If you’re a US citizen in Australia, you’ve probably already heard about this case. The case involves Larry Williams, an American futures trader, who was apprehended in Australia. The IRS alleged that he had evaded taxes to the tune of 1,5+ million.
The story is here: http://www.mainstreet.com/article/moneyinvesting/
You can find the conclusion here in the comments section (from 2010):
http://thetaxforum.org/1503/this-weeks-irs-hall-of-shame-inductee-larry-williams.htm
The most disheartening part about this case is that Larry Williams had to go through this ordeal. He was arrested, had to pay attorneys, listened to people accusing him of being a tax cheat, only have almost all of the charges dropped. The only charge that “stuck” was a charge for “failing to file.”
I don’t know the background of this case, or how Larry Williams ended up on the IRS radar, but I DO think some restitution is in order when the IRS makes someones’ life a living hell and the strongest case they have is “failing to file.” This begs the question, “is US citizenship worth it?” I don’t think so. But if you decide to keep it, be sure to file all of the necessary documents with the IRS.
Terrifying. Once again, the article is promoting tax preparers, rather than addressing the root of the problem,
Failing to file, depending on the amount of taxes you have evaded, is an act which in itself can result in a fine of up to $25,000 and one year in prison. And failing to file the FBAR form TD F 90-22.1 with the US Treasury Department can cost the US citizen with ownership or signature authority over a non-owned bank account of $10,000 for each of the past 8 years of non-filing.
US tax treaties with those foreign governments with which such treaties have been executed univerally contain a clause in which the foreign government recognizes the right of the US to levy and collect taxes from US persons (citizens and green card holders) resident in the foreign country. This pretty well obligates the foreign country to apprehend and extradite US citizens wanted by the IRS for tax offenses.
Yeah, one of the articles was about that, but there are several on this case since this was fairly high profile. To me, it sounds more like a headline-hungry IRS trying to nail this guy, and they failed. Still, the guy had to go through the whole process and deal with the costs, just because the IRS was overzealous. I don’t think this is fair.
Ahh.. you can bet tax preparers around the world are saying “thank you” to the IRS. 🙂 I know at least Googe is; I see their tax preparation ads in my browser every day!
@Roger Thanks for your comment. My lawyer told me that this does not apply to Canada/United States extradition treaty. The list of offenses for which one may be extradited does not include FBAR or tax evasion.
@Mr. Concklin, as I discovered today, the Brazilian Constitution prohibits extradition of its citizens to any country for any crime. Non-citizens can be extradited based on drug-dealing charges.
Even still, it’s much easier just to file the IRS zero-owed tax returns and then go to the consulate and renounce quietly.
My non-American wife is having a hard time understanding WHY the US punishes citizens for living abroad. But she’s being very helpful in getting all of the documents I need to naturalize here and renounce the US part.
@geeez
Just responded in the other extradition post thread, but that seems to answer then why Brazil won’t extradite her. Other countries have similar policies as well, for example Japan refused to extradite the former President of Peru, Alberto Fujimora, who fled to Japan, where he also has citizenship, to avoid charges:
http://news.bbc.co.uk/2/hi/talking_point/6295160.stm
Portugal has also recently refused to extradite George Wright, who escaped from a US jail decades ago, hijacked a plane to Algeria or somewhere similar and eventually settled down in Portugal and became a citizen.
http://latimesblogs.latimes.com/world_now/2011/11/american-fugitive-george-wright-freed-portugal-court-refused-extradite-convicted-murderer.html
Well, for people like Petros, these are good countries. If they refuse extradition of real murderers, tax-related offenses are probably considered very minor.
This is why I’m even more shocked by the American couple living in Costa Rica who were extradited on tax-related charges. The US probably gives a lot of “aid” (bribes) to Costa Rican politicians every year.
Did the person in question in this story actually “live” in Australia. For some reason my reading of the story did not seem to indicate that.
@Tim — the second link says he currently resides in Australia :
“Father of actress (and former girlfriend to Heath Ledger) Michelle Williams, Larry Williams is being investigated for at estimates $1.5 million dollar tax evasion. A former stock market trader, Mr. Williams is currently residing in Australia as the U.S. Government tries to extradite him back to the United States…”
All charges dropped.
This article is nothing but an ad for CPAs. It is revolting. I don’t think there is anybody on this blog that encourages, supports or condones tax evasion.
Please somebody explain why this article is relevant. I just don’t see it.
@Calgary411
I seemed to have read that he was arrested upon arriving in Australia for just a short visit then was released on bail by an Australian judge and thus ended up staying in Australia for several years. Having said that it sure seems like a lot commotion for someone who ended up having all charges dropped.
With over 6 million expats living abroad I highly doubt that the U.S. would embark upon a large scale effort to imprison non compiant citizens. Although it is true that the U.S. imprisons more of its citizens and at a higher rate than any other country on earth, it is also true that prisons costs money to build.
It would be totally irrational for a cash strapped government to expend its scarce financial resources on building and staffing sturctures that are designed to hold people who were not costing the government any money prior to their convictions. Now even though I believe that the U.S. politicians are spiteful enough to do this I don’t think that the public would tolerate such profigacy when so many are out of work.
I have come to the conclusion that the collection and the enforcement sides of the IRS need to be separated. There is an inherent conflict of interest when the same institution is both your enforcer and your judge and seems to have no liability for its actions.
And while I agree with Mr. Conklin that the “laborer is woth his hire”, I cannot accept the idea that we should be willing to put ourselves into to penury in order to pay for the protection of tax professionals. A tax regime that requires it citizens to go to such extreme expense is not serving its proper role, to collect taxes, but is guilty of rapaciousness and those who assist it at great costs to the citizen are parasitical partakers in the abuse.
