http://www.youtube.com/watch?v=ooFTvJiHzMk&list=UUPIj95W1bHT9NSpNMm2oVbQ&index=30&feature=plcp
Includes a couple of notable people such as Hale Shepard of Tax Notes Today. I am not sure what conclusions if any to draw from it.
http://www.youtube.com/watch?v=ooFTvJiHzMk&list=UUPIj95W1bHT9NSpNMm2oVbQ&index=30&feature=plcp
Includes a couple of notable people such as Hale Shepard of Tax Notes Today. I am not sure what conclusions if any to draw from it.
@Tim
Thanks for posting this. It is long but worth listening to. My impressions from 1 professor and 3 practitioners:
1. The professor does not understand the reality of voluntary disclosure or anything associated with it.
2. It is clear that OVDP is not working – only 1.5% response rate.
3. Practitioners recognize both what a great deal this is for criminals and what a bad deal for US citizens abroad
4. Practitioners acknowledge the incredible absurdity and unfairness of applying an penalty to those who who did not know they were US citizens.
5. Practitioner recognizes that IRS changed the rules of the game after people entered OVDP.
6. Practitioner recognizes the incredible unfairness of applying the 27.5% penalty to all assets.
Now, what I found most interesting was the question at the end about the obligations of a lawyer in voluntary disclosure (ethical obligations vs. Circular 230 etc – I have posted on this problem). The practitioners made it clear that their practice was to discuss all available compliance options and not simply tell people to enter the OVDP. Thank God for this. (Go to the last 5 minutes of the video for this.)
The clear implication being the OVDP should be entered into after careful consideration of all available options.
If there is anybody out there who is considering doing a voluntary disclosure you should watch this video.
Also I don’t think this participant is FBAR Scholar Hale Sheppard.
The video is better than was to be expected. The three practitioners were critical of the OVD programs and all of them made a point of mentioning that most of the people who came forward in the 2011 program were not what the IRS expected. They were referring to US persons resident abroad and immigrants who just did not know about the obscure FBAR form. They also mention that the penalties are disproportionate. There are a couple of good questions at the end regarding whether FATCA will be successful and how to advise clients if they should enter an OVD program.
NYU may have the most prestigious tax law program in the U.S. If the practitioners are this critical, what is going to take for the IRS to catch on that its approach is inappropriate for the type of innocent taxpayer that has recently become FBAR aware and wants to comply?
@renounce I agree with you totally. The professor, who one can also refer to as the Tax Notes Today lady, barely dealt with realities of the program. She talked about theoretical approaches for managing ultra rich tax evaders. Her part of the program seemed scatterbrained and I was left wondering how many martinis she drank before she came to the session. The practitioners were all very clear and made a point of mentioning how poorly designed the programs are for the realities they are dealing with.
@Lisa
@All
What the practitioners were saying in no uncertain terms is that you should think clearly and logically about whether to enter OVDP
Any person suffering anxiety over this issue, should watch the last 5 minutes of this video. It is the last question asked.
Also, here is the post that I did on the precise question asked in the video at the end:
http://isaacbrocksociety.ca/2012/05/31/the-conscience-of-a-lawyer-and-the-fbar-fundraiser/
@renounce You are right on target. The question is at the last 3:11 of the video. I think the statement that is made with respect to entering the current voluntary disclosure program “… I deal with it every day. I certainly don’t think you can tell a client not to come forward, but you can make them aware of the pros and cons and lead them to that conclusion.” says it all. Any decent practitioner will make you aware of all possible options, e.g., quiet disclosure, go-forward, etc.
@all- I actually found the man very interesting and critical of the whole process. I believe that he was the only one who mentioned that MOST Americans believe that the country has a territorial tax system. Now if the average man on the street thinks that then you have to ask why in the world would the U.S. government chose to stake its tax policy on such a law that is contrary to the sensibilities of its average citizen?
*Unbelievable! None of the speakers was capable of giving an organized coherent talk. The gentleman spoke off the cuff and was disorganized . The 4th speaker flitted all over the map. her main punchline was that the US is becoming like Italy without the good parts because tax evasion is too easy. And they are supposedly the experts. The subject was 99% to do with whales. The video is useless to minnows.
*@renounce
Thanks for the link to this video.
I am a big fan of Lee Sheppard, the Tax Notes Senior Editor. There is probably no one in the United States more knowledgeable of international taxation and tax policy than Lee. She is also highly knowledgeable on women’s fashion and soccer – and will frequently include scathing reviews of both in the introduction to her tax articles.
I doubt she was drunk at this seminar – hungover and deeply pessimistic or cynical maybe, but not drunk. If I knew as much as her about the intricacies of US tax policy both past and present and cared as much as she about rationalizing and making US domestic and international tax policy both more effective and fair yet was forced to watch the interminable contatenation of imbecilities perpetrated by the US Congress over the years, I suspect that I would either have long since turned to drink or blown my brains out in frustration.
Lee’s problem is that she has an enormous amount to say and typically very little time within which to say it. Worse, outside of academia, the audience that most needs to heed her either has the attention span of a 2-year old or the moral fiber of a loan shark.
She would benefit enormously by a good editor and/or publicist – preferrably one with good fashion sense who can also say something intelligent about the relative merits of Juventus v. Bayern München from time to time.
I appreciate and share the justified outrage that the IRS’s ham-handed organization and execution of its various OVD programs have provoked but FATCAT – for all its imperialist overtones – or automatic information sharing of financial data is an initiative that the world’s developed nations (e.g. Italy and the United States – and yes: Canada) sorely need.
