Friday, September 23, 2011

IRS Goes Hunting For Dollars Planetwide

Americans and dual citizens living abroad are under attack by the IRS. The US government is so strapped for cash that they are hunting down people who have never even lived or worked in the U.S. and fining them hundreds of thousands of dollars.

This from Whiskey & Gunpowder (by Wendy McElroy)
The Attack on Accidental Americans

When Julie Veilleux discovered she was American, she went to the nearest U.S. embassy to renounce her citizenship. Having lived in Canada since she was a young child, the 48-year-old had no idea she carried the burden of dual citizenship. But the renunciation will not clear away the past 10 years of penalties with the Internal Revenue Service (IRS). Born to American parents living in Canada, Kerry Knoll's two teenaged daughters had no clue they became dual citizens at birth. (An American parent confers such status on Canadian-born children.) Now the IRS wants to grab at money they earned in Canada from summer jobs; the girls had hoped to use their RESPs (registered education savings plans) for college.The IRS is making a worldwide push to squeeze money from Americans living abroad and from anyone who holds dual citizenship, whether they know it or not. It doesn't matter if the "duals" want U.S. status, have never set foot on U.S. soil or never conducted business with an American. It doesn't matter if those targeted owe a single cent to the IRS. Unlike almost every other nation in the world, the United States requires citizens living abroad to file tax forms on the money they do not owe as well as to report foreign bank accounts or holdings such as stocks or RSSPs. The possible penalty for not reporting is $10,000 per "disclosed asset" per year.

Thus, Americans and dual citizens living in Canada (or elsewhere) who do not disclose their local checking account -- now labeled by the IRS as "an illegal offshore account" -- are liable for fines that stretch back 10 years and might amount to $100,000. A family, like the Knolls, in which there are two American parents and two dual-citizen children, might be collectively liable for $400,000.
You can read the rest of the article - but it is just incredible what is going on.

What is interesting is that the IRS already receives about 400,000 tax returns from approximately 7 million Americans who live live abroad (a compliance rate of around 6%). Customs and Immigration is now sharing information with the IRS and expats and dual citizens who are not complying will be subject to massive fines and arrest if they ever come to the U.S. (Good reason for them not to ever set foot on American soil)

Meanwhile, our with all the information Customs and Immigration has, our government does nothing - zero- zilch - to enforce our laws against those who come here illegally. In fact, our government is willing to pay for their schooling, and healthcare! Now they need money from expats and dual citizens to do that! Oh, the irony!

What is apparent is that the U.S. is in dire economic straits and that is why expats and dual citizens are being hunted down like dogs.
As of 8:30 a.m. EST, Sept. 20, the US National debt was $14,744,278,404,668. That is over $47,000 per American citizen, over $131,000 per taxpayer. America is bankrupt and desperate to grab at any loose dollar within its reach. Having reaped the easy pickings within its own borders, America is extending its reach. So far, the IRS push into foreign territory has been a rousing success by their own standards. In 2009, the IRS offered "amnesty" -- that is, lessened but still hefty penalties -- to whoever stepped forward to disclose foreign bank accounts.
Global international tax enforcement of so-called "offshore tax evasion" (Foreign Account Tax Compliance Act, or FATCA) is now a priority, such that they will even raid college money earned by children born and raised in other countries!

"Starting in 2013 (2014 if an exemption is granted)every bank in the world will be required to report to the IRS all accounts held by current and former U.S. citizens. If account holders refuse to provide verification of their non-U.S. citizenship, the banks will be required to impose a 30% tax of all payments or transfers to the account on behalf of the IRS. Banks that do not comply will "face withholding on U.S.-source interest and dividends, gross proceeds from the disposition of U.S. securities and pass-through payments."
Interesting to note that some countries like Australia and Japan have already declared their refusal to comply.

Banks around the globe will now be extensions of the IRS and of course there are also significant privacy concerns for their customers. As a result, some foreign banks may opt not to do business with the American government or American interests.

Personally, I just see this as another piece to the One World Government/Global Banking scenario. The tentacles of the IRS are slithering into foreign banks and making mandates for their compliance in data collection and tax enforcement.

(H/T Jim A.)