@renounce, sorry, next time I will try to find more articles that have fewer advertisements from CPAs. 🙂 That wasn’t intended. I just wanted to get as mainstream as possible to post here.
The point to the story is that I think the treatment of this guy was just wrong. It looks like he didn’t file 1 tax return so they made his hell. I think it’s easier just to file the tax return!!!
Mr. Conklin- if it is true as you say that the tax treaties that the U.S. has signed do indeed contain a clause which acknowledges the U.S.’s right to tax its citizens and residents then it is a example of how disingenous the U.S. was when it signed treaties which explicitly have the purpose of avoiding double taxation. Obviously there was no agreement between the parties to the contract, since all other nations feel that they have been blindsided by U.S. recourse to this obscure and contradictory treaty provision.
The fact that the U.S. has NOT, up until just recently, enforced this clause means that the U.S. has up until now practised “resident” based taxation with regards to its citizens abroad.
It is now incumbent upon the U.S. that it continue with the default taxation policy that it has followed all of these years. For the U.S. to change its practise because it is looking for a financial windfall, from people who are offside, is morally and legally wrong.
@recalcitrantexpat
“For the U.S. to change its practise because it is looking for a financial windfall, from people who are offside, is morally and legally wrong.”
Exactly! I agree. People sometimes give me a crazy look when I tell them what the US is doing. It’s as if they can’t believe a government, especially the UsofA, could do something like that.
@renounceuscitizenship Your objection to the article is noted as publicity piece. The subject of extradition is relevant, however, and it is interesting to see under what circumstance and in what countries it could happen. It is true that no one here is recommending criminal tax evasion.
But one day a year or so ago, I was happily preparing my relinquishment of US citizenship when along came an FBAR. Suddenly, the question of whether I could be extradited became relevant.
publicity peace? My intention was to show a country that was willing to assist the US in deporting a US citizen. So far I have discovered two: Costa Rica and Australia.
Moreover, I wanted to show the ordeal that this guy had to go through just to hear that “he didn’t file a return.” I think this is a massive abuse of power, and I think the IRS should have to resistitute this gentleman for any cost he incurred defending himself. I think the “failing to file” was to have something to still say he was wrong, and to escape some liability.
Since this guy is somewhat famous in the trading world (I’ve heard his name for years), you also have to consider what effects there were to his reputation as well.
I notice this is quite common in America — perform character assassination first. Then public opinion goes in their favor. It’s a dirty trick.. but that’s how the US plays.
@geeeez, you take me wrong, I was defending your post. The article that you referred to was the publicity piece to which Renounce objected (as you acknowledge above ). By all means, continue to post on this subject–it is highly relevant to our discussion, imho.
@Petros, I wasn’t objecting to what you said. I was just a little surprised how some called it a “publicity piece” because I put in a link that appears to be mainstream, but later turned out to be a bunch of accountants. I will screen the sources better next time. My apologies to everyone.
Personally, I’m stuck in limbo until I renounce. I want to move forward with my life, but at the same time I know the US rules. My choice is to renounce because complying with their rules is too difficult and expensive for me. I’m not going to take away from my family any more than the government here takes from us. My family receives ZERO benefits from the US. Why should my wife and children be forced to have less resources ($$$) because I have to pay the US? We don’t live there!
Like I have said countless times, the US is wrong, but will never admit it. When you deal with someone like that, give them what they want (in my case, returns that say nothing owed), and renounce quietly and move on. *** If someone wants to keep US Citizenship while knowing the rules, and not declaring income – that is wrong.***
The US politicians think the US is the greatest place on earth. Good for them. To them, by having a US passport, you have the beneift of going there anytime you like, and you can also create a home and live the American “dream”. We all know that is ********, and the real American “dream” exists in 1/4 of counties today, effectively making that blue passport a liability more than an asset.
The “American dream” after all, is the underlying premise to justifying US citizenship-based taxation that I have seen/heard, all along. In the politicians’ eyes, if you have that passport, they think you should pay taxes. Until you formally give up that passport and pay a hefty fee, they think you should pay taxes. It’s not that complicated.
Does anybody know if a Canadian can be extradited, just had a Grren card and I missing the I-407. The Canadain courts say they will not enforce USA taxes rules.
There is no possibility of extradition for unpaid taxes. Rest easy. This is one of my first questions for my lawyer and he said that the Canadia United States Extradition Treaty, which lists specific crimes for which one may be extradited, does not include tax crimes.
Asking for Failure to file?
Can you send me your lawyer name and address?
I dealt with a Calgary lawyer who is a jerk? His website only list his MBA evem though he is an LL.M CPA and CA.
Last year when I found out about closer connection,
I told him I did not even really want to get any money out of that Florida survivor condo, he could have told me about donating the proceed to charity or I just could have quick paying condo fees and let the condo association take over in 3 months? He mentioned the 10% withholding I told him I would not try and get it back. He did not tell me
They have a group from Moody who are not Canadian and are only interested in you paying USA taxes.
I have zero desire crossing the border. Even before I found out about closer connection I really did not want to snowbird. m I am only interested in Canadian law.
Other than disposition of that stupid survivor rights Florida Condo 23K no real income. The 23 K was a lot less than my dad paid for it.
Alll my income was
@Money
I found about FATCA by accident in 2010…That is the last year I went to Florida for a couple winter months. I just rented but had the opportunity to buy a condo later in 2010 on the south east coast of Florida in an adult community. It was a lovely condo with a beautiful view and nice neighbors…and for only $10k…A real deal..but I turned it down because of FATCA.