Here, this should get your blood boiling. Hat tip to @Tim who just drew my attention to this article at Politico.
Kerrey: IRS advocate to blame for scandal
I am just stunned by the chutz·pah of this Democrat to try and deflect political fallout on the Dems.
We need some Brockers to weigh in.
I am beginning to think this IRS scandal which broke Friday has some legs. It was above the fold on the front pages of two local Bellingham papers today. I think we can use this attention to tell a broader story of IRS misdirected energies and persecution of American’s abroad with their OVDPs and FATCA administration!
Here is my comment. Add yours.
That is just such Nonsense!!!
Nina Olson as been a GREAT advocate for Taxpayers, and her reports to Congress constantly point out what the IRS is doing wrong, and they just ignore her.
As a by product of Congressional inaction on her reports, the IRS management ignores her too.
Let me give you an example. She has filed a TAD, (TAX Advocate Directive) on the IRS 2009 OVDP “Bait and Switch” in the IRS voluntary disclosure programs for offshore accounts, only to be stonewalled by Commissioner Shulman and ignored.
The Commissioner refused to respond publicly as required and refused to rescind their secret suspension of the famous FAQ 35. That had serious impacts on many non-willful offenders of the FBAR rules that the IRS hadn’t even bothered to put in their own publication 54 prior to that time.
She even reported on this in her Report to Congress and THEY, meaning KERRY, did absolutely NOTHING!!! ZERO, NADA
See MPS 12, from 2011 report to Congress
http://www.taxpayeradvocate.irs.gov/userfiles/file/2011_ARC_MSP%2012.pdf
This is just Kerrey, covering his and fellow Democrat asses, while trying to deflect attention from their own failure to read her reports and act on her recommendations.
He also doesn’t want you to know of his own complicity in voting for FATCA and allowing the IRS to continue its offshore jihad against Americans living abroad by applying Draconian penalties and generalized punishment for ALL Americans Abroad, for the sins of Homeland offshore tax evaders!
I thought Nina would have to be out of her position as NTA for a few years before she could take the Commissioner’s position.
A lead editorial in today’s Wall Street Journal recommends Nina Olsen to be the IRS commissioner. I place much more credcenced in the wsj editorial than I do in ex-senator Kerry. In all fairness the statute allowing this tax exempt status is so ambiguous that its sponsors in Congress must bear a large part of the blame. Kert is shooting from the hip without knowing anything about the subject.
If there were a few more like Nina Olsen in key positions in Washington I assure you the nation would be far better off., Her staff, acting on my behalf, was able to cut through the bungling red tape at the IRS on two different ocassions so I have both first hand experience and a very positive impression of Nina. She is a true patriot. May her tribe increase.
@Johnson…
Thanks for that reference to the WSJ. I just updated your link so that it works. This is one that Brockers should weigh in as being in support, irrespective of the statutes that might prevent this actually happening! As we know, the IRS re-interprets Statutes how ever they wish on FATCA IGAs, and apparently they also did this on the 501 (c) (4)…
I just sent this to an NPR reporter….
Speaking of that tax exempt T-party targeting scandal, this last night by Lawrence O’Donnell was interesting (skip the beginning hyperbole, and go to minute 3:14)
The real issue (scandal) is how the IRS has used (abused) their so called regulatory authority to essentially change application of the language of 501(c)(4) statute and give tax exempt status to groups that Congress really never intended when the statute was originally passed.
It is a charade that these groups, Liberal or Conservative, which are definitely political groups, have ever been given tax exempt status in the first place. That is the scandal!!! Congress never intended for them to be tax exempt, until the IRS apparently changed the application of the statute unilaterally. (although I would bet, there was political pressure somewhere to do so.)
I have been watching this unfold right now with FATCA, that statute that most Americans know nothing about.
