Are the IRS Deliberately Targeting US Expats

One Switzerland-based expat group believes that the IRS are deliberately targeting US citizens who live abroad at the expense of adequately fulfilling their duties in the United States.

American Citizens Abroad, a group based in Geneva in Switzerland that calls itself “The voice of Americans overseas,” have added fuel to the debate current investigation into the IRS by adding their own accusations that the agency is showing prejudice in its dealing with American citizens who are living overseas. In order to formalize their complaints against the revenue service, American Citizens Abroad (ACA) have sent a detailed letter to the congressional committee that contains a number of accusations pertaining to the ways in which US expats have been treated.

One of the most significant claims that the group is making is that the Overseas Voluntary Disclosure Program (ODVP) that was implemented in 2009 is prejudicial since it lured innocent US expats into a complex situation for which they were later penalized. In order to confirm their suspicions, under the Freedom of Information Act the ACA have repeatedly requested full information pertaining to the expats who participated in the scheme together with the taxes owed and penalties imposed but their requests have remain unfulfilled.

“There is no question that the IRS targeted Americans living overseas,” said ACA Director Jackie Bugnion. “By luring them into the OVDP in a form of entrapment, then hitting them with ruinous penalties based on the overseas assets, instead of using the discretion which was within IRS purview for benign actors, the IRS treated ordinary, hard-working Americans like criminals. Most of the unreported accounts were pension funds and basic financial accounts used for living expenses and were not being used to hide assets.”

The letter also highlights the fact that, despite the criticism that the ODVP received from tax consultants and the New York Bar Association, the IRS proceeded to implement the program.

The letter explains that US resident tax evaders are completely different from expats living overseas, adding that the IRS scheme is a one-size-fits-all approach that they believe deliberately targets US expats who are living abroad. Such expats are beginning to feel mistreated and disillusioned.

Meanwhile, many US citizens are relinquishing their citizenship in a bid to avoid the onerous reporting requirements enforced by the IRS in the form of initiatives such as FATCA. Such actions have not gone unnoticed. During an award ceremony in Washington in March this year, the former United States Ambassador to Switzerland and Liechtenstein, Donald S. Beyer, Jr. warned: “Current US tax policy to combat tax evasion is having a negative fall-out on Americans working overseas and this needs to be addressed.”