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Old 25.08.2012, 13:16
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Audited by IRS (USA)?

Just curious...

We moved here 2 yrs ago and about 6 months later we were audited for 2009, which was a huge hassle to deal with from overseas, and then 6 months later, we were audited again for 2010!!

For 2009 we proved we were correct, for 2010 they found something we'd filed wrong that amounted to us owing less than $50 additional so financially not a big deal but a huge hassle for both parties (not to mention expensive phone calls and shipping documents back and forth to prove our returns were correct). Throughout the whole process they treated us like criminals and were trying to charge us interest on money that we didn't owe.

I'd NEVER been audited in 30ish years of paying taxes when I lived in the US. The IRS tried to tell me its random but it sure seems like there is a big target on my head since moving to CH. I might believe the "random" line if it happened once... but twice?? Financial wise I am about as boring as they come.. just a normal salary, hardly any investments etc so there is no reason other than the move to Switzerland that would suddenly raise my chances of being audited.

Anyone else have similar experience since moving here?
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Old 25.08.2012, 13:46
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Re: Audited by IRS (USA)?

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I'd NEVER been audited in 30ish years of paying taxes when I lived in the US. The IRS tried to tell me its random but it sure seems like there is a big target on my head since moving to CH. I might believe the "random" line if it happened once... but twice??
Well I can't comment on the internal workings of the IRS, but in general I would say that that is exactly what random means - you might never be audited, you might be audited once in a live time or three times in a row.... if this was not the case, then certain people who have been audited might be motivated to commit tax fraud on the basis that they will not be audited again for years!
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Old 25.08.2012, 14:09
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Re: Audited by IRS (USA)?

I have lived overseas for about 12 years (the past 3 in Switzerland) and always live in fear of the IRS. I haven't been audited as yet, but I do worry particularly in Switzerland about a potential audit, especially due to relatively new rules about reporting amounts in overseas accounts that hold more than USD10,000, and the general pushing from the US to get more information on Swiss bank accounts held by US citizens.

I am also very boring in terms of just having an average salary, no interesting investments, etc, but I always wait till the last minute to do my taxes, making them prone to errors. Any such errors would be completely a mistake but still...

I don't believe in ANYTHING random when it comes to the IRS.
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Old 25.08.2012, 16:49
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Re: Audited by IRS (USA)?

In my mind I picture it that the USA thinks everyone living in Switzerland is rich tax evaders. They see my filing and go "WTF is this average Joe doing in Switzerland.. he must be a rich guy hiding something" and BAM the audit(s)... at least that's just how I picture it so I was curious if this has happened to anyone else.

I wish at least on the next years taxes I could deduct all my expenses and time dealing with the audit, especially the one where it was proved I was correct, but no... that would make too much sense. I have to eat the time and cost out of "patriotic duty" or some other BS...
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Old 25.08.2012, 16:54
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Re: Audited by IRS (USA)?

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Just curious...

We moved here 2 yrs ago and about 6 months later we were audited for 2009, which was a huge hassle to deal with from overseas, and then 6 months later, we were audited again for 2010!!

For 2009 we proved we were correct, for 2010 they found something we'd filed wrong that amounted to us owing less than $50 additional so financially not a big deal but a huge hassle for both parties (not to mention expensive phone calls and shipping documents back and forth to prove our returns were correct). Throughout the whole process they treated us like criminals and were trying to charge us interest on money that we didn't owe.

I'd NEVER been audited in 30ish years of paying taxes when I lived in the US. The IRS tried to tell me its random but it sure seems like there is a big target on my head since moving to CH. I might believe the "random" line if it happened once... but twice?? Financial wise I am about as boring as they come.. just a normal salary, hardly any investments etc so there is no reason other than the move to Switzerland that would suddenly raise my chances of being audited.

Anyone else have similar experience since moving here?
my understanding is that once you get audited one year, the IRS will continue to do so for 1-2 more years. Also, they don't generally audit for random reasons, but more along the lines of questionable line items as I presume you have done the 1040 long form (not EZ). I am not implying you did something wrong or that questionable means the same, but it means it goes without explanation.

