Well, that depends very much on who you are. For the same amount of protection money, you will get very different results.
Say you are a multinational corporation managed & controlled entirely in the U.S., with huge amounts of intellectual property developed by U.S. employees. You can buy an Advance Pricing Agreement: in exchange for the “user fee” specified in Rev. Proc. 2006-9 § 4.12.3, the IRS will promise not to fight back when you pretend that a tiny man in a Bermuda mailbox owns that intellectual property & makes a certain percentage of your U.S. profit. If your gross income is under $200 million, you can even get a 55% discount on the fee! And the Obama administration is adding IRS staff to ensure the rapid processing of your application to pay less U.S. tax.
Now say you are a Canadian who was born in the U.S. and you’ve managed to save up six figures for your retirement after a long & successful career spent entirely in Canada, paying Canadian taxes. In that case, you can buy a ticket into the Offshore Voluntary Disclosure Program: in exchange for about a fifth of your life’s savings (even if you don’t owe any U.S. tax) and two years of your time spent writing letters back and forth, the IRS will promise not to have the Department of Justice file charges against you for the “crime” of not filing Foreign Bank Account Reports with the Financial Crimes Enforcement Network. (Unless the IRS had their fingers crossed behind their back.)
While the IRS is adding headcount to rubber-stamp APAs more quickly, apparently they can’t find anyone to make a statutorily-required response to the National Taxpayer Advocate’s criticisms of draconian fines levied against Americans abroad. On the other hand, this is nothing more than rational behaviour by the IRS. As badger mentioned in a recent comment:
why the US is hammering individuals in Canada and elsewhere – because they can, rather than pursuing US corporations with more means to pushback or find loopholes.
Companies with expensive international law firms on retainer have an irritating tendency to take their fights to Tax Court. Much better to go after soft & clawless prey who will roll over and beg for mercy because they’ve been psychologically conditioned with a visceral reflex against doing anything as “drastic” as renouncing citizenship to protect themselves & their families.
