Updated on September 19 with an interesting comment by JC to the Robert Wood article:
Which IRS #Offshore Amnesty Program Is Right For You? http://t.co/Iktw9LTdLI – U can't choose all of them, but you could choose none of them
— U.S. Citizen Abroad (@USCitizenAbroad) September 18, 2014
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.”
This is the spirit in which many accidental taxpayers living abroad view all of the offered programs. Just drop 10-20 thousand, if your lucky, and buy your way out. Others can’t afford this and are trapped. They have no choice but go underground. (Maybe buy a passport without US place of birth, bank with the BRICS, lie…anything to shed their US-ness. This is called survival. To those deemed American there is nothing they are more ashamed of and try to hide.) In essence the result of all this nonsense is US residents can never leave the US for an extended period unless they are terribly wealthy and have fancy accountants that can merge their two disparate tax obligations. Everyone else can never come back to live on US soil. Those that are forced underground, the less fortunate as usual, can never visit family or friends again, can’t holiday in the US…Hell, they can’t even fly over the US least their plane needs to touch down. The amount of ill will this is causing not only to those living abroad but to their family and friends on US soil is immeasurable. The Democrats just might be handing the election to Rand Paul next go-around. They are still stuck in thinking this is about curbing tax evasion and actually support CBT. I’d wager not one has read the recent Democrats Abroad FATCA survey, from their own party! (https://www.democratsabroad.org/group/switzerland/democrats-abroad-releases-fatca-research-report) If there are 7.5 million with US branding (and that number is low as it does not include those who do not self identify as US folks) and you couple that with their affected family/friends in the US the number expands exponentially. This could become a serious single issue voter block. It would behoove the Democrats to wake up.
Seeking amnesty precludes you are guilty of a criminal offence and are seeking forgiveness. How is a child who left the US after birth to non-US parents and never returned, a child born abroad and never returned, an expired green card holder guilty of anything? If you have completely absurd laws such a citizen based taxation you can not assume sane people intuitively know these absurdities exist. How many living in the US know they are the only country that does this, even know what CBT is? I’d wager not many as it is counterintuitive. Taxes are for services, if you don’t get any what are you paying for? The only argument put forth from the usual commenters with IQs of 3 is the black-op helicopter rescue if you decide to holiday in Tora Bora. They actually believe it is true! Aside from that there is nothing else put forth because there is no possible way to defend CBT.
The next problem is the determination of willfulness. So you have a person whose mandate is to collect money, does not have your best interest at heart, subjectively deciding that you willfully or not understood something that makes no sense to any sane person in the universe. Great…that’s right up there with Russian Roulette!
A second comment referenced in the following tweet includes:
Why neither #OVDP nor #Streamlined will lead to freedom for #Americansabroad – It's all stick and no carrort! http://t.co/AYcXLmyVNr
— U.S. Citizen Abroad (@USCitizenAbroad) September 19, 2014
While pointing out offshore amnesty programs, the article does not mention that once one goes through “amnesty” that one’s relative freedom is determined by where one is tax resident. If in the U.S. then freedom. If resident outside the U.S. then not relatively free which is certainly not a “carrot” to go through these programs.
I reference: “Dear Mr. President, Why I’m Leaving America” where, Marilyn, a tax compliant dual US Canadian citizen tax resident in Canada speaks about her contemplation of giving up U.S. citizenship:
“We are contemplating this “not to avoid paying U.S. taxes but because we strongly object to a system that is blatantly discriminatory and unfair to law-abiding Americans living outside the country. In addition, it has become too expensive, too difficult, and frankly, too frightening, to try to comply with all of the tax filing requirements that now apply to citizens living abroad.”
Any US persons tax resident abroad should visit the Issac Brock Society webpage: http://www.isaacbrocksociety.ca/
I note with great interest the part of Marilyn’s comment that describes the “fear factor involved in U.S. tax compliance! Another idea implied by the comment is this:
Americans abroad will not solve their problems by coming into U.S. tax compliance. By coming into U.S. tax compliance they will enter the absolutely impossible world of “living in U.S. tax compliance”. As the nation of Eritrea has demonstrated it is possible to tax your citizens abroad in a simple manner. Perhaps the U.S. could emulate the kinder and gentler nation of Eritrea which levies a flat 2% tax on its citizens abroad.
With regard to what the IRS will do once they get the data, I would expect:
1. IRS Letters to all of the banks that the US Person has disclosed on his/her tax return and/or FBAR but the bank has not yet provided the US Person’s bank info. This smokes out banks that have not yet provided data on a person the IRS knows is a US Person;
2. IRS Letters to US Persons identified by the banks but where such person has not disclosed to the IRS
These letters will shake/scare a lot of people into sending money to the IRS who live overseas.
3. Targets for enforcement – first priority will be Homelanders with foreign bank accounts because they live in the US and have assets in the US; second priority will be US Persons living abroad but with assets in the US because the IRS has something to grab in the US; third priority will be US Persons living outside the US with no assets in the US but this enforcement will have to be carefully targeted given the significant costs to try to get enforcement (however, actions still available to the IRS would be stops at the border/questioning/denial of US passport and possibly denial of US entry).
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