reposted from MapleSandbox
by Lynne Swanson
#FATCA Americans overseas: Do NOT allow US tax pros scare u into entering US tax system. Many have no business entering!
— Keith REDMOND (@kredmond_global) January 19, 2017
Backing up the above tweet, Keith Redmond posted the following on Facebook:
Dear Members: I just had a lengthy, robust call with an individual who spent 25 years in upper management with the Department of Treasury IRS Criminal Investigation. He confirmed what I thought about the IRS. There is more bark than bite. He stated that there are many, many Americans overseas ho have no business in entering the US tax system and that Accidental Americans UNDER NO CIRCUMSTANCES should enter the US tax system. He confirmed that there are MANY US tax pros who prey on Americans overseas and Accidental Americans through fear and falsehoods. (e.g. you will get arrested, etc.). Any US tax professional who pushes and scaremongers these individuals to comply are not professionals and should not be used! He confirmed that the IRS is NOT going to go after you in your country of residence (most especially if you are a citizen of that country) and the IRS is NOT going to arrest you at the US border. The IRS does not have the resources to do this plus they go after those who have committed a crime not the average American overseas. He stated that Americans overseas need to not succumb to the fear. Excellent conversation and I am glad my views have been validated.
This reflects what I have long believed. Unfortunately, there is still the nightmare of FATCA to deal with. In some countries, anyone born in the US cannot even get bank accounts. We are treated as criminals just for banking where we live.
I asked Keith how his contact explains and justifies this.
Keith replied:
He can’t. He finds the whole situation abhorent…
“Could someone tell me what’s stopping computer-generated notices from being sent to non-US addresses?”
‘Nothing, as far as I know. Computer-generated notices could be sent, they could then be ignored.’
Once upon a time I thought it wasn’t a good idea to ignore IRS notices. It was the IRS’s job to ignore around 50 replies that I sent to around 50 of their notices. In 4 particular cases they acknowledged 4 of my letters but didn’t answer and later denied receiving my letters. Recently they’ve sent more akcnowledgements but still haven’t answered most of them.
However, the latest time my wife received one of their notices, and Skype let us call the IRS’s 800-phonenumber for free, an IRS employee advised my wife to ignore the notice.
“most USCs outside the US are not subject to withholding unless they hold US assets.”
OK, so I’m not most. In 2002 TD Waterhouse in Canada withheld both Canadian and US withholding from Canadian sourced interest paid into my account in Canada. Canadian withholding was correct because the interest was Canadian sourced and I live in Japan.
Interesting. That second reference (on the auditing of international returns) quickly led me to this (on the same site):
Perhaps the international audits mostly just end up increasing the “tax gap”.
“Another part is that they file liens and levies…”
How can they enforce “liens and levies” on non-US assets/income?
“No doubt, but it might be worth the price of stamps, envelopes and stationery for the low-hanging fruit alone.”
Very likely some people do respond and pay, whether from fear or the desire to remain compliant.
‘How can they enforce “liens and levies” on non-US assets/income?’
They file liens in the District of Columbia and do some kind of mailing of a notice. Intents to levy do not require filing but only require some kind of mailing of a notice. I’m not sure if the mailing has to be addressed correctly or bear sufficient postage, but it doesn’t have to be sent by a method that would be reasonably calculated to be delivered within 30 days and doesn’t have to be successfully delivered.
30 days after mailing, the victim loses their right to dispute, and the IRS has lots of power to seize and sell the victim’s property. If the US had a 5th amendment then the IRS wouldn’t have the power to deprive the victim of property without due process, but that’s just hypothetical because the US doesn’t have a 5th amendment.
It seems fairly obvious that to enforce the Internal Revenue Code the IRS would need some information about assets, income, etc. There would (it seems to me) need to be some context for enforcement.
@Norman
Are you saying that TD Waterhouse Canada responded to a levy/lien and paid withholding to the U.S.?
@BC_Doc
Thanks but I simply reposted it from Sandbox. It is Lynne who deserves the credit……..
“Could someone tell me what’s stopping computer-generated notices from being sent to non-US addresses?”
Well, a lack of addresses, for one thing. They don’t have mine.
