirement savings to this US cash grab. I made it my research project and read case law, the tax treaty, and reports from international tax firms. I learned:

    – US has no power in Canada to collect taxes, take wages, or seize Canadian bank accounts. These are “extra-jurisdictional” tax claims, very difficult to collect, and our courts favored Canadian defendants.

    – in 2006, less than 40,000 US people in Canada filed US tax returns. In 2006 there were maybe 600,000 of them here.

    – Under Tax Treaty, Canada Revenue cannot collect US tax from Canadian citizens born in US, unless the claim was from before they became a citizens. And CRA told Don Cayo at Vancouver Sun they would not collect any US bank reporting penalties.

    – My aunt’s bank has no record of her US birth. Treating a Canadian bank customer differently because they were born in the US is discriminating based upon “nationality or origin”. This violates our Charter and Human Rights law. Sending customer bank records to a foreign state, or closing an account because of where they were born, is discriminatory.

    It’s sad that the US – 14 trillion in debt and borrowing money madly to keep the lights on – wants part of my aunt’s life savings. They can’t tax billionaires and GE, so now they want her money! Sadly, she will never vacation or visit the US again. Considering all the guns and how things are falling apart there that’s OK with me :)

  4. Where are the 300 comments, am I missing something from this link?

  5. Globe & Mail link says:

    Here is a clean link – comments are at the bottom of the page in a typical browser viewer

    Help! I’m on the IRS hit list

    • That is better, thanks much. I see it is up to 352 comments now. I am reading away. I do wish Shulman fresh off his big “success” regarding these misguided OVDP/OVDI misadventures would read a few of these, and reflect on what the hell he has done!

    • Thanks for the clean link. Serves me right for blogging from a BlackBerry. While walking. And chewing gum. :-)

      I just had to edit a typo in this comment. Oops.

  6. BTW…ACA has just recently sent out this press release to all its media and journalist contacts.

    September 19, 2011
    CONTACT: Marc Destito, Public Affairs Director
    +41 22 340 02 00

    IRS Traps Innocent, Hard-Working Americans in Criminal Tax Probe.

    Recent media reports touting the success of the IRS’s Overseas Voluntary Disclosure (OVD) Programs in seizing $2.7 million in tax revenues fails to mention that of the 12,000 “tax cheats” captured, hundreds are innocent Americans living and working overseas.

    ACA fully supports efforts to eliminate tax evasion, however, current IRS policies using tools intended to prosecute organized criminals, terrorists and drug dealers on ordinary Americans in a clear abuse of government power. ACA has received dozens of complaints from Americans who are bona-fide residents overseas citing prosecution for errors or omissions on the Foreign Bank Account Report (FBAR) form. These individuals face penalties that begin at $10,000 per occurrence or 20% of the value of their bank accounts, whichever is higher. Additionally, the burden of proof rests on the filer who is assumed guilty until proven innocent. The IRS is actively enforcing these penalties even on Americans who possess no criminal backgrounds and have not been engaged in suspicious behavior. (Should journalists wish to speak with any of these individuals, ACA can furnish interviews upon request. Contact information below).

    The OVD programs do not distinguish between criminals and bona-fide overseas residents. That means Americans selling exports abroad who need ordinary financial accounts to function or stay-at-home moms who co-own accounts with their foreign born husbands are treated the same as terrorists and drug lords. In one case received by ACA, a businessman listed his income in the wrong column of his tax returned, refiled and actually received a taxcredit….in addition to a filing penalty of $1 million for being unaware he was also required to file an FBAR.

    These individuals are not criminal tax evaders but they are the “success” stories that IRS Commissioner Shulman is touting with the press in an attempt to raise tax revenue at any cost. More information on this can be found in ACA’s latest report, “The FBAR Scam”

    For more information please contact:
    Marylouise Serrato
    American Citizens Abroad
    +41 22 340.02.33

  7. Phil

    has the IRS confirmed that they will penalize RRSPs at 25% ? Does that depend on whether the person took a distribution, filed form 8891 or not ?

