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Darth Shulman to foreign account holders: I am altering the deal. Pray I don't alter it any further.

July 01, 2011

Jack Townsend explains the IRS bait and switch in its 2009 foreign account "amnesty":

...the Taxpayer Advocate criticizes the IRS's implementation of its statement in the 2009 OVDP that “[U]nder no circumstances will a taxpayer be required to pay a penalty greater than what he would otherwise be liable for under existing statutes.” The IRS did the old bait and switch on that seemingly clear statement.

He quotes the Taxpayer Advocate's report:

On March 1, 2011, more than a year after the 2009 OVDP ended, the IRS “clarified” its seemingly unambiguous statement.139 It would no longer consider whether taxpayers in the 2009 OVDP would pay less under existing statutes on the basis of non-willfulness or reasonable cause. Such taxpayers could either agree to pay more than they believed they owed or withdraw from the 2009 OVDP and face the possibility the IRS would assert massive civil penalties and seek criminal prosecution.