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.
Excellent analysis. I especially like your bear analogy.
Interesting commentary over at The Economist:
I am not sure if The Economist would actually take notice, but perhaps a letter to the editor of The Economist outlining the facts of FATCA, Citizenship Based Taxation, and how the US Jihad is ruining the lives of otherwise law abiding citizens might be in order. Over the past year I have read some very well written letters from IBS contributors. Perhaps one or more of our IBS members can educate The Economist as to the reality of the situation.
This tax attorney refers to the NTA as “egocentric”:
In addition to the so-called IRS “abuses” there are still more serious IRS abuses that involve, for example, counter-productive tax liens and willful misapplication of the authority of the IRS to levy income.
Where is the required Congressional Oversight? There have not been any comprehensive hearings dealing with IRS misconduct since the Senate Finance Committee did that in 2007.
The National Taxpayer Advocate goes on annual egocentric trips by writing 700 page reports to Congress instead of doing her job as IRS ombudsman.
The palpable failure of Congressional oversight of the IRS and the NTA egocentric focus is the reason for past and future IRS mismanagement.
Alvin Brown & Associates, PLLC
Pingback: What can you buy from the IRS for $50,000? | The Freedom Watch