  8. I’ve never heard of a law abiding US expat in Canada who has been filing Canadian returns honestly (even if not filing US tax returns) and has little to no tax due being harassed. When I learned of the reporting requirement earlier this year, I sent in 5 years of old FBARs, one new FBAR, form 8891s and a number of 1040s (not filed before). Nothing due.

    I think this is being blown out of proportion (maybe some cross border CPAs are trying to get some fees ?), and certainly no long time expat in Canada should join OVDI unless the expat has been evading Canadian taxes or filing US returns dishonestly.

  9. The IRS can pry the money out of my RRSP from my cold dead hand.

  10. The banks need is a test case if they try to close down an account over FATCA to decide that every Canadian is listed as CANADIAN for purposes of tax reporting regardless of their place of birth.

    It’s possible the banks may actually help a taxpayer with a case – they don’t want to be caught in the middle.

    Of course this action may not be necessary if Jim Flaherty and the Canadian government just tell the IRS – the answer is NO.

  11. This is a better treatment (though there are a number inaccuracies, esp. concerning the exit tax) of the issue by the libertarian

  12. angrycitizen says:

    At least the Canadians have the guts to protest against this unfair law. Read how their government is standing up to this bullying –

  13. Canadian fury about FATCA continues…….

    Margaret Wente’s article now has over 450 comments, and this MSN link has some interesting stuff as well (

    Which country is the FATCA issue going mainstream in next? Doug – Foreign nationals living in their own country “believe it or not” feel the IRS has no right to turn their own banking system into IRS reporting agents – it’s offending.

    Doug be careful what you wish for – very careful.

    If FATCA is not repealed, your information sharing agreement requests could suddenly be put on the bottom of the pile for each country’s tax service. Remember they have their own country’s tax work to do first, the IRS does not deserve special treatment by these folks.

    And…let’s not rule out the possibility of tit-for-tat FATCA arrangements aimed at US banks. I’m sure Goldman Sachs doesn’t want 30% of their money tied up with a foreign tax service for long periods of time.

  14. Robert Tiller says:

    Who would have thought it would be Canada that is raising the biggest sting about FBAR and FATCA?

  15. If the IRS lets Canada off the FBAR and FATCA hook, what will other G20 countries have to say about this misconceived legislation? If Canada does indeed continue it’s tough line, and others hop on the bandwagon, what will Doug do next? Or will Hillary be knocking on Doug’s door to confirm that she’s receiving complaints?

    • Live from Lee's Palace says:

      Considering it’s another country, considering that the US cannot collect revenue claims in Candian courts, considering that CRA will not collect US revenue or penalties from Canadian citizens, and finally considering the public and political blowback…

      I’d consider Canada “off the hook”.

      • I agree that Canada is off the hook if the CRA will not play ball with the IRS – not to mention a number of other countries that will probably take the same stance.

        The onus should be left to the “US person” whether he want to file returns and get involved with the IRS b*lls**t. People only want to be held accountable to one tax system, not two.

        Particularly when you don’t use America’s brokendown old roads and bridges, substandard public school systems, fragmented health care system, and other outdated falling down infrastructure.

        What I am refering to is G20 19 vs the US 1 with this FATCA b*lls**t. If the world does not want to play ball what is Doug going to do? Carry on regardless in the face of total rejection?

        Everyone wants a situation where FATCA is repealed and the IRS goes back to turning a blind eye and face facts that collecting money from overseas Americans is not productive, if not impossible, than collecting easier tax revenues inside its own borders – like every other G20 country in the world.

  16. Tracking into the airway stream…

    This was on KUOW yesterday. Click on one of the streaming Icons for “Listen to Weekday”. I used the Real Audio one.

    The discussion was with a Canadian Reporter, Vaughn Palmer, on the dilemma US citizens in Canada are feeling up from the IRS tax evasion crack down.

    It ran for 9 minutes at the beginning of the program.

    This is the first on air discussion I have ever heard on these VD issues and the unintended consequences the IRS efforts. Vaughn actually did a pretty good job summing up the issues in a way an average person could understand. There needs to be more coverage like this.

