IRS-Obama Idiocy Harms Innocent Americans
George Washington, the first president of the United States, is said to have exclaimed: “Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master.”
No better example of unreasonable use of official government force exists today than the policies of the Internal Revenue Service, aided and abetted by President Obama and the Democrat controlled Congress that enacted the Foreign Account Tax Compliance Act (FATCA).
Amy Feldman, a columnist for Reuters, exposed on December 8 a current example of this unreasonable force.No better example of unreasonable use of official government force exists today than the policies of the Internal Revenue Service, aided and abetted by President Obama and the Democrat controlled Congress that enacted the Foreign Account Tax Compliance Act (FATCA).
She wrote: “The Internal Revenue Service's crackdown on overseas tax cheats is having an unintended consequence on American expats... [forcing] them to pay penalties for failure to file paperwork that may be drastically out of proportion to the actual amount of taxes owed.”
Intended Consequences?
It might be some small comfort if these were stupid, unthinking IRS-Obama policies. But in my opinion, these are policies calculated to keep Americans investors - along with their cash and assets - at home, where they can be controlled (and their assets confiscated) at will by government.
That threat includes the possible confiscation of private pension and retirement plans.
These policies have imposed unjust penalties on thousands of innocent American expatriates suddenly caught in a new jungle of paperwork they had no idea existed. That’s one consequence.
I wrote about another consequence a few days ago when I noted that: “Growing numbers of Americans living abroad are renouncing their U.S. citizenship because of the Foreign Account Tax Compliance Act (FATCA) - not to mention the ever more burdensome and complex IRS reporting obligations that now come with the treat of financial and even criminal penalties.”
Our friend and associate Richard W. Rahn writes in the Washington Postthat FATCA has already sent foreign capital fleeing.
He claims that the people running Washington are "mental midgets" unaware of how their policies impact on the economy.
He estimates that FATCA will cause the departure of an estimated $14 trillion of private foreign investment, destroying as many as 10 million American jobs.
Yet another consequence, equally serious, is the decision of untold numbers of foreign banks and investors to avoid doing business with Americans because of the trouble of compliance with FATCA.
This also has made it difficult, if not impossible, for U.S. citizens living abroad to maintain existing bank accounts or open new accounts both in U.S. and in their countries of residence. This impedes American companies and their employees in badly needed foreign business and trade.
The Americans who are being subjected to this unjust IRS-Obama persecution are real people like you and me - U.S. citizens married to foreigners who left the U.S. decades ago, retirees whose lives spanned multiple countries, dual-taxpayers trying to do their U.S. taxes themselves in foreign places, where accountants that know U.S. tax laws are few.
That threat includes the possible confiscation of private pension and retirement plans.
These policies have imposed unjust penalties on thousands of innocent American expatriates suddenly caught in a new jungle of paperwork they had no idea existed. That’s one consequence.
I wrote about another consequence a few days ago when I noted that: “Growing numbers of Americans living abroad are renouncing their U.S. citizenship because of the Foreign Account Tax Compliance Act (FATCA) - not to mention the ever more burdensome and complex IRS reporting obligations that now come with the treat of financial and even criminal penalties.”
Our friend and associate Richard W. Rahn writes in the Washington Postthat FATCA has already sent foreign capital fleeing.
He claims that the people running Washington are "mental midgets" unaware of how their policies impact on the economy.
He estimates that FATCA will cause the departure of an estimated $14 trillion of private foreign investment, destroying as many as 10 million American jobs.
Yet another consequence, equally serious, is the decision of untold numbers of foreign banks and investors to avoid doing business with Americans because of the trouble of compliance with FATCA.
This also has made it difficult, if not impossible, for U.S. citizens living abroad to maintain existing bank accounts or open new accounts both in U.S. and in their countries of residence. This impedes American companies and their employees in badly needed foreign business and trade.