Don’t bother the IRS, the IRS won’t bother you.
We’re heading into black helicopter territory here. Though of course we don’t have access to US government data, a few key comments upthread make a solid circumstantial case that non-resident US citizens (insert usual caveat about not having US assets etc.) and particularly dual citizens can go out about their business with no fear of interference from the IRS, unless they unwisely choose to identify themselves and enter the system.
In pragmatic terms, FATCA is primarily an access-to-banking-services problem, not a US tax problem.
“Are you saying that TD Waterhouse Canada responded to a levy/lien and paid withholding to the U.S.?”
No, there was no levy or lien at the time. In fact there wasn’t even yet an allegation of frivolousness, because I didn’t file the return until mid-2003.
TD Waterhouse Canada withheld US withholding (not seizure/levy) in addition to Canadian withholding, just as withholding, from Canadian sourced income in an account in Canada, in 2002.
“Well, a lack of addresses, for one thing.”
Actually if they send mail to an old address that you used to use, that is sufficient for most legal purposes. I’ve even just read a case where they sent mail to an old address when they already knew the new address, and the mail which was misaddressed and returned to sender was sufficient for some legal purposes.
http://www.freelawreporter.org/flr3d/f3d/235/235.F3d.886.99-2473.html
“…the IRS has lots of power to seize and sell the victim’s property.”
I’m baffled as to what exactly you mean. How could the IRS seize and sell my property here in the UK?
I said:
“How could the IRS seize and sell my property here in the UK?”
The answer is that they couldn’t. The UK has no collection agreement with the US. Only five countries do have collection agreements.
Let’s not make the IRS seem more of a threat than it actually is.
UK law wouldn’t stop the IRS. US law doesn’t stop them either.
Neither Mexican nor US law stopped US government employees. Neither Cuban nor US law stops US government employees; Congress stopped Obama from closing Guantanamo but Obama and a US Supreme Court judge defended the use of torture.
LOL. I’ll keep my eyes peeled for armed IRS agents, and shoot them with my granddaughter’s water pistol. 🙂
Black helicopters!
🙂
@iota
“The answer is that they couldn’t. The UK has no collection agreement with the US. Only five countries do have collection agreements.”
For countries without collection agreements: Are there any cases of the IRS freezing / seizing foreign bank accounts using FATCA as leverage against the foreign bank?
@Fred2 – Not that I’ve seen reported, but it might not get reported because the collecting would presumably be carried out by the tax authority of the country of residence, and might never need to go to court.
The five countries are Canada, Denmark, France, Netherlands, and Sweden. As I understand it from IBS posts, Canada won’t enforce collection of US taxes against a Canadian citizen. I don’t know about the other countries.
Sorry, I realized after posting that I misread your question.
As far as I know, only in Switzerland have customer accounts been frozen – not as a result of FATCA but as part of the fallout from the Swiss banking todo-ment.
Model 1 IGAs don’t allow for freezing of customer accounts. Not sure about Model 2 IGAs.
@ iota
“How could the IRS seize and sell my property here in the UK?”
@ Norman Diamond
“UK law wouldn’t stop the IRS. US law doesn’t stop them either.”
It baffles me that Theresa May wants to see Britain no longer submit to the jurisdiction of European laws, regulations and court rulings yet allows American extraterritorial fiscal/financial laws to be enforced over Britain.
Blog post on the subject from Virginia la Torre Jeker:
http://blogs.angloinfo.com/us-tax/2013/04/01/how-can-the-irs-enforce-tax-collection-overseas/
@Duality – “It baffles me that Theresa May wants to see Britain no longer submit to the jurisdiction of European laws, regulations and court rulings yet allows American extraterritorial fiscal/financial laws to be enforced over Britain.”
American extraterritorial fiscal/financial laws aren’t enforced in Britain, to the best of my knowledge.
@iota
“American extraterritorial fiscal/financial laws aren’t enforced in Britain, to the best of my knowledge.”
Fatca is enforced by most financial institutions across Britain; it is the law.
The citizenship-based taxation regime requires all so-called US persons (who are also British citizens) to submit tax returns… not really enforcement but a legal requirement. How (if at all) it is enforced is another matter.