Some thoughts for immigrants caught in the IRS Jihad – This is for you!

Cross posted from RenouceUScitizenship

The OVDI Winners and Losers

The Winners: OVDI and OVDP  have been fantastic deals for: big time tax cheats resident in the United States and the “cross border professionals” who have will continue to profit from them for years to come. The big time tax cheats have settled with the IRS for pennies on the dollar. They will retain enough of their wealth to live happily for the rest of their lives. The “cross border professionals” (if they really are “professionals”) have generated enough business to fund their retirements.

The Losers: OVDI and OVDP have been vicious assaults on: Immigrants to the U.S., Green Card Holders and U.S. citizens living outside the United States. For them OVDI is a guarantee that their years of saving, investing, hard work, financial responsibility and attempts to comply with the law as they understood will lead to their financial ruin. Why did they enter OVDI? Why would they enter OVDI? More on that in a moment.

The Biggest Loser: Surprise! It’s the IRS and the U.S. government. By allowing U.S. citizens abroad, immigrants and green card holders to be part of the OVDI shakedown, and changing the rules of OVDP mid-stream, they have so eroded their credibility, that honest people are afraid to comply with laws that they are just learning about. It’s in the long term interest of the U.S. government to encourage tax compliance. Instead, citizens are renouncing, immigrants are leaving, and Green Card holders are turning in those cards. The word is out. People who would have immigrated to the U.S. will now go elsewhere. The United States of America has depreciated its most valuable assets –  “credibility” and “moral capital”. Both educated people and real estate investors (and others) may be reluctant to immigrate to the U.S. But, this is a subject for a separate post.

This post is for immigrants – Those who currently reside in “Form Nation

You know, the people who thought they were improving their lives  by coming to the U.S. Instead they found themselves caught in an IRS shakedown. They can’t sleep at night. In November I wrote about the effect of OVDI on immigrants. In January I wrote a post about the IRS trust deficit. The last couple of days have featured a stream of comments on that post. If you are an immigrant, you can begin the comments here. Here are the comments that best encapsulate the fear and desperation.

What’s a poor, honest, hard working, frightened immigrant to do?

Yes, you should read and educate yourself and make an informed decision about how to proceed. There are a number of U.S. tax compliance options. That’s the good news. Now the bad news.  It’s hard to read and learn while you are under so much pressure. It’s hard to make a decision when you are under such stress. This post is not legal advice and should not be understood to be such. This post is for the purpose of helping you understand where to get advice and the questions to ask that adviser.

Once upon a time in America …

Ronald Reagen (an American president who was worth admiring), once commented that, if you wanted him to read it, it had to be on one page. I offer you some small points that might help you proceed. The very fact that you are so stressed and fearful is proof of your  honesty. You have simply been blindsided by an unprovoked, unprincipled, unjust and unimaginable assault on your life. You have not done anything wrong. It’s just that sometimes bad things happen to good people.

Some Thoughts On Your Emotions

You are experiencing fear and confusion.  I once heard a great motivational speaker say that “FEAR” is nothing more than:





So, what’s false and what’s evidence? This all seems so unreal

You are probably getting a lot of misleading information from the “cross border professionals”. In fact, the very first post that I wrote for the Isaac Brock Society was titled: We can’t trust the IRS – But can we trust the lawyers and accountants. This was followed by another one describing the “Taxpayer, the IRS and the Cross-Border Professionals“. Now I am not saying that no cross-border professional can be trusted, but you DO need to do your own thinking. Furthermore, you are dealing with primarily with a “compliance problem” that may include some tax issues. (I also want to make it clear that I am aware of some superb cross-border professionals. The problem is that this is a complex area and there just aren’t a lot of them.)

Therefore, the first thing I recommend is that you separate the decision of how to bring yourself into compliance from the decision of what professional (if any to help you with this). It could be worth paying for a couple of hours of legal advice from a competent professional who knows that he will not be retained beyond that two hours. Consider this advice to be repeated.

