After bringing the nation to the verge of war with Canada, the IRS is preparing a retreat. Tax Analysts reports ($link) that the IRS is backing off of its aggressive approach to penalizing Americans in Canada who haven't been reporting their Canadian financial accounts:
While the IRS spokesperson didn't provide any details on what that guidance will provide, [U.S. Ambassador to Canada David] Jacobson said in the Globe and Mail interview that the IRS will make it clear that if a dual citizen living in Canada files a U.S. tax return late and owes no taxes, there will be no penalties for failure to file. The guidance also will provide that those who were unaware of the FBAR filing requirement will be able to file previous reports now, along with a statement explaining why they're filing late, and that no penalty will be imposed if the IRS determines that there is reasonable cause. Finally, individuals who took part in the IRS's 2011 offshore voluntary disclosure initiative or in the 2009 special offshore voluntary disclosure program will be able to get back penalties already paid, according to Jacobson.
That's all well and good, but the IRS is still using the tactics that triggered the outrage in Canada on Americans worldwide. If it's outrageous and unreasonable for Americans in Canada, it's so everywhere.
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