Liberty and justice for all United States persons abroad

The Isaac Brock Society

Tag Archives: Streamlined

In four years, about 1% of diaspora non-filers chose to come into compliance through Streamlined: IRS

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On Thursday, the IRS released their “Dirty Dozen Tax Scams” for 2017, among which they listed “unreported offshore accounts”. They go into more detail in IR-2017-35:

Since the first Offshore Voluntary Disclosure Program (OVDP) opened in 2009, there have been more than 55,800 disclosures and the IRS has collected more than $9.9 billion from this initiative alone.

In addition, another 48,000 taxpayers have made use of separate streamlined procedures to correct prior non-willful omissions and meet their federal tax obligations, paying approximately $450 million in taxes, interest and penalties. The IRS conducted thousands of offshore-related civil audits that resulted in the payment of tens of millions of dollars in unpaid taxes. The IRS has also pursued criminal charges leading to billions of dollars in criminal fines and restitutions.

Works of the U.S. government are not objects of copyright, which is a boon for stenographers who mislabel themselves as “journalists”: they can just cut-and-paste the U.S. government’s viewpoint on the issues into their magazines without thinking about it, or attempting any analysis.

Anyway, US$450 million is an average of about US$9,400 per Streamlined participant. Not as big as the $13,000 per head they extracted from minnows with two-digit annual tax deficiencies under the 2009 OVDP, but still a sizeable sum from the perspective of the individual.

I’m sure there’s some poor deluded souls in the IRS and the Joint Committee on Taxation staff who are salivating at the thought of getting nine grand per head out of the rest of the millions of diaspora non-filers too — that might help them turn those mythical FATCA revenue estimates into reality. If that’s their aim, however, then forty-eight thousand over four years is a rather slow start.

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IRS & State encourage ESL teachers abroad to join Streamlined?

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At least that’s my best guess of what they’re trying to do, based on the rather strange contents of (and omissions from) their latest guidance to U.S. Persons abroad. Patrick Martin of Procopio, Cory, Hargreaves & Savitch LLP reports on recent State Department efforts to communicate with the diaspora about their IRS obligations. State sent out an e-mail blast, and posted the same message on the websites of various U.S. consulates and embassies, for example Tokyo, Bern, and Athens. The guidance was prepared by the IRS rather than State; State is merely the messenger.

Here’s the IRS’ complete answer to the question “What Forms May I Need” (I eliminated references to instructions and Spanish or “EZ” versions of forms):

1040, U.S Individual Income Tax Return
1116, Foreign Tax Credit
2350, Application for Extension of Time to File U.S. Income Tax Return (for U.S. citizens and residents abroad)
2555, Foreign Earned Income Exclusion
4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return
8802, Application for United States Residency Certificate
8938, Statement of Specified Foreign Financial Assets
14653, Certification by U.S. Person Residing Outside of the United States for Streamlined Foreign Offshore Procedures

Form 8802 is only useful to you as an individual if you have a credible case for tax non-residence in the country where you are present, and a claim that such non-residence should exempt you from local taxation on some of your income which the U.S. also does not tax under its own system.

The mention of Form 8938 notwithstanding, this e-mail doesn’t appear to be aimed at accidental Americans or long-term emigrants who conduct all their finances locally — the largest category of non-resident non-filers who have assets which could be subject to fines and actually might owe U.S. taxes in unusual years (e.g. on the sale of a house). None of us have any claim to U.S. residency under a tax treaty. If the IRS were aiming at us, it would have been far more relevant to mention Forms 3520 and 8621 than Form 8802.

Nor is this e-mail likely to be aimed at short-term corporate assignees — who might be able to benefit from Form 8802, but in general have Big 4 assistance as part of their overseas assignment package and so are far likelier than average to be compliant with their U.S. tax obligations (thus artificially driving up the average income of FEIE users). Rather, the IRS seems to be trying to contact people to whom Form 8802 is relevant and who currently have a low rate of compliance. My guess is that means students, teachers, and researchers, in particular young graduates teaching ESL classes.

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Coming into U.S. tax compliance – To “amnesty” or “not to amnesty” – that is the question

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Updated on September 19 with an interesting comment by JC to the Robert Wood article:

 

The above tweet references an interesting article by Robert Wood. Many people consider the question of which vacation destination to go to. As any “Homelander” will tell you, all Americans abroad are probably  “offshore tax cheats” who simply “don’t pay their fair share”.

Therefore, it’s reasonable that while the whole wide world (less Americans abroad) wonder about their next vacation destination, Americans abroad worry about:

“Which IRS Offshore Amnesty Program Is Right For You?”

It’s 11:00 p.m. – Have you worried about your amnesty program today?

Readers of this post are encouraged to post some comments on Mr. Wood’s blog. I don’t believe that he differentiated between Homeland tax cheats using offshore accounts to evade taxes and Americans abroad who need offshore accounts to pay their bills.

One commenter filled the void left by the failure to acknowledge Americans abroad by writing:

“Amnesty is often used to express “freedom” and the time when prisoners can go free.”

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Civil Forfeiture: The new #OVDP confiscation program for those in U.S. borders

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Note: Further update September 15, 2014 introducing the idea of “Third Party Confiscation”. Updated September 12, 2014 – Reader comments of “indirect confiscation added” – if you can think of more, please add them to the comments and I will add them to the post. Thanks: NotAmused and Mark Twain.

Direct Confiscation – Let me count the ways

The above tweet references an article which appeared at CBC.ca and was written by Neil MacDonald who is the Senior CBC Correspondent in Washington. The article is about the increasing U.S. use of “civil forfeiture” to confiscate people’s assets. (There have been previous Isaac Brock posts on the use of civil forfeiture here, here and here.)

To put it simply:

Civil forfeiture is a process where the government simply comes in and directly takes your property and money. As the article in the above tweet notes, cash is particularly susceptible to arbitrary confiscation.

But, what about the confiscation of cash according to U.S. law? For example, what about the confiscation of cash pursuant to Title 31? This issue was recently explored as comments to a blog post about the backlog of renunciations in Toronto.

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