Lynne Swanson does it again. Another fine piece. This time at the U.K Tax News with a global audience.
She frames the story by asking the key question, “What If Other Countries Adopted American Citizenship and Tax Laws?
It is actually a frightening idea, however in this world of copy-cat taxation policies with OECD’s GATCA arising out of the U.S. unilateral global imposition of FATCA, and the U.K ‘Sons of FATCA‘, it is question that needs more attention. And, she got it!
As I understand it, the article was also published as a letter to the editor in Tax News International (subscription only), the most widely read tax publication anywhere, with the largest audience of compliance experts including Treasury and the IRS.
The questions she asks, is also a question posed by the late Andy Sundberg who penned a piece on January 6th that did NOT get as wide distribution as Lynne’s article did. It paints the picture of a dystopian nightmare for a person laboring under the demands from multiple countries all claiming their citizenship taxation rights. It was posted in February of 2012, the early days of IBS existence. What is the Systemic Risk of Citizenship taxation to the World’s Economy?
Later that year, there was Arrow’s excellent article written in June of 2012. The accidental Kenyan: What would happen if the African nation copied U.S. tax policy? by Don Whiteley. He focused on the impacts on Obama, and it got good play in Vancouver and Canada.
And now Blaze has completed the trilogy for even a wider audience, and answers the key “What if” in a manner that anyone should be able to understand, unless, apparently, you are a U.S. Congressman.
With this piece you are now armed with 3 good articles to send to family and friends that “Don’t get it!”
I just admired his attempts. US CBT neither helped nor harmed Dash INSIDE the USA but don’t you think by now he understands that US CBT is harming those who live OUTSIDE the USA? Again, if Canada had inflicted CBT on him after moving to the USA he would have been harmed by that. (I would have been too come to think of it.) Thank goodness Canada is RBT not CBT. I never thought Dash might be part of the compliance industry because he’s been around Brock for awhile and well I just never got that impression. He had a thought about CBT and he attempted to defend it that’s all. We made a very good case against CBT in the process so we ended up honing our axes — the better to chop off the head of the FATCA monster. 🙂
I think I sort of said what you just said but I didn’t say it as well. I was typing while you were posting. 🙂
I have a feeling we will never know whether Dash gets how CBT is fine inside USA (in other words operating like RBT) but destructive outside USA, because by now, he has likely dined and dashed.
That makes us sound like a tasty snack. No, make that a testy snack. 😉
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What is the thinking behind a “pingback”?
@MarkTwain… It means that a link to your post has been posted on another blog. So, it is just letting you know.
The ping backs here seem to me to be more about bringing back ancient history.
Although these comments do not represent legal advice, I think many of the readers will find them insightful:
The string of comments can be found at
See the comments of Jack Townsend in the federal taxcrimes.blogspot.com on this important point:
Jack – The Statute of Limitations for tax purposes states that the SOL is tolled for the time spent outside the US OR while being a fugitive from justice. Does this mean that US citizens living in foreign countries have an unlimited statute of limitations (both for tax and FBAR) even if they are NOT fleeing from justice. Or are they exceptions to the tolling provision while being outside the US. Unlimited SOL is a very scary situation.
Jack Townsend Mod American abroad • 3 days ago
The criminal statute of limitations provision, 26 USC 6531 (flush language), says
The time during which the person committing any of the various offenses arising under the internal revenue laws is outside the United States or is a fugitive from justice within the meaning of section 3290 of Title 18 of the United States Code, shall not be taken as any part of the time limited by law for the commencement of such proceedings.
So, the answer to your question is that mere absence from the U.S. will suspend the criminal statute of limitations. But keep in mind that this is the criminal statute of limitations. Most persons who are not fugitives and who spend significant amount of time outside the U.S. are not at material risk of criminal prosecution. And, of course, for conduct that could be subject to criminal prosecution, the civil statute is probably open under Section 6501(c)(1).
impuestosypatrick responded: February 23, 2014 at 5:39 pm
Jack Townsend, I think this is an important point to highlight for the millions of U.S. citizens who reside outside the U.S. (and other possible millions of lawful permanent residents who spend a large part of their time outside the U.S.).
Can you please focus on your comment of why you say –
“Most persons who are not fugitives and who spend significant amount of
time outside the U.S. are not at material risk of criminal prosecution.”
This is important for the several million of U.S. citizens (many who I have referred to as Accidental Americans – see,Accidental Americans” – Rush to Renounce U.S. Citizenship to Avoid the Ugly U.S. Tax Web” International Tax Journal,CCH Wolters Kluwer, Nov./Dec. 2012, Vol. 38 Issue 6, p45) and LPRs.
How might your statement be modified, if a U.S. citizen living most of their lives outside the U.S., knew and understood they had a tax filing obligation (and presumably taxes owing in a particular case) and still did not file U.S. tax returns?
impuestosypatrick responded: February 23, 2014 at 6:58 pm
Jack Townsend provided a good explanation and made some good points –
Jack Townsend Mod Patrick W. Martin • 39 minutes ago
To answer your question statistically, the IRS has limited investigation resources, DOJ Tax has limited prosecution resources, the courts have limited trial and related proceeding resources, the probation office has limited resources and the prison system has limited resources. All of that means that very few tax crimes get prosecuted. So, just statistically — driven by limited resources — very few tax crimes generally get prosecuted and that applies to all classes of taxpayers, including those living abroad.
Now, that is a systemic overview. Each taxpayer’s situation needs to be evaluated to see if there are some unique features that would motivate the components of the prosecution system to devote limited resources to that taxpayer.
There will undoubtedly be some of the taxpayers in the profile you present that may be prosecuted. But it will not be near most of the taxpayers in that profile. Indeed, I repeat that most of those taxpayers are not at risk of criminal prosecution.
Some are at risk. And, some may even not be at identifiable risk based on more egregious factors than others in the group (i.e., they are picked up by chance or the luck of the draw).
That is the way the criminal tax prosecution system works. Those prosecuted are in many ways samples from the larger set with those not picked / prosecuted representing most of the set.
From the taxpayer’s perspective, the question is whether the taxpayer is willing to take that risk, based upon the low percentage of prosecutions and the taxpayer’s own unique profile. If the taxpayer is not willing to take the risk, the taxpayer should join the program. At a minimum, even if the taxpayer does not disturb the past, the taxpayer must be squeaky clean for the future — meaning that all FBARs must be filed and all returns should be filed and filed correctly.
Your analysis of the GAO report on the IRS OVDP was excellent, and I brought it to Jack Townsend attention. I was glad that he pulled it out of comments for a full posting. Thanks for drawing attention to the further comments, as I have not been back to it recently.
I really can relate to your analysis, as I have published my experiences inside the OVDP here…
I have have posted your analysis on several blog threads here on Eric’s post on the GAO report and here on my OVDP Drudgery for Minnows advice, as I think others really NEED to read it.
Thanks again, for doing the hard yards of pulling the analysis together…
I have also sent it off to a few Journalist who have shown some interest.
You might consider contacting Liam at WSJ who is doing an impact story along these lines…
liam.pleven at wsj dot com
2009 OVDP Statistics: The United States Knows Where Offshore Tax Evaders Live And Bank!