The IRS Taxpayer advocate service came out with its annual report on the IRS and included a large section (very critical of the IRS) on FBARs, the 2009 VD program etc etc. Very scathing report, so hopefully it’ll have some impact
http://www.irs.gov/pub/irs-utl/2011_…tionalmsps.pdf
I have to admit that I am disappointed that the Tax Payer Advocate failed to state the obviously most workable policy, which is for the U.S. to stop taxing based on citizentry or long terme resident status. That solution is the simplest, the most just and relieves the IRS of having to divert its limited resources from higher value tax revenue sources.
As any parent can tell you, it is nice and desireable to have rules but it is only the parent who keeps in mind the fact that rules have to be enforced who will not make the mistake of making unnecessary and non productive rules. The IRS rules with regards to the taxation of citizens who are being taxed by their jurisdiction of residence is an example of a needlessly redundant law (pg. 28). All that work for no revenue. The only thing that the government could do to derieve more revenue from partner Tax Treaty countries would be to tear up the treaties and axe both the Foreign Income Exclusion and the Foreign Tax Credit. I have read one of Senator Tom Coburn’s speeches and he would like to do exactly this very thing.
Here is what I put over at Forbes on this very issue…
http://www.forbes.com/sites/janetnovack/2012/01/11/irs-advocate-new-taxpayer-rights-crisis-is-brewing/
In response to…angrymobvoter 9 hours ago
A simple solution to this problem is to simplify the tax code not increase the budget of the IRS.
I replied….
Absolutely agree.
And, go to a territorial taxation system so as to be competitive with other exporting nations who unlike the US, do not tax their citizens income who reside in another country.
The current US jihad against expat foreign accounts via the VDPs is making it extremely difficult for a shrinking US diaspora, (not counting those troops scattered around the world) as more decide the expense and complexity of keeping up with foreign tax compliance and reporting and resulting double taxation makes returning to Kansas seem inviting. 🙂 Or, sadly, just renounce their US citizenship to shed the burden.
and then rogerc added…
A totally-correct recommendation. The US has a massive $720 billion trade deficit, while Germany which is just one example of many among the high-wage industrialized nations, has a $198 billion job-creating trade surpuls and a healthy trade surplus with China as well. How does Germany do it? They encourage their citiens to relocate abroad and sell their high-priced exports which they do with great success, and consider them patriots. Their foreign income is not taxed by Germany. The US does just the opposite: It subjects its citizens who relocate abroad to double taxation so they will stay home and considers any who go as tax evading traitors. That is why the US has a $720 billion trade surplus while Germany has a $198 billion trade surplus AND the lowest unemployment rate in 20 years. You sow what you reap. Feet on the ground = trade surpluses. No feet on the ground = trade deficits. It is just that simple but nobody in Washington, either on Capitol Hill or Pennsylvania Avenue seems to really care.
This is GREAT! And it makes me feel better – they actually have a clue. Oh, miracle….
Loved this part:
“The complexity of international tax law, combined with the administrative burden placed
on these taxpayers, creates an environment where taxpayers who are trying their best to
comply simply cannot. For some, this means paying more U.S. tax than is legally required,
while others may be subject to steep civil and criminal penalties. For some U.S taxpayers
abroad, the tax requirements are so confusing and the compliance burden so great that they
give up their U.S. citizenship.
A recent of IRS study of taxpayer needs and preferences showed that international taxpayers
may have a greater current need for IRS services than the general taxpayer population.”
Calgary411 – you are a star!
My theory is that the IRS has its hands tied due to laws passed by Congress. The politicians see it as a vote winner because it’s perceived as a moral issue, similar to the war on drugs. Ron Paul scared voters off with his candid honesty here.
It will take time but especially with this scathing report, the tide may finally be turning in our favour.
I think Mona is right. Since it is framed as a debate about “tax evaders” Congress is more than happy to give the IRS money for enforcement but not much for outreach and tax assistance help. After all who could possibly justify spending taxpayer money to provide services to “tax evaders”?
I think “rogerc” said “That is why the US has a $720 billion trade surplus while Germany has a $198 billion trade surplus…”
I think he meant deficit.
Haha! Darn I’m good. I remember seeing this argument somewhere:
http://buyamericanchallenge.wordpress.com/2011/02/17/warren-buffet%E2%80%99s-sobering-view-of-the-u-s-trade-deficit/
Check out Roger Concklin’s comments. It is an expanded version of what he wrote in the Forbes comments.
This report is an excellent read. It’s really long, though. So for anyone short of time here’s a CliffsNotes version:
TAS to IRS: You cheated.
IRS to TAS: Drop dead.
Thanks, but I just passed it on as I thought it was important, but can’t take credit. It was AmTaker on the Expat Blog who picked it up and SW121 who gave great comment when I passed the link on to him after a conversation that we had yesterday.
I so appreciate your contributions to the Isaac Brock Society site. You are a star!!
Indeed!! And, our thanks for pointing out what you did, TAS.
On the IRS site: http://www.irs.gov/advocate/article/0,,id=212313,00.html
“The Taxpayer Advocate Service is Your Voice at the IRS!
The Taxpayer Advocate Service (TAS) is an independent organization within the IRS. We help taxpayers who are experiencing economic harm, such as not being able to provide necessities like housing, transportation, or food; taxpayers who are seeking help in resolving problems with the IRS; and those who believe an IRS system or procedure is not working as it should. Here are ten things every taxpayer should know about TAS: …”
I will tell you what, the TAS is really truly your advocate and voice at the IRS. I can’t say enough good about them.. If all government agencies acted as it did, we would not have such frustration with Big Government.
More very interesting commentary:
“The National Taxpayer Advocate responded on October 26, demanding that the Commissioner issue a “formal response” to the TAD by January 26, 2012. Tax practitioners and affected taxpayers are now awaiting that formal response. If the Commissioner continues to pursue the agency’s present course, the National Taxpayer Advocate can escalate the dispute to the Congressional IRS Oversight Committee.”
http://www.nixonpeabody.com/publications_detail3.asp?ID=4189