The IRS is currently entering into FATCA agreements with other countries promising them tax data reciprocity in exchange for them signing up to something called a FATCA IGA. This is to encourage foreign financial Institutions the world over to turn over all ‘US Person’ data, if the 30% withholding penalty of all their U.S. sourced income isn’t enough!! This is offered as a way to over come the privacy barriers to imposition of 544 pages of FATCA regulations which puts U.S. law in direct conflict with their National sovereignty and their countries privacy laws. This all goes into effect Jan 1, 2014.
To make the IGA work, the IRS has then unilaterally imposed a small measure of reciprocity blowback onto the U.S. domestic financial system via a regulatory bulletin IRS 2012-20. I call it DATCA (lite) and in the IGA, they promise full blown reciprocity later. This intention was buried in the Obama 2014 Budget on page 202.
Again, like 501 (c)(4) changes, this reciprocity was never the will of Congress when FATCA was passed. There currently is a law suit by Florida and Texas Bankers association to try to stop them as it is causing serious capital flight.
Maybe you or your listeners would think that what the IRS is doing is a good idea, as “what was good for the FATCA goose is good for the domestic DATCA gander”. But that is not the point. This FATCA IGA was NEVER EVER contemplated or provided for in FATCA as passed in 2010. Even now, few know or understand what is happening, since there was no FATCA debate or hearings in Congress or the media, so few know about it. Treasury and the IRS are just doing this on their own with imperial hubris. They think they are the 4th arm of government and can do as they please.
All of this is definitely is not the will of Congress, but again, the IRS does as it likes. They are entering into these treaty like IGA promises, but cleverly avoid the “Advise and Consent’ process by calling them ‘Competent Authority Agreements’, which have a dubious legal basis. Never mind that the country signing them think they are Treaties and take them to their Parliaments for approval. They will never see the light of day in Congress for any review! They would say it is their Regulatory authority gives them this power, and if no one challenges them, then I guess it does. They definitely operate like they are a law unto their own. 🙂
But I digress, as I know NPR is not interested in FATCA 🙂
@Roger…
Actually the tax exempt status language in 501 (c)(4) appears NOT to be ambiguous at all. The IRS just decided to changed the meaning of this statement.. “must to operate exclusively for the promotion of social welfare” to ” must operate primarily for the promotion of social welfare.
Watch the clip starting at minute 3:14
http://www.nbcnews.com/id/45755883/ns/msnbc-the_last_word/vp/51910764#51910764
It is like explaining to your wife that your marriage and promises of fidelity are now not “exclusively”, but “primarily” being honored
http://www.nbcnews.com/id/45755883/ns/msnbc-the_last_word/vp/51910764#51910764
So, the law as written solves the problem of who should get tax exemptions, but the IRS, as they do, just decide to apply it differently than Congress intended. We should not be surprised! We see that with the FATCA IGAs. They go rogue, all the time, and no one reigns them in.
Very, very informative, Just Me.
But why does it have to be Levin?
@Bubblebustin…
I hear you. I see the BIG irony in that too! 🙂
mvh
According to Wikipedia, Dana Lathan was appointed as IRS commissioner on November 5, 1958 and ended his term in January 20, 1961. He was appointed by Eisenhower.
Maybe words had different meanings in the ’50’s, just as the gravitational pull of the earth was different in those days:
IRS arrogance at its best — “IRS interpretation of law.”
They are aware of the problem? Why has that ever been an OK answer? Will the IRS NOW change this term in their regulations? How many other aspects of people’s lives and finances does IRS interpretation of the law affect?
What is the precise definition of “exclusively for the promotion of social welfare?
Does that include promoting women’s choice or opposing abortion, or both? I suspect that most politicians are of the opinion that the policies they embrace and support promote social welfare.
I don’t offhand recall even one political candidate who claims to oppose social welfare. I fear the term has very different meanings in the minds of different people. Is this terminology defined anywhere or is it like the constitutional requirement that the president of the US must be a Natural Born US citizen? I have my opinion of what Natural Born means, and I am sure I am right, but others have a very different opinion and are just as sure I am wrong and that they are right.
