Treasury Secretary Timothy Franz Geithner has just one business day left to avoid breaking the nation’s tax laws for the eighth time since taking office. (And that’s just counting the times for which there’s publicly-available evidence.) The law which our lovable fiscal bandit-in-chief just can’t stop himself from defying is the good old “name and shame” law, § 6039G(d), which states:
Notwithstanding any other provision of law, not later than 30 days after the close of each calendar quarter, the Secretary shall publish in the Federal Register the name of each individual losing United States citizenship (within the meaning of section 877 (a) or 877A) with respect to whom the Secretary receives information under the preceding sentence during such quarter.
This law is part of Subtitle F, Chapter 61, Subchapter A, Part III, Subpart A of the Internal Revenue Code. Friends of the Isaac Brock Society have no doubt come into close contact with the other sections of Subpart A — § 6038 (which authorises Forms 5471 and 8865), § 6038B (which authorises Form 926), and the newest and bestest § 6038D inserted by FATCA (which authorises Form 8938) — which all impose severe penalties on us brigandish ex-patriot expatriate scofflaws who dare ignore our duty to file.
The calendar quarter closed on 31 March. My fellow Isaac Brock Society author Bubblebustin is getting impatient for those numbers. But today’s scintillating edition of the Federal Register has no news at all from Mr. Secretary of the Treasury. Since the Federal Register doesn’t come out on weekends, Geithner has only one issue left in which to comply with his obligations. Not counting this time, Geithner already violated 6039G(d) seven times in the past thirteen quarters. That’s a non-compliance rate of 54%!
- The Q3 2009 list was not published until 19 November 2009, 20 days after the 30 October deadline
- The Q4 2009 list was not published until 26 February 2010, 27 days after the 30 January deadline
- The Q1 2010 list was not published until 24 May 2010, 24 days after the 30 April deadline
- The Q3 2010 list was not published until 10 November 2010, 11 days after the 30 October deadline
- The Q4 2010 list was not published until 11 February 2011, 12 days after the 30 January deadline
- The Q1 2011 list was not published until 10 May 2011, 10 days after the 30 April deadline
- The Q4 2011 list was not published until 2 February 2012, 3 days after the 30 January deadline.
Will this time be number eight, bringing his non-compliance rate up to a shocking 57%? To be fair, of course, in almost all of these cases, the lists were “submitted for publication” before the deadline. But the law doesn’t say “shall submit for publication and let it be published late”; it says, in black letters, “shall publish”. The IRS ignores foreign postmarks when it determines whether us U.S. persons abroad have filed in a timely manner. And of course we know that in United States of America, the fairest country in the world, there would never be a double standard which imposes harsh penalties on paperwork footfaults by some taxpayers, while letting unelected bureaucrats lackadaisically slide their way through their obligations, right?
Oh right. In 2009, following revelations that he had failed to pay $34,000 in payroll taxes, Geithner said to the Senate Finance Committee:
These were careless mistakes but they were unintentional. I want to apologize to the committee for putting you in the position of having to spend so much time on these issues when there is so much pressing business before the country.
Clearly a very sincere apology.
And since we’re running wild with this daydream of holding Geithner to the same standards as the rest of us — even though he eventually rectified his missing 6039G(d) paperwork in all past cases, he only did so by making a “quiet disclosure” after the deadline. He did not enter the Offshore Voluntary Disclosure Program to give a full accounting of his failures to file on time. This willful repeat offender, who sits inside the United States’ borders enjoying government benefits funded by honest taxpayers, clearly has not learned his lesson. Why don’t we fine him 350% of the value of his assets — 50% per failure — until he gets the message that he cannot flout our democratically-enacted deadlines? Make sure that rental property of his in Larchmont gets included in the penalty base. (And let’s not even ask the question of whether his reporting was complete — how about some extra “accuracy-related penalties on under-reporting”?)
@ Eric I know why my expatriation wasn’t counted; it took the State Department until February 29 2012 to approve my 28 February 2011 expatriation (that I informed them of on 9 April 2011).
So does this law require reporting all who receive a CLN or only those who subsequently complete the tax expatriation process?
My guess is it’s supposed to be everyone, not just the 8854 filers. A couple of lines up in 6039G(d) it says:
So as far as I can see, once Geithner gets the CLN from the Department of State, he’s obligated to publish the name whether or not the IRS gets an 8854.
@Eric Then I should be on the list for Q1. Crossing my fingers.
@Eric: “My guess is it’s supposed to be everyone, not just the 8854 filers.”
My reading of 6039G suggests only “covered” expats are listed. That it, only those 8854 filers with an exit tax target painted on their backs.
IRC 6039G reads, literally, “…the Secretary shall publish in the Federal Register the name of each individual losing United States citizenship (within the meaning of section 877 (a) or 877A)”. And IRC 877(a) and 877A carry the tax and net worth tests — “…shall apply to any individual if …the net worth of the individual as of such date is $2,000,000 or more, [blah blah blah]”.
He does appear to be less tardy as time goes on, even with the spike in renunciations as of late.
