Cross-posted from Perspectives at USxCanada InfoShop.
From a broadscale, abstract perspective, the voluntary and other disclosure programs of the IRS after 2009 bear resemblance to the post 9/11 decade of tottering toward ever more byzantine and restrictive financial reporting to U.S. authorities by unfortunate “U.S. persons” who merely reside “overseas.”
The Decade
At the level of decade, the multiple period provisions of Form 8854 Initial and Annual Expatriation Statement bear witness to a wish to tighten the screws ever more, with very different regimes operating pre-2004, 2004-2008, post-2008. One other indicator, from a different direction, is the institution in mid-2010 of a punitive $450 fee for renunciation of U.S. citizenship, in face of a skyrocketing rate of ship-of-state jumpers.
Voluntary Disclosure
The voluntary disclosure programs of 2009 to the present manifest steadily upward penalty increases, to a current 27.5 percent.
According to sketchy IRS reporting as of early 2012, the 2009 program generated $3.4 billion with 95 percent closure, and the 2011 program generated another $1 billion. [1]
More IRS reporting in mid-2012 shows acquisition of another $0.6 billion and 1500 further disclosures (compared to 33,000 in the first two) under the new third open-ended program. [2] (This 1500 quantifies the “hundreds” who were said to be eagerly coming forward after September 2011. [1])
This looks like a clear case of diminishing returns.
All Extraterritorials
Yet another enforcement prong, in operation for about a year, deserves scrutiny. In December 2011 the IRS restated existing procedures for persons “residing outside the U.S.” under the guise of advertising policy relaxation. [3] The IRS then followed up in mid-2012 with an announcement of specific guidelines to come. [4] At the end of August 2012 the specifications [5] made it apparent that potential participants would gain little assurance by “coming in from the cold,” could well expose themselves to unwarranted harsh scrutiny, and would certainly subject themselves to severe compliance costs in the form of legal and accounting fees.
The IRS together with its master the United States government increasingly look like dancers paired as a mad duo dervish, whirling ever faster in dubious pursuit of payoff phantasms, with onlookers increasingly bemused by the perverse chasing of the partner’s tail.
References
[3] Information for U.S. citizens or dual citizens residing outside the U.S.
