This is what a tax evader looks like, Mr. Shulman

by Phil Hodgen on April 5, 2011

This is the real life situation for a person who called me, sufficiently anonymized so that only my caller would know.

American citizen.  Moved abroad as a child, has lived abroad since then.  Now has college-age kids.  Spouse is a citizen of the country of resident, and is a school teacher.  She filed tax returns because she never worked at a wage-paying job.  They paid their taxes scrupulously in the home country.

Her only crime is that she is on joint accounts with her husband.

Participated in the first Voluntary Disclosure Program.

Penalty?  $46,000.

She started weeping on the phone when she called me.  This is money set aside for the kids’ education.  She said she had always been proud to be an American citizen.  Now she is ashamed of her heritage.

Way to go, Commissioner Shulman.  This is what tax evaders look like.

Yep.  You sure showed her.  And you showed millions of other Americans living abroad exactly what to expect if they raise their hands and try to clean up their paperwork.

Reader comments (4)

  • Something is not clear. If “[h]er only crime is that she is on joint accounts with her husband”, then I presume her issue is not having filed FBARs on those joint accounts (as opposed to an additional issue of not having declared foreign income and paid taxes on that income). If the only issue is not filing FBARs, then OVDP FAQ 9 would allow for retroactive FBAR filings, without penalty.

  • @Asher,

    She’s not my client so I don’t know the answer to your question. Number 9 might work. She was a DIY participant in the original VDP.

  • I sent her an email suggesting she look at this. :-)

  • The moral of the story is shut up and keep shut – let the IRS do the hard work – you get the same fine if you decide to crawl out from the trenches….oh…then there is the matter of collection.