http://www.fas.org/sgp/crs/misc/R40623.pdf was found by JC and placed in a comment.
It is a recent release which I haven’t seen discussed elsewhere.
Tax Havens: International Tax Avoidance and Evasion
Jane G. Gravelle Senior Specialist in Economic Policy
January 15, 2015
Congressional Research Service
It has quite a history of tax proposals which are claimed as having originated from the Obama administration.
Plus a history of the dastardly ones we know of (Ex Patriot Act, MAP 21, etc)
Lots of unconstitutional solutions upon 7.6 million US citizens and 10’s of millions of immigrants, in order to chase after a small quantity of bad guys.
This one pulls its own unfootnoted number for total tax evasion out its whazoo.
Don’t get bogged down by the corporate discussions. The individual discussions come in the last pages.
You’ll learn about the history of the attack on expats and that the dastardly proposals have not gone away.
Options to Address Individual Evasion …………………………………………………………………………….. 34
Information Reporting ………………………………………………………………………………………………. 34
Multilateral Information Sharing or Withholding; International Cooperation ……………… 34
Expanding Bilateral Information Exchange ……………………………………………………………. 35
Unilateral Approaches: Withholding/Refund Approach; Increased Information Reporting Requirements……………………………………………………………………………………. 35
Other Measures That Might Improve Compliance ………………………………………………………… 35
Incentives/Sanctions for Tax Havens …………………………………………………………………….. 35
Tax Havens: International Tax Avoidance and Evasion
Congressional Research Service
Revise and Strengthen the Qualified Intermediary Program ……………………………………… 36
Place the Burden of Proof on the Taxpayer …………………………………………………………….. 36
Treat Shell Corporations as U.S. Firms ………………………………………………………………….. 36
Extend the Statute of Limitations ………………………………………………………………………….. 36
Greater Resources for the Internal Revenue Service to Focus on Offshore …………………. 37
Make Civil Cases Public as a Deterrent …………………………………………………………………. 37
37 Strengthening of Penalties ……………………………………………………………………………………. 37
Address Tax Shelters …………………………………………………………………………………………… 38
Regulate the Rules Used by States to Permit Incorporation ………………………………………. 38
Make Suspicious Activity Reports Available to Civil Side of IRS……………………………… 38
Summary of Enacted Legislation in 2011 ………………………………………………………………………….. 38
The Hiring Incentives to Restore Employment (HIRE) Act (P.L. 111-147): FATCA ………… 38
Reporting on Foreign Accounts …………………………………………………………………………….. 39
Deduction of Interest for Bearer (Nonregistered) Bonds ………………………………………….. 39
Additional Information Reported on Tax Returns ……………………………………………………. 39 Penalties ……………………………………………………………………………………………………………. 39
Statute of Limitations ………………………………………………………………………………………….. 39
Reporting on Foreign Passive Investment Companies ……………………………………………… 39
Electronic Filing …………………………………………………………………………………………………. 40 Trusts ………………………………………………………………………………………………………………… 40
Treat Equity Swaps as Dividends ………………………………………………………………………….. 40
Summary of Legislative Proposals …………………………………………………………………………………… 44
American Jobs and Closing Loopholes Act (H.R. 4213, 111th Congress) …………………………. 44
President Obama’s International Tax Proposals ……………………………………………………………. 45
Provisions Affecting Multinational Corporations and Other Tax Law Changes …………… 45
Provisions Relating to Individual Tax Evasion, Not Enacted in the HIRE Act …………….. 49
The Wyden-Gregg and Wyden-Coats Tax Reform Bills ………………………………………………… 49
Chairman Camp’s Territorial Tax Proposal (Included in H.R. 1, 113th Congress) and Senator Enzi’s Bill (S. 2091, 112th Congress) ……………………………………………………………. 50
Stop Tax Haven Abuse Act ………………………………………………………………………………………… 51
111th Congress (S. 506 and H.R. 1245) ………………………………………………………………….. 51
112th Congress (S. 1346 and H.R. 2669) ………………………………………………………………… 52
113th Congress (H.R. 1554, S. 1533, and H.R. 3666) ……………………………………………….. 53
114th Congress ……………………………………………………………………………………………………. 53
Finance Committee Proposal, 111th Congress ………………………………………………………………. 54
Arrogance is an awful condition.
All this report advocates is “Turn up the penalties! Hit them harder harder HARDER!” Practically calls for public hangings as a deterrent.
What she really writes is: “Put the burden of proof on the taxpayer,” and “treat all accounts as if they are subject to FBAR.” In other words, assume that every account held by any US expat has at least $10,000 and put the burden on the proof of the account holder to demonstrate otherwise.
What an ass (to put it politely).
For those who don’t want to read this, I will save you the trouble by giving you a “book report”.
Here it is:
As long as U.S. “citizenship taxation” continues to exist, Americans abroad and their families will be presumed to be criminals. Their day to day bank accounts will be presumed to be for the purpose of tax evasion. They will be destroyed.
You have two choices:
1. Hide
2. Renounce U.S. citizenship
There is no possible way that you can continue to live openly as a U.S. citizen abroad.
In the interim, if you are interested in working for the greater good of humanity, you should work to ensure that:
A. The Democrats will not be reelected.
B. The defeat is so bad that the Democratic Party will be destroyed and the cancerous tumor that it represents will be permanently eradicated from the world.
This can be your contribution to a better world.
Renounce and rejoice!
Obviously Ms. Gravelle is *not* one of those who is at all disposed to learning of the mess that Obama’s tax policies have made of our lives outside the United States. However, this paper handily lists for us in one place a catalogue of the abuse meted out against us by this president, as well as his plans for more.
@USCitizenAbroad:
I understand your anger. The greater good of humanity is not served by the GOP. Examples are readily available. You will be pleased to note, however, that as a longtime Democrat, I will hold my nose and vote Republican for the forseeable future, in effect adhering to your points A. and B.; hopefully the GOP will regain power and behave somewhat, and restore some sense into the tax code. I’m not holding my breath, though.
I was going to suggest a third choice: muddling through, entering FBARs and filing as well as possible, knowing one isn’t completely compliant in all details, but not owing tax and hoping for the best. The kind of option that the tax compliance industry warns about.
We’re back to being guilty and proving your innocence. Change the burden of proof from the Government to the Individual?
Place the Burden of Proof on the Taxpayer
An important part of the Stop Tax Haven Abuse proposal is to place the burden of proof in court
on the taxpayer; this approach was also suggested by Blum. As noted above, there is also a shift
in the burden of proof for accounts with non-qualified intermediaries for filing an FBAR (Foreign
Bank and Financial Account Report).
President Obama’s proposal would create a presumption that the funds in foreign accounts are
large enough to require an FBAR, which is required when amounts exceed $10,000. It would treat
failure to file for amounts in excess of $200,000 as willful, which permits criminal penalties and
larger civil penalties.
The HIRE Act (P.L. 111-147) would assume that, when adequate information is not provided,
foreign accounts exceed the $50,000 minimum that requires reporting (under other provisions) on
the tax return for purposes of assessing penalties.
An individual goes to court and instead of the Government having to prove you needed to file FBARs, the individual will have to prove they didn’t need to file any FBARs.
All the more reason the US needs to see some of the IGAs ruled illegal. So what the US Government is trying to do is in the event an IGA is struck down, you still have to prove you’re innocence. The US Government is out of control.
@Fred
Glad to hear you are not voting Democrat. With respect to your proposal:
“I was going to suggest a third choice: muddling through, entering FBARs and filing as well as possible, knowing one isn’t completely compliant in all details, but not owing tax and hoping for the best. The kind of option that the tax compliance industry warns about.”
Understand that the tax compliance industry is concerned (in large part) by their perception of possible liability for advising what they see as a “quiet disclosure”. There are many people (in fact the majority) who can’t afford their services anyway and what do they do? They:
“muddle through, entering FBARs and filing as well as possible, knowing one isn’t completely compliant in all details, but not owing tax and hoping for the best.”
I’m not angry anymore. I wrote my comment a couple of hours ago.
I think it is save to say that there will be no legislation enacted in this Congress. Lots of talk. Yes, vote Republican this time and let them know why.
The more I read that document all the US Government is continue driving corporate and individual strategies to limit their exposure to the US Tax system.
So imagine the US market only being served by foreign owned companies with US subsidiaries, and continued renunciations.
The more penalties, criminal charges, and reporting the US Congress mandates, the more US tax base will continue to decline. The US Congress needs more consumption taxes, like VAT, which is collectible.
The first rule I was taught about taxation is a tax must be easy to collect. So is collecting US ex-pat income taxes across 200 jurisdictions (who will fight the US tooth and nail every step of the way) easier than to collect than enacting a national VAT within the US?
People like Senator Elizabeth Warren really need to have a reality check.
@Barbara
This is a CRS report, so the author is just pulling together the ideas that have been popular with Congress. Ms. Gravelle probably isn’t someone has any power, but the list that Congress has come up with is scary.
@Don Says
People don’t just want to limit their exposure to the U.S. tax system. People are also avoiding exposing themselves to the U.S. citizenship system.
It is appalling that they are so brazen about getting rid of the principle of innocent until proven guilty. If everyone with a foreign account is going to have to fill out an FBAR for a foreign account, then the limit is no longer $10,000 but $.01. And will the fine still be $10,000? Well, that’s one of raising money, but it’s not an ethical one..
The U.S. really does seem now to oppose everything they once stood for. I read this quotation today from the Englishman Dr. Samuel Johnson in 1775 criticizing the tax protest of the Americans in the colonies. The reasoning sounded eerily familiar:
“As man can be in but one place, at once, he cannot have the advantages of multiplied residence. He that will enjoy the brightness of sunshine, must quit the coolness of the shade. He who goes voluntarily to America, cannot complain of losing what he leaves in Europe. He, perhaps, had a right to vote for a knight or burgess; by crossing the Atlantick, he has not nullified his right; but he has made its exertion no longer possible. By his own choice he has left a country, where he had a vote and little property, for another, where he has great property, but no vote.”
In other words, those colonists brought it upon themselves!
Why doesn’t Ted Cruz, who was born in Canada, pay taxes to his country of birth? Because the Canadians don’t have this ridiculous CBT system!
If anyone has time for a comparison, it would be interesting to see if this current (January 2015) report varies, or has been undated, from one of the same title, by the same author, in December 2009, National Tax Journal. The text starts out the same in both.
http://www.ntanet.org/NTJ/62/4/ntj-v62n04p727-53-tax-havens-international-tax.pdf
Good find http://www.ntanet.org/NTJ/62/4/ntj-v62n04p727-53-tax-havens-international-tax.pdf
“Guttentag and Avi-Yonah (2005) estimate $50 billion in individual tax evasion, based on an estimate of $1.5 trillion of non-U.S. holdings held by high net worth individuals, using a 10 percent rate of return and a 33 percent tax rate. They also summarize two other estimates of $40 billion by the IRS, and $70 billion by an IRS consultant in 2002. ” Another source of the lie.
Otherwise, it indeed looks like this report is an update of her other. That’s why they hired her.
@Eric
re: no legislation. You are ignoring the possibiliy of:
1) Something nice attached to some bill such as keeping government going, much in the same way FATCA was attached to the Hire Act.
2) The Treasury may change the definition of a “US Person” and that could be quite substantial in its impact.
Well that’s a cure for insomnia, isn’t it. Didn’t really address non-residents specifically, but then why would they?
@USCitizenAbroad
You are right, the tax compliance industry, subject of scorn here, must of course obey the rules, no matter how absurd. They may be gleeful about it, but they are doing their job. However the industry itself is not monolithic.