Nine Considerations – Or A “Note To Give To Your Lawyer”

1. You want to be in compliance – It is obvious (since you are stressed) that you are planning to be in compliance on a “going forward” basis. Obviously you want to be in compliance with the law. Therefore, the real problem is how to deal with past problems, if you want to.

2. No Willfulness – I am assuming that that you have not willfully/knowingly disregarded your legal obligations to file FBARs and/or other obligations. Therefore, you are not (but, hey I don’t know you, so get another opinion), subject to willful penalties and criminal prosecution. But,  I am assuming that all of this is new to you and that you have had no reason (as Steven Mospick put it) to think about the IRS for the last few years. Therefore, yours is a “clean up” problem.

3. Clean Up – In paragraph 2, I noted that yours is a “clean up” problem. (Remember the IRS thinks you are dirty – just trying to make you smile). Your goal is to “clean up” past mistakes. But, there is nothing you can do know that will change what you have done in the past. You are under no legal obligation to correct your past mistakes. That said, you may want to file old returns or you may want to just comply from today on.

4. Determine Any Tax Liability – Your route to compliance will be impacted on whether you own any tax. For example, the FAQs for OVDI (if I am reading this correctly) make it clear that if you do NOT owe any taxes and have simply not filed FBARs that you need only file the FBARs. That’s why the starting point it determine tax liability.

5. OVDI is an optional program. It is not mandatory. (On the other hand, filing FBARs and 1040s is mandatory.) There are other ways to come into compliance, and frankly for most people, OVDI  is just too expensive and too time consuming. Some alternatives to OVDI are simply filing returns outside of OVDI (either with or without notifying the IRS – but review your facts with a professional before making that decision) or compliance going forward. An excellent discussion of these issues is here. Just remember that OVDI is optional – problem is that a lot of lawyers make it sound like it’s mandatory. It’s not. Of course, (as Just Me) points out the lawyers are optional.  You can remind the lawyers of that (especially when they tell you to enter OVDI without considering your facts).

6. OVDI needs to be understood. It is not explained very well by our goods friends – those “cross border professionals”. Without getting lost in the technicalities you need to understood the following points:

A. Once you are in OVDI you are agreeing to pay back taxes, interest, and an “in lieu of penalty” which could be as much as 27.5% of the value of your world assets. In other words, the penalty is applied to far more than your bank accounts. Funny, I rarely hear that discussed. You need to understand: the penalty base (what the penalty is applied to) and the percentage. If you want to read about the interaction of the “penalty base” and the “percent” read this.

B. The only way to avoid the “in lieu” of penalty is to “opt out” of the program.

C. Don’t forget to add the legal fees. They will be huge.

So, if you are asking yourself: why would any sane person enter OVDI the answer is one reason and one reason only. They are criminals plain and simple and OVDI is a less expensive option for them – particularly if it means they avoid jail.

Why would a non-criminal enter OVDI?  There are only two reasons:

First, they get very bad legal advice – this is usually the case

Second, they get very good legal advice – this is possible but less common  (The “very good” legal advice would demonstrate that somehow OVDI was a “better deal”. There are some situations where it can be.)

Note that the Isaac Brock Society issued a press release warning people about the perils of OVDI. It is a good general introduction. To put it simply: you should operate with a presumption that you will NOT enter OVDI unless a competent lawyer explains why it is the best option for you!

7. “Form Crime” and Fear of the “FBAR Fundraiser” – What will happen if I don’t enter OVDI?

The answer is who knows?  The United States AKA “Form Nation” is a pioneer in “Form Crime“.  Not only does the U.S. have onerous tax requirements, but it has a large number of penalties for not filing forms.   Mr. FBAR – is a very nasty form and filing your very first FBAR is frightening. FBAR and the OVDI decision  has been the subject of much discussion including a classic discussion between an OVDI minnow and an IRS attorney.

