Cross posted from USxCanada InfoShop
Uncertainty has two poles. One, external conditions may be unclear or unstable. Two, an affected person may be unable or unwilling to take action. Factors from the two poles may interplay. A high level of uncertainty tends to parallel a high level of risk.
Expatriate Americans start from a situation where much is confused. Why can’t life be as it has been, with most Americans de facto enjoying the same status as that of practically all other nonresident citizens throughout the world — taxed only in place of residence?
Questions proliferate. Who is an American? Can problems be solved by ceasing to be American? What is required to become compliant with US tax expectations? Is it possible to become compliant without paying extra taxes and/or exorbitant penalties? Is there any hope for an individual to complete in a correct fashion the complex, unfamiliar, multiple paperwork that needs to stretch back over a series of years? If not, will the individual face paying thousands of dollars to uncertainly qualified “professionals” who can offer no guarantees? Will the IRS launch an ongoing regime of torturous scrutiny?
Add to this set of circumstances unstable and inscrutable IRS policies. In January 2012 unspecified further details are supposed to be forthcoming within a month. Recent history on the Canadian front does not promise arrival of clarity. Ambassador Jacobson offered up a vague reassurance on 18 October 2011. The ensuing 7 December 2011 restatement of existing IRS policy made his words look like mere gesture.
To cite one prominent example, application of narrow technical “reasonable cause” criteria to failure to file FBAR reporting offers no certainty. The return of “voluntary disclosure” on 9 January 2012 offers only the certainty of being penalized like a criminal, though not being prosecuted in court.
The U.S. Congress and the IRS have generated huge anxieties by enacting new tax and reporting legislation and by shifting enforcement practice for existing requirements. The first decade of the 21st century has not been kind to the United States, and the United States has compounded its difficulties by struggling to maintain an unrealistic position in the world.
A lot of that lack of realism traces back to unfamiliarity with the rest of the world — except perhaps through imposition of military force or through “travel” cocooned in cruise-ship compound or guided-tour enclave.
The United States is projecting its own massive uncertainties onto the rest of the world. The primary motivation seems to be crass expectation of easy “found money” among extra-territorial citizens.
By imposing perpetual uncertainty on its own offshore people, and leaving them to respond in fear, the United States will sever much of the only real connection it has with other countries.
Amid the confusions, one thing does seem certain: the United States is pursuing its own isolation with a vengeance. (23 Jan 2012)