@Watcher — yeah, that’s the big question everyone keeps trying to figure out. Andrew Mitchel (the lawyer who’s quoted in that WSJ editorial on renunciation from the other day) took a look at this issue one time and came to the same conclusion as you: the list is only covered expatriates:
http://intltax.typepad.com/intltax_blog/2011/06/clarification-of-expatriate-graph.html
Then he took a look at it a second time and came to the opposite conclusion: the list contains everyone.
http://intltax.typepad.com/intltax_blog/2011/12/expatriate-graph-re-clarified.html
I’m waiting for him to take a third look 🙂
In all seriousness, though, Adam Bilzerian is very clearly a covered expatriate (he was looking into getting Austrian citizenship by investment — the price tag for that is rumoured to be in the seven figures, while the government flat out denies the program even exists), but he never showed up in the list. In contrast, I have a high school classmate who is in the list, but she’s definitely not rich enough to be a covered expatriate (and I think she had her five years of compliance sorted out too).
Well, personally I think the list is useful if it includes everyone. Then I don’t have to carry my CLN with me to the border. The border guards can just check my claims to have expatriated against the “List”.
@petros, with a special notation that you are the original 🙂
@Eric: I saw Andrew Mitchell’s analyses. One of them must be wrong, but unlike him I think it’s the latter of the two that’s mistaken. I’ve always found the logic in this article to be fairly persuasive:
http://www.livingondividends.com/articles/american-expatriation
“… take the London embassy, for example. It processes multiple renunciations every day. If you contact them to book an appointment, good luck. The wait time is reportedly almost a year. So given that they’re overbooked, if the embassy only processes three renunciations per day, that alone would account for all 743 listed in the Federal Register for 2009. Given the hundreds of other U.S. embassies and consulates you can visit to expatriate – many with substantial wait times – it seems obvious that the number of people renouncing is woefully underreported.”
Well, that and knowing that the poor schmuck tasked with compiling this list is of course going to take the narrowest view possible, not necessarily to cover anything up but mostly just to avoid what is for them a bunch of utterly pointless busywork.
Unless/until someone slaps the govt with a FOIA request for this info I guess we won’t ever know for sure what the numbers really are.
Re: article quoted in the above posting: ” “… take the London embassy, for example. It processes multiple renunciations every day. If you contact them to book an appointment, good luck. The wait time is reportedly almost a year.””
Some good news for Londoners re that. London, along with some other consulates, seems to be dealing the increased volume of renunciations and speeding up wait times. Brock recently received word from someone who booked at London that the wait time is now 2 months.
It’s a relief to know this but who’s to say that Congress won’t in the near future make it much more difficult to renounce by lowering the thresholds for being a covered expat? They could lower the exit tax to perhaps $500,000 rather than the current $2,000,000.
@monalisa1776 – If the US did something rediculous like makeing the limit zero, it would turn into a situation of “can’t pay won’t pay”. If the UK won’t lend a hand, the IRS will be pretty helpless.
For god’s sake the Dutch are now going to the ECHR because the Dutch courts ruled today to restrict the sale of cannabis to only Dutch citizens and the coffee shops are appealing on the grounds that the Dutch government is discriminating against people because of “nationality” to save their businesses.
Excuse me but doesn’t that sound like what the US wants foreign banks to do to US citizens? That’s why I think once an EU citizen gets refused services because they’re a US citizen or a bank wants to close down an account because of US citizenship or the customer refuses to provide their SS number for a W2 (mainly because of US indicia – place of birth on their EU passport) or the bank wants to make a withholding payment after 2017 on a pass-thru payment, they’ll have grounds to mount a legal challenge against the financial instution concerned. EU financial instutions (as EU govenments) are going to have to realise that you can’t treat one EU citizen one way and another differently because the US believes they have a lifelong hold on “US persons.”
I don’t mean to sound unsympatheic, but once you’ve settled your “unfinished business” in the States, you can take a harder line towards the IRS.
Should be getting my appointment finally this month in Belgium…Its not just London, Bern and Hong Kong that have wait lists – The smaller countries do too! I’ve actually tried contacting a few consulates in central Europe to try and get a better time slot and even they seem to have a wait list of a couple of months…
@John
What you describe above is the reasoning behind my renouncing US citizenship. I have had enough of being regulated to a second class citizen in my own country due to holding US citizenship. I have no assets there and no intention to ever go back, even to visit, so their threats would have been empty against me. I find though, I cannot access normal banking services which is why I am left with no choice but to get rid of the citizenship formally. I am amazed actually that this issue has yet to be brought to trial. I expect that it will sometime next year after FATCA kicks in and enough people get hit. I’m not waiting for the system to change though..
Already out, 460 this quarter compared to 499 2011 1st quarter.
https://www.federalregister.gov/articles/2012/04/30/2012-10274/quarterly-publication-of-individuals-who-have-chosen-to-expatriate
No Peter Dunn though.
There ARE definately some whales on the list like the wife of one of the richest men in Norway
Pingback: 460 people lost U.S. citizenship in Q1 2012, claims government; various names missing | The Isaac Brock Society