But the main point that you need to remember is that the IRS cannot impose FBAR fines if there is “reasonable cause” for not filing the FBAR. Now, “reasonable cause” is not clear, but my point is that FBAR fines are not automatic. There is a series of steps that the IRS must go through before imposing penalties. Furthermore, even if the IRS does impose FBAR fines, they cannot enforce them without getting help from the Department of Justice. In many cases, the “FBAR Fundraiser” is more trouble than its worth to the IRS.

Finally, do the arithmetic on the maximum FBAR fines. Don’t just presume that the “in lieu of” penalty in OVDI is less expensive. It may or may not be.

8. Fear of Compliance Going Forward – What if  they come after me for past  years?

The answer is that they do. What is relevant is your “state of mind” and conduct at the time you failed to file the past returns. A failure to correct past omissions, does NOT turn those past omissions into willful omissions. You get audited. What does that mean? Who knows? It won’t be pleasant. But the IRS is threatening to audit people who opt out of OVDI anyway. So, maybe the way to view this is: do you want the greater chance of an audit with an OVDI opt out or the chance of an audit later?

9. How complex is your situation? Are their any other “Form Nation” information returns that you have failed to file? If so, how do you want to deal with those?

I could go on and on. But, I am going to stop. My hope is that I have provided enough structure to help you think rationally about this. But, not enough to overwhelm you.

From my perspective (and I acknowledge that this is just my opinion):

Get a compliance counseling session from somebody who understands that they are being paid for a couple of hours of advice.

In closing – This post is NOT legal advice. It is only an attempt to help you organize your thinking. All the Best!


38 thoughts on “Some thoughts for immigrants caught in the IRS Jihad – This is for you!

  1. Enjoyed this post, especially the 2 reasons why people enter amnesty. Crikey, enough to turn anyone into an ostrich, if they CAN! I entered OVDI only because my lawyer and I were led by the IRS to believe that the provisions of the Internal Revenue Manual were no longer available for those seeking compliance. (Just read NTA Nina Olson’s 2011 Report to Congress) Those coming forward wanting to comply should be aware that the IRM is a better choice than OVDI for some!!!

  2. @bubblebustin – You just described what happened to me. Two US tax lawyers new to Canada telling me that I need to get right or face the IRS. Well, I still haven’t heard anything about my OVDI submission. In fact I think my 2011 filing will go through faster.

    Yes, the IRS and the US Federal Government have lost all credibility with me and my family. No trust here I can guarantee that. I’m not the least bit afraid to say that I’m an evangelist for renouncing. It is the only way to get free. I’m not concerned about paying the taxes, it’s paying to have all them crazy insane forms filled out every year for me! To find out I own nothing. What a bad investment. How many average Americans are going to through away $1500 to $3000 to get nothing in return??

  3. @bubblebustin – I was just thinking, all this IRS stuff is just like the prostate exam I just had. Accept my Dr. used a rubber glove… Sorry for the crass statement but I just had to let it out.

  4. @itacaf – gave ME a laugh. I just compared this situation today, as a matter of fact, to getting a mammogram. Don’t know if you’re familiar with the slang ‘getting your t**s caught in a wringer?

  5. Yes, after 28 years of marriage and three older sisters I’ve been exposed to far more then any man deserves.

  6. With its disproportional attempt to enforce compliance, the US is causing immigrants to leave the country and its citizens abroad to renounce. Great, now these people are compliant, yes, by not being subject to US taxation anymore. Now they are not paying ANY tax to the US. How can this be productive? The US government is shooting on its own foot.

  7. Immigrants to the US really are caught between a rock and a hard place with this since they can’t just refuse to pay like those abroad and go about their lives. They have to choose to either pay and comply and be able to stay or abandon their jobs, friends and new country and go back home. What a choice.

