UPDATE November 18 2015:
Poll Added at end of Post – Please Vote!
USCitizenAbroad, responding on Brock to a comment from @Andy05, makes the very provocative argument that our friendly cross-border tax professionals, who live with us in our own communities, are really “‘bounty hunters’ who receive a “cut” for turning their victims over to the IRS.”
These are strong words.
Wikipedia teaches that a “bounty hunter” is a person who captures fugitives for a monetary reward (bounty) and is sometimes called in the United States a “fugitive recovery agent”.
Is USCitizenAbroad correct? Here is USCitizenAbroad’s argument:
A thought provoking comment indeed. Towards the end you write:
Of course many of those cases — like Sidney Jaffe — involve bounty hunters. And if the USG privatises tax collection we might see more of that, perhaps combined with ne exeat republica writs like those served on the Barretts.
Actually, the USG has privatised tax collection. Person after person has said that they have called the IRS and the IRS response has been: “you must consult a tax professional for the answer to that question”.
What this means is that the the “tax professionals” both (1) MAKE THE LAW and (2) ENFORCE THE LAW.
Some thoughts on each.
(1) Tax Professionals MAKE THE LAW
We can see the attempt of some tax professionals to MAKE THE LAW on the issue of the proper way to interpret the Exit Tax provisions of S. 877A of the Internal Revenue Code. I am reminded of the following post that appeared earlier this year – 26 U.S. Code §877A – The “Exit Tax” rules: Do you see them as applying “prospectively” or “retrospectively” or both? :
This is an excellent example. The post discusses two groups of tax and legal professionals with conflicting views of whether the U.S. Exit Tax rules would apply to someone who relinquished U.S. citizenship prior to 2004. The consequences are staggering. One group argues that the rules are retroactive. The other group argues that the rules are prospective. That said: if enough tax professionals treat the rules as being retroactive, the rules will (in application) become retroactive. This is how tax professionals MAKE THE LAW. (Significantly this means that whether one pays an “Exit Tax” will NOT depend on what the statute means, but on how your choice of tax professional interprets (or chooses to interpret) the law).
(2) Tax Professionals ENFORCE THE LAW
This is quite obvious. People go to a tax professional for assistance with taxes and compliance. After having interpreted the law, the tax professional will then enforce the law on the client. In fact, the tax professional is likely to ENFORCE THE LAW in a manner that is least advantageous to the taxpayer and most advantageous to the IRS. This is the penalty (or “tax/form premium” that one pays for using the “tax professional”). Remember that all tax professionals are dependent on the IRS for their livelihood. Although you pay the tax professional, the the tax professional is working for the administration of the Internal Revenue Code (i.e. the IRS).
Tax professionals are in private business. They are NOT government employees.
So, what is actually happening here is this:
The combination of an Internal Revenue Code that is incomprehensible coupled with an IRS that is overworked (and probably doesn’t understand the rules of international tax any better than you do) has created a system where:
1. The IRS has downloaded the interpretation/creation and enforcement of U.S. tax law to PRIVATE “tax professionals”; who
2. “Take a cut” (in the form of their fees); for
3 Turning the person over to the IRS (which collects taxes).
Sounds to me as though the IRS has ALREADY privatised enforcement of the U.S. tax system and that the “tax professionals” are “bounty hunters” who receive a “cut” for turning their victims over to the IRS.
It’s about “People”, “Forms” and “Form People” …
Looks to me like the IRS is already using “Bounty Hunters”, or am I missing something here?
I got it wrong, I remember that there was CA and CPA. Since I have seen the new ads for CPA on Canadian television, I thought that was the original Canadian designation. Do not use an accountant with a US CPA. They are loyal to USA. I never needed a CA, my taxes never need any final adjustment from what I have filed.
“Tricia Moon says
November 18, 2015 at 5:00 pm
1. For purposes of this agreement and any annexes thereto (“Agreement”), the following terms shall have the meanings set forth below:
ee) The term “U.S. Person” means (1) a U.S. citizen or resident individual,
This subparagraph 1(ee) shall be interpreted in accordance with the U.S. Internal Revenue Code.”
The original FATCA proposal used US person for tax purposes where US ex-citizen who have not done exit taxes ( John Richardson “USA tax citizens”) were exposed.
“19. Does the agreement require Canadian financial institutions to report to the CRA on any individuals who relinquished their U.S. citizenship?
No. Canadian financial institutions do not have to report on any individuals who have relinquished their U.S. citizenship and are not residents of the U.S.
Financial institutions may ask individuals who have relinquished their U.S. citizenship for documentation to this effect. ”
But the current FATCA IGA agreements excludes them. Just do not cross the bordewr
I never needed a CA either — until all of US tax horror entered my life. My (CA) accountant, near retirement, has her own small business and continues to help all the clients she already has but will no longer take any new clients with US taxes to be dealt with. I don’t blame her.
It would seem that members of the US tax compliance industry are ‘de facto’ bounty hunters for the IRS.