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IRS to sue for peace in war against Americans in Canada; war against other Americans abroad continues

December 05, 2011

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.


Shulman's great Canadian Pension Raid
Why IRS agents seldom transfer to the Foreign Service

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Has there been a ruling from the IRS on the "return" of penalties paid by those who entered OVD and were not candidates? The most recent information/ruling from the IRS simply returns to the original regulations on FBAR. Is there any clear documentation from the IRS on the return of penalties paid? American Citizens Abroad (ACA) would be interested in knowing.

Thank you.

I've seen nothing that would indicate the IRS intends to return any fines, unfortunately.

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