With FATCAT the US has essentially put what’s left of its rapidly waning financial clout to work in the form of a legislative 2 x 4 applied “upside the head” of the world’s developed nations to get their attention to this unassailable fact:
Labor’s relative immobility makes it easy to tax but through a combination of demographics, advances in automation the share of taxable income from labor in the developed world is rapidly losing ground to the income from capital accumulated in these countries. Capital is very mobile and is thus very difficult to tax. Capital is also increasingly becoming concentrated in the hands of fewer and fewer warm bodies. However, those who labor – i.e. flesh and blood human beings just like capitalists – are the primary direct and indirect beneficiaries of taxes in the modern states. Labor also benefits from the willingness of capital to deploy in places where it will create jobs. Thus, in order to simultaneously a) keep that capital at home b) attract capital from abroad and c) tax capital there has to be an effective and efficient system of international disclosure or an effective and efficient system of source withholding tax on capital.
Wisely, I think, Lee Sheppard is a proponent of the withholding system (e.g. the 25% withheld on interest income under the misnamed “European Savings Directive”) rather than the impossibly complex and multifariously unworkable system of information sharing of the kind proposed by FATCAT.
Even though the people in power in the US pay Lee Sheppard little (or too little) heed, I would urge the visitors to the IBS not to make that mistake.
@Todundsteuer- it is the very unique terms of U.S. taxation policy that make the existence of FATCA so harmful to the world’s banking system and U.S. persons. Capital free flows are necessary if world economic output is to increase. If the U.S. under FATCA succeeds in gumming up the flow of capital and imposing an unproductive set of inefficient reporting forms on the world financial system that will in turn hurt labour, savings, investment etc. No nation has ever gotten rich by manufacturing tax reporting forms or by taxation period.
The U.S. has only its own problems in mind and most of those problems are of its own making. The U.S. taxation regime is too broad and needlessly turns everyone into a criminal even though the U.S. Treasury has not suffered any harm. I don’t think that the world should be complicit with assissting the U.S. in its persecution of innocent people. Which is exactly what is done by FATCA and citizenship based taxation.
I believe that FATCA will certainly succeed in keeping capital at home but it will fail in the goal of attracting capital from abroad. FATCA just adds more additional risk to deployment of capital with any U.S. entity. The biggest risk being that of not getting your capital back in one piece or even at all. Who wants to deal with the IRS if they don’t have to do so?
*Todundsteuer
Yes, but there is ALREADY Automatic Exchange of Information between Canada and the United States on US “Residents.” No one on the US side of the border seems to want to acknowledge this. Instead from the Canadian side it appears FATCA is attempt to get automatic exchange of information on individuals who are Canadian residents and are part of the Canadian domestic tax system notwithstanding their nationality. Is their some reason the existing automatic exchange of information between Canada and the US isn’t good enough. I highly doubt Canada is high on the list down at the country club out on Long Island of countries to stash cash without paying tax.
@Todundsteur
Very thoughtful comment and much appreciated.
I find your point about the need to tax capital interesting. A book that touches on this problem is James Dale Davidson’s “The Sovereign Individual”. Author makes the same point – that capital is very mobile.
It appears that what you like about FATCA is that it makes it harder to hide and move capital. In his book Davidson predicts the end of the Nation State because they will find it too hard to find, capture and tax capital.
Even if FATCA is acceptable in principle, FATCA combined with citzenship-based taxation is not. The combined effect of FATCA and citizenship-based taxation is that it turns all of the world into hunters and U.S. citizens abroad the hunted. Sorry, but intolerable. As a tax lawyer you have understood the tax consequences of being a US citizen abroad for many many years. As a result, you have been able to plan your life around this. The vast majority of US citizens don’t have that kind of knowledge and the Obama administration has turned their lives in to a living hell. It has also created millions of “America Haters” – more than the world has ever known. Something has to give here. FATCA cannot coexist with the the effects of citizenship-based taxation on US citizens abroad. Let’s be clear what FATCA and citizenship-based taxation mean combined:
Imagine a country with the world’s most corrupt and irrational tax system – a system that is so complicated that not even the tax professionals completely understand it. Imagine, now imposing that system on the lives of people in another country who have almost no way of understanding that system. Imagine threatening them with life altering penalties for failure to comply with a system they cannot understand. If this isn’t enough, let’s add in that they have to also comply with the complex tax laws of their country of residence. Let’s now recognize that the tax laws of those two countries are in many ways incompatible. Now, once we have achieved all of that: we are now going to turn those poor people into the hunted of the world! Banks release videos on how to identify them and turn them over to the original nation.
That’s what the FATCA combined with citizenship-based taxation means. Sound good to you? The country that does that is so called “land of the free”, but the real “nation of the form” – “Form Nation”.
That said, it is pretty clear that FATCA as originally conceived is “dead in the water”. The Legacy of FATCA might be a number of information sharing agreements. But, I would be surprised if FATCA is it original incarnation survives.
Furthermore, as you have pointed out, FATCA is likely to stimulate the development of a non-US dominated financial system. Financial sharing is one thing. FATCA is another. And citizenship-based taxation has to go either way.
Thanks for the video, renounce, your comments, Todunsteur, and, renounce, your subsequent comments to Todunsteur. What it is like to be the hunted, not having the lead time to plan your life accordingly, is what so many are up against.
How true: