(4) Those most hurt by the IRS’s persecution of expats have engaged the services of cross-border compliance condors.
(5) Those least hurt have done nothing.
Commentary:
I have heard many expat stories. A clear picture emerges. Many of those who wish to do the right thing have paid dearly. In some cases, the victims pay little if any taxes, but large payments to their cross-border tax accounts and lawyers. In the most extreme cases, people have followed the advice of their cross-border lawyers and have entered OVDP “amnesty” programs. Those in amnesty programs have had not just money but years sucked from their life–what Just Me (Marvin van Horn) called LCUs (Life Credit Units).
On the other hand, I know some people who have done nothing: they haven’t renounced, and they haven’t complied. But above all, they have informed themselves rather than seeking the services of a wraith. This method obviously works best if (1) you are not on the IRS radar; or (2) you do not meet the income threshold (such as non-earning spouses of a non-US persons). For these people, it is life as usual. (I understand that in some European countries bank accounts have been closed–obviously if that bothers you, you will likely have to do something–i.e., renounce or return).
I heard once that standard operating procedure in the compliance industry when asked by a client how much this whole fiasco would cost, is to ask back: “How much do you have?”
Previous Petros Principles:
(1) What the IRS can’t know unless you tell them can’t hurt you.
(2) Fear makes the IRS more dangerous than it really is.
(3) Haste is the devil
About: Petros is the alias of the founding administrator of the Isaac Brock Society. He has created this series of Petros Principles as a means of communicating guidelines which he believes have helped him and others deal with the United States’ world-wide tax invasion.
U.S. tax law is not enforced by the IRS. It’s enforced by the compliance industry.
Your post raises many interesting issues, but to focus on one issue/question:
because the compliance industry enforces the U.S. tax laws, the compliance industry also “makes the laws”.
Here is one interesting example:
Since the Obamacare Tax (Net Investment Income Tax) took effect many Americans abroad are now paying an additional 3.8% to pay for medicare for Homelanders. Does the combination of the Internal Revenue Code (foreign tax credit rules), totaliation agreement and Canada U.S. tax treaty require this? On this point you will find:
“Not all compliance condors are the same.”
“because the compliance industry enforces the U.S. tax laws, the compliance industry also “makes the laws”.”
For me, one of the pressing questions we must ask is if cross-border compliance industry is at all legitimate. If they are here in Canada and in other countries only to enforce the laws of the USA, is there a possibility that there could be an “ethical” compliance expert? If the regime is itself unethical, how can there be an ethical enforcement?
An important part of the answer to this question is to examine the effect of the laws and their enforcement. We see too many victims. That resonates with my view that there can be no such a thing as an ethical practitioner of cross-border compliance. Even if some practitioners clients do not become victims, still their profession presupposes the validity of the laws that they enforce–something I cannot do.
1. “still their profession presupposes the validity of the laws that they enforce–something I cannot do”
Yes, U.S. “citizenship taxation” coupled with FATCA has created “the weaponization of citizenship”. U.S. citizenship is now being used as a mechanism to wage war on the economies of other nations.
2. These people are governed NOT by “ethics” in the sense that you mean it, but by prescribed rules of “professional” conduct. U.S. tax preparers are generally bound by the rules of the IRS.
3. Many of them have no malicious intent. They genuinely believe that they are helping people.
@USCitizenAbroad: You may find the following exchange interesting. A compliance specialist was making comments about how one is obligated to pay phantom gains on one’s foreign currency mortgage if the exchange rate favoured the foreign currency. Another with alias of “Wander” asks if she, the compliance expert, could help him with his issues. The moderator said that no soliciting of business was allowed in the group. Wander then apologized, and I wrote:
The compliance specialists then retorted:
https://www.facebook.com/groups/citizenshiptaxation/permalink/1092946557461758/?comment_id=1094420027314411&reply_comment_id=1094988410590906&comment_tracking=%7B%22tn%22%3A%22R9%22%7D
Do we as taxpayers have any recourse to this abuse, such as sharing with one another our experiences in dealing with the “compliance condors”? The aim would be to identify the better experiences among them, and hence the more “ethical” service providers, perhaps through a comparison site like the ones for other products and services? (Granted: geographical coverage would be a challenge.) Many advisors suffer from conflicts of interests and solutions are found. Medical experts, for instance, must routinely declare conflicts of interest. Mere codes of conduct do not seem adequate.
I wonder if it a regulated industry in Canada.
Good thoughts ,both of you. Condors love making hay when the sun shines; so do many of us but not at the added expense of the stress we all face with all the crap that’s going on in a good country that I was glad to grow up in. My mother of 94 mourns the death of the United States she knew.
Glad not to be there now, and glad to go with a strategy that may help many of us stay under the radar (no condors). On the other hand, if exposed, join up and stand on the constitutional high ground with the other brave souls doing so now, and fight back. No guns allowed. More press coverage required.
Among the “compliance condors” are the ‘IRS Enrolled Agents’. They are numerous and operating both within the United States as well as outside the United States. I want to draw readers to this blog’s attention to a very important issue concerning these ‘IRS Enrolled Agents’ practicing and advertising their services, as “Enrolled Agents” outside the borders of the United States. First, let’s look at the definition from the Webster dictionary of the word “agent” and that is: a person who acts on behalf of another. In this case the “agent” is working on behalf of the IRS. Unfortunately for them, if they are operating, advertising and promoting themselves, outside of the United States, as “agents” of a federal organization, in this case the IRS and U.S. Treasury, then they require, under international law to be registered as employees, or in this case, representatives (agents) of a foreign government. This requires, under international law and conventions, that they hold diplomatic or service passports, be accepted by the foreign country in which they are working and have permission to do refer to themselves as “agents” of a foreign government’s Treasury or other office.
These people, “IRS Enrolled Agents”, are numerous in Europe, Canada, the Middle East and Asia/Pacific. They are in severe violation of international law and I now know of two cases where former U.S. citizen/person taxpayers have reported them to their country’s authorities, for operating as an agent of a foreign government without holding the necessary host country accreditation and service passport from the United States. Two lawyers have concurred with me on this issue. These “IRS Enrolled Agent” condors are at high risk of serious consequences, large fines and even expulsion from the host country.
I’m sure that many of you on this blog have encountered or used the services of these Americans overseas, operating as “agents of the IRS” without the necessary papers to do so. Legally speaking the word that catches them up is ‘AGENT’. If you want to make a dent in dismantling this condor compliance network, please report these individuals to your country’s Ministry of Finance or relevant department. Send a scanned copy of their listing on the internet, their letterhead, invoice, etc., where it clearly states that they are “IRS Enrolled Agents”. They will certainly be investigated, as the word “Agent” has a very specific meaning in the diplomatic and foreign service vocabulary and very clear international laws and procedures for allowing a person to work under that title. The American tax preparers abroad are in clear violation of these requirements and should be reported to the relevant authorities in your country. They should also be told that they are being reported, as this will shake up the condor network without a doubt. The situation has only got this far, as people haven’t looked carefully at what can be done to dismantle this monstrosity, including those enforcing, aiding and abetting the IRS in its drive to extort and fleece as much as it can from American persons living outside of the U.S.
That’s very interesting, Adam. Thanks for your post.
One way to avoid the compliance condors completely is to do forms yourself. My financial situation was simpler than most however. I filled in the 1040s by hand printing in black ink. The 8854 as well. And had no qualms about only putting down what I wanted the IRS to see. Of course one has to be confident that one’s financial information is not being sent to the IRS through the banks and CRA. I did that by moving funds out of the big banks and into LCB FATCA exempt credit unions before July 1, 2014 and then becoming a non US person. It’s like the Jews not telling the complete truth to the Nazis to avoid the death camps, in this case confiscation and financial death.
@Adam: http://isaacbrocksociety.ca/2014/08/15/the-irs-agents-in-our-midst/
American Citizens Abroad proudly make a directory of all those agents who are “IRS listed”. I agree that those outside of the United States are operating illegally and outside of all international requirements and norms. They should and must be reported, as they are the IRS’s foot soldiers in other countries, doing the necessary compliance work and then charging the victims to do it and bring them into compliance, after having them shell out a few thousand to the illegal agent and then they assure that the IRS gets its cut by entering the person in the OVDP so that the bill can rack up into the 10’s of thousands, or more if that wouldn’t bankrupt the poor “law abiding” individual who went to them for “help” with their US taxes.
I will personally report as many on the below list in my country to my government. It must done. Thank you for this. Here is the list, country by country. Only report those showing that they are enrolled agents. Report these bastards!
http://www.acareturnpreparerdirectory.com/listing/guide/irs-listed
@Petros and Victor
Thanks, I see there are 548 “IRS listed” agents in Canada. Many right near me. Pretty scary.
@Adam @Victor
Of equal relevance to the legality of their “Overt IRS Operative Status Abroad” (which is related to the “legality of their presence”, is the fact that:
IRS Enrolled Agents get their license to practise from the IRS. In other words, it is an IRS designation and they are completely bound by IRS rules. Think Circular 230. For this reason they are/can be a very specific kind of problem.
Perhaps a repost of this old article is in order:
http://isaacbrocksociety.ca/2012/01/23/attorney-cpa-ea-or-registered-tax-preparer-your-choice-of-dance-partner-tax-compliance/
Just remember, if there wouldn’t be any tax preparers abroad able to understand and file the minefield of tax regulations in the IRS tax code, especially as it applies to US citizens abroad, US citizenship based taxation would come to a grinding halt. It is these very “agents” who make this nightmare a reality. Remove all of them from the international landscape, have their “IRS enrolled agent” status revoked, their clandestine US tax operation in a foreign country shut down and that would spell the end of citizenship based taxation, especially in its current form, with FATCA, FBARS, Form 8938, PFICs, etc. No individual would be able to comply without a condor agent. Remove them from the equation and the entire house of cards comes falling down. Together with a friend of mine heading up our city government’s financial services department, will report all of these people in our country and try to get them put out of business. Others should do the same wherever you are.
Jens, Victor and Adam are all the same person. Just FYI
“I have been a fully qualified US tax preparer” …
Yes, and I retorted in effect “what does that mean, ‘fully qualified'”.
The problem is that the USG has extorted compliance, or tolerance of force compliance, from almost the totality of foreign governments. At some point, given the millions of dual nationals abroad, this will lead to an international-law (private- or public-international law) confrontation. Reprisals, blocking statutes, renunciations of tax treaties and IGAs — if (and only if) the foreign financial services industry decides that they are net losers by FATCA.
The fact remains that the bulk of accidental and hostile Americans abroad are continuing as before. Many or most of those abroad are not known by their banks (assuming they have banks: we’ve met Americans abroad who are so poor that they are unbanked) to be American citizens. Few could afford the cost of compliance or the cost of renunciation.
And the USG — the bad boys of the Nicaragua case (where they walked out of the World Court) — scorn international law except where they can use it as a diplomatic argument.
Lots more to be said but I leave that to others. This isn’t an ordinary forum for me, and I am not allowed by my firm to solicit or accept clients from any forum. Even when (as has been described here) we see improper, and legally invalid, advice and solicitation by others.
@USCitizenAbroad;
re; “……. Many of them have no malicious intent. They genuinely believe that they are helping people.”
From my experience, I don’t get the impression that US tax law in Canada is one of the ‘helping professions’.
Beware of condors bearing gifts.
Or free seminars.
@Petros
Thank you for your recent principles and indeed this blog and all you have done and continue to do. I have not yet read all your principles but found lots of wisdom in those I have read. They give much to think about.
I have been thinking about one point in particular recently, that of it being those who have done nothing that have yet to be hurt by any of this. For those of us trapped as non dual USCs, that must change. Each of us will need to renew our passports at some point, at which time we are “caught”. Myself, I doubt I have even that long as statements on my passport renewal application of three years ago stated very clearly that all data required by the application will be shared with everyone. With the new passport revocation law, they already have me in their net, regardless what I do.
I and everyone similarly situated, are dead people walking. Our sentence has been handed out, to be ammended to even harsher, if possible. We await only the execution date.
Also, thanks for the info that as agents they are acting illegally. A weapon I now have against this. I will be looking into how to point this out in Japanese once I find who the agents in are.
Finally, a way to fight back! Thanks!!!
Doing nothing doesn’t come without its own set of risks. But given the choice between complying and quite possibly becoming financially insolvent versus not complying and maintaining a roof over one’s head, I would much rather consider the latter. The stress of such a decision and the resulting health problems associated with that stress should not be discounted.
Interesting…
I just checked the link provided above and found that there are 104 IRS listed tax preparers in Japan. I haven’t yet looked through all of them but on the first page most are Japanese, or at least have Japanese names. Any idea how being an agent for a foreign nation’s tax agency would affect them?
@The Animal
Agreed, but that means that at best I have only 6 and a half more years to be with my family.
In the end, the same destination is reached. Making oneself known to the IRS gets one there quicker, however.