Almost one year ago, I wrote a post acknowledging that we can’t trust the IRS, and questioning whether US citizens abroad can trust the cross-border professionals. A month later, I followed up with another discussion describing the interaction between the taxpayer, IRS and the cross-border professionals. The IRS is “tightening the noose” by forcing tax preparers to be licensed by the IRS. To be clear, this means that tax preparers now work at the pleasure of the IRS. A group to tax preparers has sued the IRS to prevent this licensing framework. This is adding to the cost of US tax preparers which is making the cost of retaining US citizenship to high.
US taxes are so complicated that over 90% of US taxpayers use a computer program or some kind of professional tax preparer. Those using a tax preparer have a choice of: lawyer, CPA, Enrolled Agent or just a tax preparer.
Coming into and staying in tax compliance is difficult for US citizens abroad. As I have suggested before, the IRS is making it very difficult for US citizens abroad to be tax compliant. From the perspective of a cross border professional, there are three considerations:
1. The Professional Future of the Cross-Border Professional – Their right to make a living depends on their getting along with the IRS.
2. The Economic “Well Being” of the Cross-Border Professional – Their ability to make a living depends on their being able to extract enough fees from clients (or is the IRS the real client?).
3. The facts specific to the client – What kind of job will/can they do for the client that is consistent with the interest of the cross-border professional? Code: There is only so much money the client can pay.
Check out the following description of a US citizen abroad trying to be tax compliant.
Those who are NOT Twitter literate will click here.