reblogged from Allison Christians’ Tax, Society & Culture with permission
"The Offshore Tax Enforcement Dragnet" – how adversely affects immigrants, #Americansabroad #AccidentalAmericans https://t.co/7rqEzYYpqy
— Patricia Moon (@nobledreamer16) April 1, 2017
Shu Yi Oei (Tulane) has posted an important new paper on U.S. offshore tax enforcement, of interest. Here is the abstract:
Taxpayers who hide assets abroad to evade taxes present a serious enforcement challenge for the United States. In response, the U.S. has developed a family of initiatives that punish and rehabilitate non-compliant taxpayers, raise revenues, and require widespread reporting of offshore financial information. Yet, while these initiatives help catch willful tax cheats, they have also adversely affected immigrants, Americans living abroad, and “accidental Americans.”
This Article critiques the United States’ offshore tax enforcement initiatives, arguing that the U.S. has prioritized two problematic policy commitments in designing enforcement at the expense of competing considerations: First, the U.S. has attempted to equalize enforcement against taxpayers with solely domestic holdings and those with harder-to-detect offshore holdings by imposing harsher reporting requirements and penalties on the latter. But in doing so, it has failed to appropriately distinguish among differently situated taxpayers with offshore holdings. Second, the U.S. has focused on revenue and enforcement, ignoring the significant compliance costs and social harms that its initiatives create.
The confluence of these two policy commitments risks creating high costs for the wrong taxpayers. While offshore tax enforcement may have been designed to catch high¬-net-worth tax cheats, it may instead impose disproportionate burdens on those immigrants and expatriates who have less ability to complain, comply, or “substitute out” of the law’s grasp. This Article argues that the U.S. should redesign its enforcement approach to minimize these risks and suggests reforms to this end.
The paper provides a thorough review of the panoply of offshore enforcement programs and mechanisms and documents the harms of their dragnet approach, especially on the most vulnerable and least likely targets. A significant contribution to the literature.
Italics went haywire. Never mind.
re; “substitute out” of the law’s grasp” – I assume the author refers to renouncing/relinquishing – which is not about tax evasion or tax avoidance – it is our internationally recognized human right to choose to award our allegiance where we will – choose our citizenship, and choose our home country – and dump the arrogant US hegemon who extraterritorially claims control over our persons, our personal and financial data, certain of our children and our non-US created and sited assets for the rest of our lives and beyond – as well as interjecting and interpolating itself between us and our local government, and into our relationships with non-US family, work and others.
How can that be so hard to understand and to write about fairly and with objectivity?
@maz57
It seems that there must be some limit to the power of an Executive Order.
Could CBT be stopped without involving the Congress? Isn’t an Amendment to the Constitution above a statute?
I don’t understand what the limit on the power of an Executive Order is………
“They want the information on everyone because they don’t know who they might be able to successfully take to court and penalize.”
They don’t have to take anyone to court to penalize the person. In order to get to court, a person has to respond to notices in such a way that each response reaches the IRS (or Tax Court) within 30 days of when the IRS mailed each notice. If the person doesn’t get their reply there in time, the person doesn’t even get a court case — even when the IRS mailed the notice by means reasonably calculated to take longer than 30 days to reach the person, and when the notice did actually take longer than 30 days.
This violates the 5th Amendment. The 16th allows collection of taxes without due process but not penalties. But so what? Ability to read the English language doesn’t make a court obey the 5th Amendment.
‘re; “substitute out” of the law’s grasp” – I assume the author refers to renouncing/relinquishing – which is not about tax evasion or tax avoidance’
Besides which, if a minnow has investments in the US, our US tax[*] goes up after renouncing, not down.
[* That’s the legal amount of US tax, not the amount embezzed by IRS employees.]
“Isn’t an Amendment to the Constitution above a statute?”
The Constitution says it is, some statutes say it isn’t, court rulings depend on which side of the bed the judge got up from that day, and experts get to pick judges where they know which side of the bed each judge gets up from most days.
@Patricia
Sorry, I can’t answer your questions. The US isn’t my country, at least not anymore. However, legal or not, if Trump issued an executive order eliminating CBT, I’d be happy to follow his lead.
Wikipedia (https://en.m.wikipedia.org/wiki/Executive_order_(United_States) says:
Could an Executive Order perhaps make non-US-resident USCs no longer US-tax-resident?
Seems unlikely Trump (or any President) would ever be interested in signing such an order though.
“Could an Executive Order perhaps make non-US-resident USCs no longer US-tax-resident?”
Short answer is No. An Executive order cannot be used to change the law. However it can be used to change its enforcement, interpretation and policy by directing Departmental behaviour via regulation.
The effect could be exactly the same, but only for the duration of the order… as we are seeing as Trump rolls back Obama era EOs.