Advice on OVDI position or QD

[millerh]

I hope someone can offer us some common sense in all of this because we're lost and in much despair at this point in life.

Last fall, we received notices from our brokerage in Canada that held our RRSPs that we would be charged a yearly fee since we didn't meet the minimums, so we began to look for ways to move the money back to the US, all $11,500 of it. One thing led to another in our research and then bang!, just like that, we should have been filing FBARs, 8891s, 5471s, and 8865's since we had a partnership at one time and a corporation for a couple years since we were self-employed at various times.

We're part of the way through this nonsense of amending 8 years worth of tax returns, paying an accounting firm vast sums of money for discovering that we owe tax on $30 that was missed on a 1040. The penalty calcs for the interest missed because of the FBARs which means we're "non-compliant" is about 38K for tax on 30 bucks, meaning we had a non-compliant bank account because we missed the interest income.

Me: I'm a US citizen and my wife is a GC holder. Everything I'm reading says OVDI is the best way to go vs. QD / do nothing / going forward. Honestly, I'm confused and we're spending a lot of money to have things fixed for what would seem to just need common sense applied and pay the stupid tax and send the FBARs off and perhaps a couple years worth of amended returns.

Any helpful insights would be appreciated because between penalties and professional fees, the bill is going to be about $75 - 80K for tax on $30.

[nelsona]

In my opinion QD WAS alaways better that OVDI. The problem is that IRS has pretty much eliminaated QD as an option BECAUSE of OVDI.

Canada is llowed streamlined OVDI, but your partnership issue might be the problem for that.

No doubt that some Cdn cpa's are raping their clients with this.

[primo]

There are a lot of people in your situation over at the blog
http://isaacbrocksociety.ca/
I'm sure some there can give you some reasonable advice.

[CdnAmerican]

Hi millerh - sorry to hear about your mess. I'm not an expert but can share my experience .. I had to backfile a number of forms over the span of 6 years back in 2011. I did it all on my own because I was too cheap to hire an accountant. It was a real mess, but as the process went through everything worked out in the end with $0 penalty (despite having, on paper, what could have been a $70K penalty).

I guess I would think that a common sense approach would be the way to go. Also do note the IRS' stremalined backfiling approach. I don't know if that would apply to you, but the consensus I've gained from this board is
- Backfiling often takes a very long time, with lots of mistakes by taxpayers and the IRS, but common sense generally prevails
- Accountants can and do make mistakes
- Some will use scare tactics to try to comple you to spend huge amounts on professional fees
- That said, a professional will tpyically do a, well, professional job - it just may cost a lot.

That's not really advice, but just my experience and impression. Good luck & sorry you are going through this ..

[millerh]

One would think that common sense should apply, but a couple of things:

1. We're not resident in Canada anymore and haven't been since late 2009, so no streamlined ovdi for us
2. Been to the Isaac Brock Society's website many times over for resources and there's lots of people in this situation

My overall feelings on this matter: It's not going change anytime soon whether or not there's management change at the top at the IRS or the Treasury. The IRS is run by professional thieves. Many cross-border "professionals" will having you believing that they knew this stuff was coming all along and they're "experts". No, the reality is they didn't know this stuff either and they make it up as they go too, only they get paid for their mistakes at our expense.