Well, maybe everybody and every corporation and every organization and every religious establishment (where good old politicking and Presidential campaigning goes on in some) should be paying their fair share. If there is no good definition and it’s all arbitrary, then perhaps should apply to all. The “Fair Tax” deal or GST (goods & services tax on all, with some kinds of means test) is sounding fairer and fairer. And, we who live abroad will pay our fair share to the countries in which we live. Maybe everything complex should be required to follow the KISS rule.
@Roger…
Of course we all define for our own political or partisan purposes what we consider “Fair” to be, as it is a pretty subjective word and allows for a wide spectrum of views. However, it does seem to me, that “exclusive” wording in the statute is pretty black and white, while “predominately” gets us into the subjective area of what percentage and what activity is considered “predominate”, like what is “Fair”?
ex·clu·sive [ik-skloo-siv, -ziv]
adjective
1.not admitting of something else; incompatible: mutually exclusive plans of action.
2.omitting from consideration or account (often followed by of ): a profit of ten percent, exclusive of taxes.
3.limited to the object or objects designated: exclusive attention to business.
4.shutting out all others from a part or share: an exclusive right to film the novel.
5.fashionable; stylish: to patronize only the most exclusive designers.
Try as I might, I don’t see any definition that describes “predominate” as a synonym for “exclusive”. 🙂
That said, I don’t think that so called social welfare organizations or religions for that matter should have tax exemption status. Neither need the help of the government to promote their activities or their religious beliefs with tax breaks, IMHO. I know that is heresy in America, but why favor one activity or group over another with Tax exemptions? I know my view is probably in a minority. 🙂
@calgary411; What is fair in the eyes of one can be very unfair in the eyes of another.
It was Senator William Proxmire (D,WI) who set the standard of “fairness” as far as the tax treatment of US citizens living abroad is concerned. In his testimony before the House Ways and Means Committee at it hearing on earned income from sources outside of the US on februar7 27, 1978 stated: The rule that should properly apply is that American citizens with essentially the same incomes and family circumstances should pay essentially equal income taxes whether they live in Waukesha, WI, Scarsdale, NY or Timbuktu. It is a perversion of that principal, through loopholes and truckholes, and special priviiiges, that has brought the tax system into disrepute and a smarting sense of injustice to tens of millions of taxpayers who pay through the nose on almost every cent they earn wile others get to exclude or deduct from a credit against their income tax vast amounts of money which those not so fortunately situated must fork over to Uncle Sam.”
To continue one of the most flagrant loop0holes in the tax laws at a cost of half a billion dollars a year because some of the 5,133 persons in Saudi Arabia have rents they say are excessive is to allow the tail to wag the dog at a price which no efficient business, civilized government or oppressed domestic taxpayer should have to endure.”
He went on to state “…merely because an American citizen lives a few years of his life abroad,. he cannot and should not opt out of the requirements and obligations of citizenship. Unfortunately , it costs money to run our Government and the American abroad has the same obligation as those at home to support it with their taxes – no more, no less.”
@MeTo. Most religious organizations I suspect do not operate at a profit, but what is important to them is the deductibility of the charitable contributions they receive to thee donors of those contributions. An important difference between these religious charities, and the non-profits on which approval was held up for years, which are in the “non-profit but contributions are not tax deductible” category is just that. Contributions to those organizations are not tax deductible either.
@Yes, I sure know that’s correct, Roger. I am just speculating on the many pages of the Tax Code — how can it ever be weeded down to work better? In my simple, common sense mind, I want it to start all over.
And, the sooner I am away from this for me, my husband and my daughter the better for my sanity and my family’s retirement savings:
My son and many like him though are entrapped though he will NEVER live in the US — why would they have ANY obligation to the US because of citizenship acquired from a parent when he was born in Canada, raised in Canada, never lived in the US, never registered with the US, never had any benefit from the US? I will continue saying it should be a choice, not an unwanted “gift.”