    The US government should be ashamed of itself. They should have done the following: attach detailed tax and reporting information to every visa application, even tourist ones due to the 183 day presence test over three years for IRS residency purposes. This information should also be posted on the ESTA website so as to warn nobody to overstay this number of days in the US. Permanent residents and citizenship applicants should be made to understand that all of these reporting requirements and tax obligations will remain theirs for life even outside US borders if they obtain US nationality. All US passport applications made overseas should also attach all of this information as should any application being made for a registration of birth abroad. Does the US currently do ANY of this to attempt to inform people of their stealth laws?

  8. Since we gave Earned Income Exclusion and Tax Credits we never needed to hire anything. If any of us did not declare something it was to simplify the excessive and difficult paper work. But the FBARs for us were a trap. Not that we did not pay taxes …but we did not do the paper work that we did not know we had to do. When you learn about them it is too late. Sleepless nights, a lot of suffering.

  9. @all, My US Accountant told me NOT to send a Reasonable Cause Letter, he said it would draw more attention to the returns.. I have been worried about this as well. I didn’t know what to do so I just sent it without a letter..Maybe he wants me to get nailed because he is a attorney as well..Then I would have to hire him because I would be in real trouble.. I just don’t know who to believe anymore.

  10. All this sickens me. Like MarkinPineTree, I never bothered declaring my non-US investment income and accounts because I knew it would require complicated paper work. I figured it was sufficient to just list my US investment income and my earned income which was clearly covered by the foreign earned income exclusion…I’d naively assumed that the tax treaty meant that I was completely covered from double taxation so I believed a nominal tax return was sufficient, as I was properly declaring my worldwide income to the UK tax authorities.

    And this was, of course, before I understood about FBAR reporting. My accountant quite sensibly tries to reassure me that the IRS will probably accept reasonable cause, especially as I amended the returns and paid all the taxes I owed with interest and penalties.

    But I hadn’t known about PFIC taxation on my local mutual funds, nor did I realize that tax advantaged investment vehicles where i live are not honored by the IRS. So I got myself into quite a mess and could be in quite a lot of trouble if they decide to make an example of me. Where i went wrong was that I’d been a DIY investor and should have at the very least sought professional advice and an accountant…had I planned things better, I could have then probably used Turbo Tax going forward.

    Regrets, regrets, regrets. I face a six year statute of limitations on the amended returns which won’t run till mid 2016. I hate living with all the uncertainty but it’s the price I’ll have to pay. I resent this intrusion into my life when I’ve lived peacefully in the UK for almost 24 years in full compliance there.

  11. @saddened

    Just curious about two questions (which obviously you should not feel obligated to answer) but:

    1. Did you own any tax?

    2. Did you file based on the information in the December 2011 FS for dual citizens and U.S. citizens living outside the U.S.?

    You note that your adviser is both an accountant and a lawyer. This whole exercise is revealing how lawyers and accountants think differently.

    The accountants seem more inclined to just file the returns and get the paperwork done. They seem to be more of the view that the issue really is just getting the paperwork in.

    The lawyers seem much more interested in “reasonable cause” and the worst case scenario.


    The PFIC thing is truly incredible. It is beyond the capacity of anybody to even imagine. PFICs are not even well understood by the professionals. Even owning a simple mutual fund and doing normal retirement planning triggers this as a problem.

    The way to explain this to somebody in one sentence would be (at least in Canada) would be:

    In Canada tax deferral is a wise strategy for retirement planning whereas the U.S. does not allow tax deferral of any kind and will impose aggravated penalties for so doing.

    I have reached the point, where I am having trouble even inventing a reason to be a U.S. citizen. Pity the poor “b***** who are stuck there.

    It’s interesting also that it was not even until the IRS was about half through the 2009 OVDP that they realized the potential of:

    “The PFIC Fundraiser!

    Yes, this along with ‘The FBAR Fundraiser” are the IRS’s ideas of MSI (“Multiple Sources of Income).

  12. @Renounce, thank you for your kind words. Yes, I also am flabbergasted about the Byzantine PFIC taxation. It’s effectively an attack on the middle class because those with modest means prefer to spread their risk via funds rather than individual stocks. The rich can almost always get around these sorts of things. It makes my blood boil.

    If I had only held a portfolio of blue chip stocks and/or CDs, I wouldn’t have even owed any US taxes. I thus feel that my mistakes were unintentional. I feel morally innocent, especially as I had the returns amended and dutifully paid the taxes I owed even though I felt that they were grossly unfair.

  13. @monalisa1776, and others;
    Ironically, given what we know now, and the suffering experienced (paying outlandish sums for specialized help, sleeplessness, depression, very dark thoughts, inability to eat or enjoy any peace..) the London embassy site still says that this should not create anxiety…. and the generally only three years of past returns should be filed, etc. – with no mention of FBARs, FATCA, etc.:
    “I am a U.S. citizen who moved to the U.K. several (or many) years ago and thought I did not have to file U.S. tax returns any longer. Now I have learned that information was incorrect. What do I do?

    This is a common misunderstanding among Americans abroad, and should not create anxiety for those who find themselves in this situation. Generally, you should file returns for the past three years, taking the foreign earned income exclusion, the foreign tax credit, or both. It would be extremely unlikely that there would be any late penalties assessed, since penalties are computed as a percentage of tax owed, and only the rare taxpayer would actually owe tax in this situation.

    You may contact us for prior year tax forms, or download them from the IRS web site. To find older forms, enter the year required in the Search for… box on the top-left of the page. The search typically returns Forms and Publications for the year on which you will have seached.”

    Nowhere on the page does it say anything about FBARs, FATCA filing requirement, etc.

    Contrast this with the one from the Ottawa embassy:

    Taxpayer Assistance
    The information on this page is intended especially for taxpayers residing in Canada. Note: Owing to budget cutbacks, the Internal Revenue Service will not/not be providing any in-person assistance or tax seminars at the U.S. Embassy and certain of the Consulates General in Canada.

    (NOTE: the cancellation of the inperson assistance noted above, is contrary to the advice about obtaining ‘taxpayer’ assistance for those in Canada – see page “During the filing season, the IRS conducts a taxpayer assistance program in Canada. To find out if IRS personnel will be in your area, you should contact the consular office at the nearest U.S. Embassy or consulate. “)

    Important Information and Links

    Information for U.S. Citizens or Dual Citizens Residing Outside the U.S.
    IRS Website for International Taxpayers
    Regarding Report of Foreign Bank and Financial Accounts (FBAR)
    Regarding the Foreign Account Tax Compliance Act (FATCA)
    Offshore Voluntary Disclosure Agreement (OVDI)
    Answers to Frequently Asked Questions about the OVDI

    IRS Ottawa

    The Internal Revenue Service (IRS) does not maintain an office in Canada. For information tailored to both U.S. citizens in Canada and Canadian citizens, please refer to this page at the IRS web site

    Form 8938

    Form 8938 (Statement of Specified Foreign Financial Assets) should be filed by taxpayers withspecific types and amounts of foreign financial assets or foreign accounts. It is important for taxpayers to determine whether they are subject to this new requirement because the law imposes significant penalties for failing to comply. Form 8938 — including the instructions, regulations implementing this new foreign asset report, and other information to help taxpayers determine if they are required to file the Form 8938 — is available on the IRS website.

  14. And what are we supposed to do about our primary residence – which we may have to sell if we have to move for work, or to be nearer to ailing family, or to go to school, or to downsize for retirement, or for a catastrophic health emergency? Selling it will trigger capital gains for US tax purposes. We are completely blocked from all normal life activities.

  15. See also:
    “IRS Customer Service Problematic for Identity Theft Victims”
    Washington, D.C. (May 8, 2012)
    By Michael Cohn, Accounting Today
    ……..”TIGTA conducted its review because of significant recent growth in tax-related identity theft cases and reports of problems that taxpayers are encountering with the IRS when attempting to resolve their cases. As of Dec. 31, 2011, the IRS’s Incident Tracking Statistics Report showed that 641,052 taxpayers have been affected by identity theft in calendar year 2011 (compared to 270,518 in 2010). The growth in these cases has overwhelmed IRS resources and burdened taxpayers.”…….

    Here is the TIGTA report:
    May 8, 2012
    TIGTA – 2012-17
    Contact: David Barnes
    (202) 622-3062
    “TIGTA Report: IRS Customer Service is Problematical for Identity Theft Victims”

    ….””TIGTA found that the IRS’s current methods for handling identity theft cases are insufficient and taxpayers deserve better,” said J. Russell George, the Treasury Inspector General for Tax Administration. “As the Federal Trade Commission has reported that identity theft continued to be the number one consumer complaint last year, and the most common form of reported identity theft involves government documents, the IRS must make handling these cases a priority,” he added.”….

  16. @Don Pomodoro, the applications for US visas, permanent residence or naturalization do not mention taxes. One thing that applicants for permanent residence are informed of is the requirement to register for the selective service, if applicable.

    However, the last page of the US passport does say that US citizens abroad must file US tax returns on their worldwide income.

  17. @badger; @bubblebustin – I spoke with the tax lawyer I worked with and asked about cap gains. He suggested it was more like 500k. But the important part is that I’m married to a Canadian and she owns half the house. No US cap gains can be assessed against a Canadian so I would only pay on my half of the home. And that’s well under the limit. Of course this was all part of our conversation and I don’t have the documentation to validate this just yet.

  18. Thanks for that @bubblebustin. I haven’t looked at the details for sale of a primary residence. I just don’t trust that any of their ‘exemptions’ don’t come with additional restrictions or hoops, or tricks for those of us ‘abroad’. And 250,000. is not that much for some markets. We face so many pitfalls with our registered savings, and all those tricky forms, and this whole extraterritorial tax regime, that I have no trust at all that anything they apply to us outside the US is going to be designed or administered in a reasonable, just, ethical or fair manner.

  19. @Shadow Rider

    The awful truth here being that if you have a US passport in hand its too late! 😛

    I find it very dishonest to not inform visa or citizenship applicants what they are getting into. Also, I just looked at my US passport – It must be the same model as yours. A small bit of text buried on the last page of a passport is not really in your face informative. I imagine that lots of people have never even looked at the last page of their passports before and those with older US passports do not even have this information featured. For those who are interested and dont have the new biometric passport here is the website that they mention:

    I would feel completely overwhelmed if I opened that up for the first time with no idea that I had to file US taxes…

  20. Thanks @itacaf. Hope it works that the non-US co-owner’s share is excluded. I assumed not since they don’t recognize that principle for other things like the joint bank account reporting, and because often the primary residence is where the greatest equity builds up over a lifetime.

  21. To be fair, I intuitive get the impression when visiting the IRS offices at the US embassy in London that expats in the UK are not currently in their line of fire. This is probably also why my accountant continues to try to reassure me that they will be satisfied that I’ve come into compliance without pursuing aggressive audits, etc.

    However, it also wouldn’t surprise me if the IRS isn’t getting more aggressive with expats in Switzerland (obviously), Israel, Hong Kong, etc. Also Canada due to the huge numbers of expats and accidental Americans.

    But it is indeed misleading because I would think that many would be affected by PFIC taxation though perhaps I was unusual in ‘going native’. I suppose that most wealthy expats continue to have most of their investments through fancy brokerages or still in the States. I was unusual in that I invested like a Brit with ISAs, etc.

  22. @itacaf and @bubblebustin, re the exemption for capital gains on a primary residence outside the US – I’ll look more closely. I thought I would have to avoid selling my primary residence at all costs, in order to avoid any possibility of being assessed with US tax on it. I am too afraid of any more hidden pitfalls. I just can’t live this way.