  17. I talked to a CPA who handles cross border returns earlier this year and he said he had done 1000 plus of catch up FBAR and tax returns (almost no tax owed in most cases) in the last 12 months itself, with no pushback (except for a UBS customer). So I think this is a non issue for normal dual citizen Canadians. I’ve yet to hear of one case of the IRS seeking money from someone like this. So any panic seems way overblown.

  18. I should add that none of this CPAs clients were totally Canadian tax compliant. Might be a bit different for someone who was evading Canadian taxes and had accounts in a third country.

  19. Ugh — I meant “ALL of this CPA’s clients were totally Canadian compliant”

  20. Northerner: Not a big deal. No sir. But then when I look at all the forms to fill out, and the ones that I can go to jail for not filling out and have all my wealth confiscated in the form of filing penalties, I think, why the hell would I ever want to be an American. As a Canadian I can visit the country any time I want, and if I want to warm up, well maybe I’ll just go some place where it is really warm in December, like Grand Caymen. My dad has a place in South Texas, not far from Brownsville, and it’s pretty cold there in Dec. So are the Florida Keys. I guess I’m saying this: the IRS has made me unwilling to keep my US citizenship by forcing me to fill out a bunch of damn forms that will never amount to any taxes at all, since the tax rates up here in Canada are still higher. It is the slow death of a thousand forms to fill out.

    The week after I ended my US citizenship I started my own personal corporation, and the feeling of not having to ever worry about filling out forms for the IRS makes me feel like a free man (despite still being under the thumb of Canada Revenue).

  21. I see more comments from Canadian politicians are radiating out into the Regional news..

    and the issue is working its way into more blogs…

  22. Concerned Canadian says:

    Globe & Mail Toronto newspaper ran on-line poll to follow up on Wente’s article. Questions and results:

    “If you are an American citizen living in Canada, how are you planning to deal with the IRS cross-border tax crackdown?:

    * I applied for the limited-time amnesty: 6% (136 votes)

    * I am still working out a plan with a financial professional: 8% (160 votes)

    * I am not sure what my options are: 22%
    (456 votes)

    * Nothing, how will they find me?: 65% (1368 votes)

  23. I see there is a new Q & A about who is a US Citizen, and what next now that the OVDI is closed. Wished this issue would get as much attention in the US, as it gets in Canada…

    This kind of conversation below just drives me crazy. The IRS has really boxed themselves in. In normal, rationale times, they should be encouraging Quiet Disclosures, not discouraging them, as it increases compliance. However, you have to be naive if you think this effort had anything to do with compliance.
    They want the money plus some good penalties, pure and simple!

    From the Financial Post:

    7. The OVDI applied to 2003 to 2010 but we’ve been hearing of people advised to go back just three years for example. Do people need professional advice on whether filing a smaller number of returns could suffice?

    JG: They sure do! Filing only three years is sometimes referred to as a “quiet disclosure” because you don’t actually come forward and fess up to the IRS – you are basically taking your chances that your returns and FBARs will simply be accepted into the system without any penalties being assessed.

    But be careful as the IRS frowns on this, according to published statements it has made discouraging this practice.

    CP: It is unclear how IRS will treat taxpayers who are discovered making a quiet disclosure. Because IRS has made statements discouraging taxpayers from proceeding this way, there is some risk involved in taking this course of action.

  24. When will Obama stop this evil? Many believe that he is cold man. As long as he doesn’t rein in Shulman, he proves he is a man without feelings. One thing that Obama could do is give a general FBAR pardon to Americans living in Canada and recent immigrants to the US; Jimmy Carter did it for Viet Nam draft evaders who actually knew they were breaking the law. But Obama won’t. He is only thinking about re-election at this point. Well I know five million Americans abroad; and two million East Indians in the US who should not vote for Obama.

    More Canadian content:

    • Thanks for that one. I am sending that link to a few US reporters that continue to ignore this story. That really makes the story personal. I sent the FP reporter a note thanking her for doing what no reporter is doing in the US.

      • I wonder if the US journalists are afraid of being audited. I see that kind of fear in third world countries, you know, where you don’t criticize the government because of you don’t want any hassles. Certainly all of us bloggers who use aliases are not afraid, are we?