The Americans who are being subjected to this unjust IRS-Obama persecution are real people like you and me - U.S. citizens married to foreigners who left the U.S. decades ago, retirees whose lives spanned multiple countries, dual-taxpayers trying to do their U.S. taxes themselves in foreign places, where accountants that know U.S. tax laws are few.
- Marvin Van Horn, a 62-year-old U.S. citizen and permanent resident of New Zealand, semi-retired, bought a home there with his Australian wife a decade ago. When he learned about the new IRS reporting rules, he followed them and paid a small tax he owed but the penalty for failing to file the foreign bank account reporting form (FBAR) was $90,000.
- When the IRS agent learned he had rented his house and not reported that income the penalty spiraled to $172,000. After negotiations with IRS's Taxpayer Advocate Service, the result was a single "non-willful" failure to file FBAR penalty of $5,000 per year, or $25,000 total.
There are an estimated five to six million Americans living offshore and another 39 million immigrants in the U.S. who face similar IRS issues with overseas disclosure if they have foreign bank accounts back home.
Yet in 2009 there were only 534,043 FBARs filed, according to a report by the Treasury Inspector General for Tax Administration.
Indeed, many Americans abroad inherited foreign assets from foreign-born parents and relatives or they have simply lived abroad for years ignorant of FBAR requirements.
All of this IRS-Obama induced tyranny involves mainly U.S. citizens, but the new rules have ensnared thousands of Canadians, many of whom were not only ignorant of IRS rules, but of the fact that they were U.S. dual citizens.
One 54-year-old Canadian, who was born in Canada and has only worked in Canada, recently discovered that she’s a dual citizen for tax purposes because her mother, then a U.S. citizen, registered her with the U.S. embassy at birth. She faces a $75,000 penalty.
Jack Townsend, a Houston tax attorney, who writes on these issues in his Federal Tax Crimes blog, said: “The people who made out well are the real crooks who have been doing this for years, while the people who don't have that culpability are getting hammered because of the one-size-fits-all rule.”
I have no sympathy for Americans who cheat on their taxes. Illegal tax evaders should be caught and penalized. But stupid, harmful rules should be repealed immediately to take into account innocent mistakes.
Honest, taxpaying Americans and others who desire real financial privacy, true asset protection and expert investment advice should continue to employ offshore banks, investment advisers, insurance and annuity specialists - and not be scared away by the IRS from the very real benefits offered by the world's leading offshore financial centers with which the Sovereign Society works.
We will help you go offshore with full legality and tax compliance - the IRS be damned.
Yet in 2009 there were only 534,043 FBARs filed, according to a report by the Treasury Inspector General for Tax Administration.
Indeed, many Americans abroad inherited foreign assets from foreign-born parents and relatives or they have simply lived abroad for years ignorant of FBAR requirements.
All of this IRS-Obama induced tyranny involves mainly U.S. citizens, but the new rules have ensnared thousands of Canadians, many of whom were not only ignorant of IRS rules, but of the fact that they were U.S. dual citizens.
One 54-year-old Canadian, who was born in Canada and has only worked in Canada, recently discovered that she’s a dual citizen for tax purposes because her mother, then a U.S. citizen, registered her with the U.S. embassy at birth. She faces a $75,000 penalty.
Jack Townsend, a Houston tax attorney, who writes on these issues in his Federal Tax Crimes blog, said: “The people who made out well are the real crooks who have been doing this for years, while the people who don't have that culpability are getting hammered because of the one-size-fits-all rule.”
I have no sympathy for Americans who cheat on their taxes. Illegal tax evaders should be caught and penalized. But stupid, harmful rules should be repealed immediately to take into account innocent mistakes.
Honest, taxpaying Americans and others who desire real financial privacy, true asset protection and expert investment advice should continue to employ offshore banks, investment advisers, insurance and annuity specialists - and not be scared away by the IRS from the very real benefits offered by the world's leading offshore financial centers with which the Sovereign Society works.
We will help you go offshore with full legality and tax compliance - the IRS be damned.
By Bob Bauman JD, Chairman, Freedom Alliance
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