  23. My accountant told me that as we own our flat jointly (he’s a NRA) that I could divide the value by half as my share so would probably not owe any capital gains tax if we sold it.

  24. @monalisa1776. Still curious that the Ottawa embassy added OVDI links, but no such mention on the London UK one. Would be interesting to see what other embassies abroad have posted. And wonder if the webpages will stay so very different in content and tone.

  25. @badger, had we known about our exposure to cap gain (because we sold before we knew about our obligation to pay US tax) we would have certainly planned things much differently! Maybe taken advantage of those nice mortgage interest write-offs the US has to offer? But from what I understand, you can only go back a few years to claim exemptions. That means you should be talking to a tax accountant now. We were told by our accountant that the benefit to us in going back would not be worth the cost, which she explained to me in a language that sounded like Greek.

  26. Sorry to hear that. Because you got bad information. Here’s what’s happening in Canada.

    If you include the letter for “Reasonable Cause” there could be a zero penalty assessed against you. But remember, this is the IRS and the US federal government. Do you research and ask lots of question. Good luck.

  27. @Badger, it almost makes me wonder if the IRS is trying to shakedown Canada, especially as there has been a large outcry there. On the other hand, there is virtually nothing in the media here about FATCA and no one is up in arms, plus the UK has sold out to the US along with the other Five Euro countries who made a special agreement. Perhaps this could explain the differences on the respective embassy websites

    @Bubble, I agree it’s outrageous about being potentially hit with huge US capital gains taxes on the sale of your primary residence. It’s definitely not fair, especially when you hadn’t been easily made aware of this when doing previous financial planning.

    I don’t know yet if I’m going to renounce but I’ve certainly lost all future incentive to save and invest! I’ve grown very cynical.

  28. @to All, when I browse Jack Townsend’s blog about the latest FBAR court cases, they all seem to involve obvious whales and tax evaders. I suspect that the IRS is not going to actively pursue FBAR fines through the courts for people like us, especially those of us who’ve pleaded reasonable cause. Unfortunately, it would appear that the minnows who joined OVDI have landed in a trap. They will probably be able to opt out or get reduced misc fines albeit at great professional expense.

    It’s why I admire the likes of Just Me and IJ for going it alone without shelling out for expensive lawyers, especially when the legal costs could be even higher than the fines.

    I feel it’s inexcusable how many attorneys appear to be railroading innocent minnows into OVDI. If anything, I would have been a stronger case for it due to under-reported passive income, whereas those who genuinely hadn’t known they had to file were completely innocent in my eyes. Of course, there are many many shades of grey here.

    I suspect that the OVDP and OVDI were initially set up for whales but that the IRS saw the revenue potential when all the minnows signed up and introduced the 5% penalty, for instance for completely benign players…

  29. @renounceuscitizenship, I did owe for the sale of some land in 2009, that my Canadian Accountant told me not to bother with.. So when I learned of the filing obligation for back 5 years, the 2009 return I had to pay taxes owed and penalities. For the 2nd question, I don’t know how it was filed, I just took my 2011 returns and paper work and he prepared it and I just mailed it off.

    He is now doing my sons now, which he has TFSA, Mutual Funds, RRSP’s. What a ordeal this is!

  30. @all, My son is now confused as to what to do about the reasonable cause cover letter, the accountant said not too, but I have heard it is a must.. Any thoughts on what he should do????.. I did not send a letter with mine, but who even knows if they have completed mine.. The taxes I owed were state taxes, who knows what will happen with FBAR, etc.

  31. @monalisa “Unfortunately, it would appear that the minnows who joined OVDI have landed in a trap. They will probably be able to opt out or get reduced misc fines albeit at great professional expense.” There’s also TAS. I have little appetite for spending much more on lawyers.

Comments are closed.