Interesting FATCA and tax compliance post from Mr. Mopsick which includes:
For both Americans abroad and recent immigrants: Millions of people are agonizing over the question, “Should I just blow it off or do I really need to take some action?” The answer is easy: Whether you take action or not is all based on your personal tolerance level for risk and uncertainty. It is your decision to make. Many people are totally comfortable with the idea that they will never get caught violating the tax laws by not reporting foreign income and accounts or for some reason don’t care if they do get caught. This is because it is one thing for the IRS to compute a tax due and owing from a delinquent taxpayer, but the IRS is years away from routine collection in the ordinary course of delinquent taxes from Americans overseas, provided there are no periodic or regular payments like Social Security payments or pension payments leaving the US for accounts abroad.
Leaving one with the question for Americans abroad:
Is it more dangerous to be IN tax compliance or NOT in tax compliance?
Time will tell. If Mr. Mopsick is correct in his analysis, this suggests those NOT in tax compliance have time to respond to their situation and NOT react!
Another fascinating article from Geneva Launch includes:
The title of the article by Lynnley Browning is:
“Swiss agree on penalties for banks that aided tax cheats”
A review of the article suggests that the U.S. government is attempting to impose on Swiss Banks a program that is like the “OVDI-OVDP” program.
The article begins with:
My recent post discussed the importance of renouncing U.S. citizenship before becoming a covered expat. For those who need a reminder (and this is not a substitute for careful legal advice) a “covered expatriate” is one who meets any of the following tests:
1. The Income Test – Has the composition of income hat has resulted in a U.S. tax bill of approximately 140,000 for each of the last three years (this is a paraphrase, look it up yourself);
2. The Asset Test – Has a net worth of two million dollars or more
3. The Compliance Test – Is unable to certify compliance with U.S. tax laws for each of the five years prior to expatriation. Note that this is intended to include having filed all relevant information returns. (I would argue that since FBAR is a Title 31 requirement it is irrelevant to Title 26 compliance). Interestingly, if you do not meet either the asset test or the income test, you have a huge incentive to ensure that you have five years of tax compliance.
When it comes to U.S. tax compliance:
The only thing worse than the fear of non-compliance is the certainty of compliance. Why?
The following comes from a post at the Isaac Brock Society.
Assuming the correctness of this, it is very big. It signals that the focus of the IRS may be moving away from penalties and toward getting people back into the system! Note the discussion of the role of Taxpayer Advocate.
Are you a U.S. citizen abroad?
If you are not a U.S. citizen (or other kind of U.S. person) you may have little to worry about. Panic is starting to set in. There were many U.S. citizens who became citizens of other countries. They may or may not have lost their U.S. citizenship. Even if at this moment you believe you are a U.S. citizen, I urge you to consider this issue.
If you are NOT a U.S. person there is no reason for you to read the rest of this post. But, if you are then:
It’s all about Cause, Reasonable Cause
The Good News – FATCA Is In Trouble
FATCA is in trouble – it appears to be stalled. Treasury was (at least it said) anticipating up to 50 IGAs by December 31, 2012. As of today, they have a total of four. That is a pathetic and pitiful number. To make matters worse, Treasury failed in its commitment to get regulations/information/direction to the foreign financial institutions by the December 31, 2012 date. (The word is that the release of the final FATCA rules is imminent. Update January 18: the IRS has finally released the final FATCA rules.)
At best FATCA is not going as smoothly as Treasury predicted. At worst FATCA is in serious trouble. As James Jatras preaches, it is a mistake to think that FATCA is inevitable. Furthermore, Canada (the Government and the banks) can put an end to FATCA by just saying no. Just Say No!
The Good News – We Are In A Pre-FATCA World For Non- Complaint U.S. Persons
Anecdotal evidence suggests that the majority of Americans Abroad and Green Card holders are not in compliance with their tax and FBAR filings. Much has been written on this in the last year. Of particular interest are a series of posts written by former IRS attorney Steven J. Mopsick.
In order the posts are: