David Hryck, a tax lawyer for celebrities and billionaire businessmen, is concerned about the IRS’s recent efforts to crack down on international tax evaders.
“In many cases, from what I’ve seen so far, they’ve had numerous voluntary compliance programs, but it seems like the innocent people are getting penalized,” he said. “They might have somebody whose mother or grandmother is not a U.S. resident, and if the children happened to be a U.S. resident or citizen, they had no idea this account existed. Unfortunately those are many of the cases I see.”
Tax Lawyer to the Stars Sees Problems with International Tax Enforcement
Boy, does he state the truth here! Still the US press repeats the “success” of the OVDP/OVDI programs without a question.
Also, I would add…
Many other prominent Tax attorneys have said exactly the same thing…
Scott Michel and Mark Matthews have written similar comments in their well written analysis of the IRS programs called…
“OVDI is Over — What’s Next for Voluntary Disclosures?”, 133 Tax Notes 369 (Oct. 17, 2011)
D. One Size Does Not Fit All
In the relatively narrow categories of behavior associated with unreported bank accounts, private practitioners encountered a broad range of culpability. There were a few of the stereotypical offshore tax cheats — native-born U.S. citizens who, on their own accord, decided to evade taxes and developed plans to use offshore entities and accounts to shield from taxation funds earned in the United States.
That is the media image of offshore tax evaders and an image promoted by IRS public statements. For that group, the penalty levels in the OVDI programs were, in our judgment, appropriate, perhaps even generous when combined with a criminal amnesty.
It may surprise most observers, but “we saw few
cases like that.”
It is anyone’s guess why. It may be that this aggressive and risk-prone group was prepared to let it ride. Or perhaps there simply are not as many of them as anticipated.
An excerpt from the April the 1st entry from the TaxProf Blog http://taxprof.typepad.com/ :
“Timothy Geithner: TurboTax did not cause me to underreport my income
Mitt Romney: I abused the IRA rules to stuff my IRA with $100 million
Newt Gingrich and John Edwards: We abused the Sub S rules to avoid paying employment tax
Joe Biden and Barack Obama: We only increased our charitable giving when we realized we would have to publicly release our tax returns
Charlie Rangel: As Chair of the House Ways & Means Committee, I knew all along that I was liable for tax on the rental income from my Dominican Republic beach condo
General Electric: We have downsized our tax department and will no longer use aggressive tax strategies to avoid U.S. ”
so,….Happy April Fools Day.
and this announcement just out…
wish it were so, @justme!
@Just Me, Tim re Undate from Credit Union Central
In The Border Guide (10th edition) Robert Keats says a few things about the Canada/ U.S. Tax Treaty. (1) “The Canada/U.S. Tax Treaty attempts to accomplish the same goals as any tax treaty – … reaching a common ground on the taxation of non-residents to avoid double taxation on the same income, and to protect the domestic treasury.” (2) “The terms of the treaty take precedence over almost all the Canadian Income Tax Act rules in Canada and the Internal Revenue Code rules in the United States. It is an important trump card to play at appropriate times when doing cross-border planning. The value of this cannot be overemphasized….”
Re the first point, far from protecting the domestic treasury (Canada’s that is) FATCA gives the U.S. licence to plunder through penalties the savings of many Canadians who expatriated themselves as per U.S. law many years ago.
Re the second point, reporting Canadian assets of resident Canadians to the IRS as proposed under FATCA violates the Tax Act and appears therefore to be unlawful. Does anyone know how the Tax Act is enforced or who the enforcer is?
I will have to remain silent on this one, as I am not the Canadian Tax Act expert. I am not even for sure that I know where Canada is. I am an American after all, and we don’t need to know! 🙂