Also, I had received a call from the IRS a couple of years back because of these questionable items. Once I explained all was good. The person I spoke with did tell me if I had not responded or was able to properly answer, I could have been audited.

Sorry for your experience!!
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Old 27.08.2012, 12:13
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Re: Audited by IRS (USA)?

I might be going out on a limb here, but I wonder if the IRS audits more returns done by people on their own as compared to those done by an Enrolled Agent? I've started filing my returns and FBAR's on a going forward basis just a few years ago and have heard "diddly squat" form the IRS so far, but my returns have been done by an Enrolled Agent and the box asking whether the Agent should be conatcted if there are any questions has always be marked "yes". It costs me between 800CHF and 1000CH but I think it's been worth it so far. "Keeping my fingers crossed"
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Old 27.08.2012, 12:16
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Re: Audited by IRS (USA)?

"... should be conatcted ..."
I meant to say "contacted"
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Old 27.08.2012, 12:25
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Re: Audited by IRS (USA)?

If you have been following any of the american tax nightmare stuff, like FBAR and now FATCA, and read the blogs of issacbrocksociety. ca or Jack Townsends blog, there is definitely a huge change in the making for expat audits. In the past the IRS rarely audited US persons abroad, to their own admission due to costs, etc. but that is about to change.

There will be a growing number of expats audited in the future as the IRS recently (last year of so) got the approval to have some 200 (? approximate, cannot remember exact figure) new posts/persons solely for overseas enforcement, ie. expat audits. If you read some of Nina Olsens reports (Taxpayer advocacy) I beleive you will find quite a few comments and details there as well. So it is only going to get worse I am afraid.
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Old 27.08.2012, 22:57
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Re: Audited by IRS (USA)?

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If you have been following any of the american tax nightmare stuff, like FBAR and now FATCA, and read the blogs of issacbrocksociety. ca or Jack Townsends blog, there is definitely a huge change in the making for expat audits. In the past the IRS rarely audited US persons abroad, to their own admission due to costs, etc. but that is about to change.

There will be a growing number of expats audited in the future as the IRS recently (last year of so) got the approval to have some 200 (? approximate, cannot remember exact figure) new posts/persons solely for overseas enforcement, ie. expat audits. If you read some of Nina Olsens reports (Taxpayer advocacy) I beleive you will find quite a few comments and details there as well. So it is only going to get worse I am afraid.
Great, the more I hear this, the more impossible it will be to hold myself back from relinquishing next year.
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Old 27.08.2012, 23:22
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Re: Audited by IRS (USA)?

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Great, the more I hear this, the more impossible it will be to hold myself back from relinquishing next year.
Why the wait?

And (just curious) why relinquish, and not renounce?
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Old 27.08.2012, 23:23
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Re: Audited by IRS (USA)?

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Why the wait?
He's waiting to get his Swiss citizenship.

Tom
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Old 27.08.2012, 23:33
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Re: Audited by IRS (USA)?

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And (just curious) why relinquish, and not renounce?
Saves you 450 USD, and possibly some other pains.

For example, just a few things, go to isaacbrocksociety.ca for more reading on the subject-

The jury is still out on who actually gets put on the Fed. Reg. name and shame list.

If the relinquishing act occurred a while ago, ie. before some of the newer painful tax laws went into effect, it could literally almost save your life, if not your sanity.
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Old 28.08.2012, 17:50
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Re: Audited by IRS (USA)?

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And (just curious) why relinquish, and not renounce?
Saves you 450 USD, and possibly some other pains.

For example, just a few things, go to isaacbrocksociety.ca for more reading on the subject...
It's the 'other pains' that I guess I'm curious about — i.e., are there 'pains' that a renunciant experiences, but that a relinquisher doesn't? Does a relinquisher receive anything like a CLN? (If not, that 450 USD might be well spent, at least in some cases.)

Otherwise, maybe I'm just inept, but I didn't find clear info on any significant differences between renunciation and relinquishing on that website.