Roger, Proxmire appeared to be fixated on expats who live aboard on work assignments. And he sorta has a point. These are people who are gone a few years and then come back to “use” the system. If you look at it that way, it could make sense -except since no other countries feel compelled to do it this way, why does the US? It’s just ownership issues being twisted to justify keeping track of us. The tax collected is bonus.
The USG simply has no policy to deal with duals who are really citizens of other countries, expats who leave and never come back and accidentals. None. They are simply treated as those who go “overseas” to work with every intention of coming back.
I think some of the problem is that this is as dominant a narrative as the “wealthy expats” and maybe why you so often read in comment sections, “then just come home”. It just isn’t conceivable that Americans would leave the US and not come back.
@Roger…
I understand that, but the question is, why should contributions to religions or social welfare agencies be tax deductible in the first place? That is the question. To be crassly cynical, does God need a tax deduction from the IRS to keep his mission of spreading the gospel going? Do Christians need the incentive from the U.S government to meet their 10% tithe requirements from God? Is it even appropriate? Isn’t charity and tithe supposed to come from your moral obligations to the “least of these” rather than something you get back from the IRS in terms of lower taxes?
IRS going after pro life groups, forcing them to say they wouldn’t protest
https://www.thomasmoresociety.org/2013/05/15/broadening-irs-victims-include-pro-life-advocates-as-congress-investigates/
There is an interesting article in Business Week, my copy of which was delivered this morning, on Canada’s efforts to lure US workers to take jobs in Canada. Not one word about the tax challenges faced by US citizens living and working in Canada. Some of you might like to chime in on this with an on-line posting of your own. Those Americans who might be tempted to accept job offers in Canada after reading this article need to have their eyes opened wide.
http://www.businessweek.com/articles/2013-05-16/canada-looks-to-lure-away-skilled-u-dot-s-dot-workers.
Here is the comment I posted:
Americans considering accepting employment in Canada need to be aware that, even though they will be taxed in Canada on their world-wide income like everyone else living there, they continue to be subject to US taxation on their already-taxed-once Canadian income. Because taxes are generally higher in Canada, foreign tax credits plus an exclusion from US tax on a limited amount of foreign earned (but not passive) income may leave them owing no additional US tax.
But they must still file US tax returns to prove they owe nothing, as well as filing FBAR and FATCA reports on their Canadian bank accounts. There are 16 IRS publications and 667 pages of tax forms with 7,332 total pages of instructions for US citizens living abroad. Some non-cash items like your Canadian employer’s share of Canadian Social Security income, although not taxed in Canada, are subject to US tax even though you never see them.
The US is the only “civilized” nation that imposes home-country taxation on its citizens living and working abroad. All other nations tax only those who live within their borders but never on their citizens living in another country.
The failure of US citizens abroad to file US tax returns and the required additional forms, or slight errors even with no tax consequence on any of them, can subject the US citizen abroad to draconian penalties so that it is absolutely necessary to employ professional tax preparation assistance from highly competent sources well-versed in US tax laws applicable to US citizens living abroad. The middle-class US citizen resident abroad can expect to outlay the equivalent of about one month’s earnings tor these specialized professional services. But if you reside abroad you cannot risk filing without this professional assistance.
If living in Canada you drive back across the border visit the US expect to be asked by the US Immigration officer if you are current in your US tax filings as ICE now collaborates closely with the IRS to identify among the about one million Americans living in Canada those visiting the US who are not current with their US tax obligations.
The rules are so onerous that if you plan on remaining in Canada you should seek Canadian citizenship and renounce your US citizenship before a US consular official in Canada. You should recognized that renunciation of US citizenship is irrevocable, and although currently not enforced US law states that if you renounce citizenship to avoid US taxes you can be blacklisted and never permitted to even visit the US for any purpose for the rest of your life. In spite of these renunciation provisions, renunciations of US citizenship are up 6-fold in the last few years as Americans living abroad struggle to survive the onerous consequences of US citizenship-based taxation.
I posed a comment on the Business Week article on-line – just 1 of two so far.
Thanks, Roger.
I added a post that will, hopefully, alert those who need full disclosure on this Canadian employment opportunity:
@ Roger and calgary411
Your comments at Business Week are excellent. I haven’t got the connections to comment there. (I’m still trying to disconnect from Disqus after an aborted registration.) Mine would have been less finessed I’m afraid. Tad on the snarky side actually. Something like this …
Border crossers beware! Although Canada is eager to welcome you to a good life here, Uncle IRS Sam will have iron shackles on you from the time of your first foot fall in our country. If you aren’t prepared to spend the time required to learn the intricacies of satisfying two often incompatible tax systems (CRA and IRS) then be prepared to spend big bucks to have your US taxes prepared by a professional. You’ll find you can probably do the Canadian taxes on your own but filing an “overseas” 1040 and all the accompanying information forms will be a challenge. (US tax code is 72,000 pages and growing.) And good luck finding a truly competent US tax professional if you don’t live in a major city in Canada. Oh and don’t think you can simply dial up the IRS and get your questions answered. Their 800 number doesn’t work from Canada and if you do manage to track down an actual person to talk to at the IRS the favourite response is, “Sorry but your question is beyond my mandate to answer. Please consult a tax professional.” If you know the number of a specific form you can find information at the IRS website (beware they are tracking IP addresses there) but it’s tough if you don’t know there is something you should be searching for. Always keep in mind that although you will probably not owe the IRS any taxes after all the time and money spent to file that “overseas” 1040, the IRS has plenty of penalties to hit you with if you fail to file or make a mistake on their so-called “information” forms like the FBAR or the new 8938. You would be well advised to keep your financial situation simple (chequing and savings account only) because the forms required to report investments to the IRS will mess your mind big time. So border crossers, take those stars out of your eyes and prepare to don the horizontal stripes of your IRS prison uniform for your entire stay in Canada. One more thing … you do know it gets cold up here don’t you?
@Roger Conklin
Thanks for that posting on Business Week…
I gave you a reply…
Hi, Em.
Your comment is now there — attributed to Petros though. (Roger, there is an edit for your comment. I had to edit mine as the link didn’t work.) Thanks for highlighting this for us, Roger, and the opportunity to comment on this important thing for so many who would NOT KNOW!
@ calgary411
I hope Petros doesn’t mind. (The writing style isn’t up to his standard although he ventures into snarky sometimes too.) Anyway it’s certainly fine with me — Petros will get the blame for the faulty formatting. 😉 The Business Insider isn’t where I’d normally hang out but I think the comments there just might reach a valuable demographic.
@ Just Me
As always, you did good there. I don’t know how you can make so many contributions in so many places and not get burned out. PLEASE don’t get burned out. Achieving tax justice for outlanders could be a long haul, as others here have pointed out.
@Em…
Well, Roger keeps me inspired. The frustrating part, is when you make measured comments (like the NPR Planet Money) and they still do not come out of moderation. I did that last night on this site about Retirement abroad, and they just ignored it… I basically supported the @marciovp comments in the the body of the blog… I guess they did not want to hear that.
http://bucks.blogs.nytimes.com/2013/05/17/going-abroad-to-keep-working-not-retire/
I just added another one, and we will see if they let it out of moderation….
I can vouch for what Roger Conklin says about the cost of tax reporting for U.S. citizens abroad:
“The middle-class US citizen resident abroad can expect to outlay the equivalent of about one month’s earnings tor these specialized professional services.”
My elderly mother is a U.S. citizen and a permanent resident of Canada for the past 5 years, living on modest returns from, and diminishing capital of, under $400,000. She pays about $4000 per year to a tax accountant to file her Canadian and U.S. tax returns. More than 60% of that amount is for the U.S. return and reports, significantly more than her monthly income. Far from “hiding money abroad”, she must squander some of her money in tax filing fees in order to live near family members here in Canada.