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...The jury is still out on who actually gets put on the Fed. Reg. name and shame list...
What actual harm is there in getting your name published as an ex-citizen?
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Old 29.08.2012, 10:23
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Re: Audited by IRS (USA)?

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It's the 'other pains' that I guess I'm curious about — i.e., are there 'pains' that a renunciant experiences, but that a relinquisher doesn't? Does a relinquisher receive anything like a CLN? (If not, that 450 USD might be well spent, at least in some cases.)?
Yes, you get a CLN. But what could be very important is when you committed the expatriating act, as that determines the date of the CLN. If before the exit tax law went into force, this could be very significant. Keep in mind the INA (Immigration and Naturalisation Act) has been modified many times over the years, and what was a relinquishing act in say 1975 is different than it is today. See required reading below for more details.

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Otherwise, maybe I'm just inept, but I didn't find clear info on any significant differences between renunciation and relinquishing on that website.?
Here is some required reading--

http://isaacbrocksociety.ca/2011/12/...ce-if-you-can/

http://isaacbrocksociety.ca/2012/06/...are-different/


http://isaacbrocksociety.ca/2011/12/...te-department/

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What actual harm is there in getting your name published as an ex-citizen?
Depends on how much you value your privacy. Keep in mind this is relatively recent development and only enacted by Congress to give a negative connotation to all this, so why appease them. And finally given the Rich and Saverin cases, who knows what crazy Congressman may inact in the future using this list. But in essence I agree somewhat it is not too draconian. As I said previously, it still is not clear to anyone who exactly gets on the list, and it is clearly full of errors. Perhaps relinquishers who relinquished before this law are not on it, yet new relinquishers are on it, but no one really knows.
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Old 29.08.2012, 12:31
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Re: Audited by IRS (USA)?

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Yes, you get a CLN. But what could be very important is when you committed the expatriating act, as that determines the date of the CLN...
Okay, in my case everything happen during the past few years, so not much difference or impact, but...

Thanks very much for those useful links. Only the first one pertains to me (because in my case everything took place after 1995 and after 2004), but it seems like I could have saved the $450 and just relinquished, had I been better informed, but that's all water under the bridge now.

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Depends on how much you value your privacy...
Yeah, and I guess one never knows what some congresscritter or bureaucrat might try with such info. Do you happen to know whether "the list" is published online anywhere?

Thanks for all the clarifications.
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Old 29.08.2012, 13:08
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Re: Audited by IRS (USA)?

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Do you happen to know whether "the list" is published online anywhere?
Here is the general link for the Federal Register. The 'name and shame' list is published quarterly. You would have to input your own search criteria to find the quarterly lists.

https://www.federalregister.gov/

Here is the result of my search which should list them all since the law introduced this list.

https://www.federalregister.gov/arti...+to+expatriate
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Old 29.08.2012, 14:53
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Re: Audited by IRS (USA)?

Interesting, my name shows up six months after the fact.

Tom
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Old 29.08.2012, 16:50
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Re: Audited by IRS (USA)?

Another question:

In the case of relinquishing by taking on another citizenship and advising a state dept. office that it is meant as an act of relinquishment, what happens with the passport? (In a renunciation, it is handed over, stamped "cancelled", and returned to the ex-citizen.)
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Old 31.08.2012, 10:04
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Re: Audited by IRS (USA)?

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Another question:

In the case of relinquishing by taking on another citizenship and advising a state dept. office that it is meant as an act of relinquishment, what happens with the passport? (In a renunciation, it is handed over, stamped "cancelled", and returned to the ex-citizen.)
I have no personal experience with this, but as it is a parallel path to loss of nationality, I would assume the officals have to follow the same procedures, i.e. the former citizen has no right to the passport so it is either turned in or invalidated.
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Old 15.09.2012, 19:45
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Re: Audited by IRS (USA)?

I am sure once the IRS see the Zug address it goes straight to the top of the list, we have been audited twice in the last 3 years, a similar story to yourself , nothing ever before.
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