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Clawbacks: IRS collects $2.7 billion in unpaid taxes
Federal tax forms are distributed at the offices of the Internal Revenue Service in Chicago, Ill.
The IRS says it has dredged up $2.7 billion from people who squirreled cash away in foreign bank accounts and failed to pay tax on it. The news that the Treasury is making progress in its campaign against tax dodgers - and bulking up its bank account - is making the Marketplace Daily Pulse quicken today.
The Treasury stands to gain a lot more from its efforts. That $2.7 billion is just the tax on foreign accounts that wasn't paid - the people who have been caught or who came forward under the amnesty and declared their foreign accounts will still have to pay fines. Those fines range from 5 to 25 percent of the amount held in the account that wasn't taxed.
"My goal all along was to get people back into the U.S. tax system," IRS Commissioner Doug Shulman said in a statement. "Not only are we bringing people back into the U.S. tax system, we are bringing revenue into the U.S. Treasury and turning the tide against offshore tax evasion. We have changed the risk calculus. Americans now understand that if they try to hide assets overseas, the chances of being caught continue to increase."
UBS, Switzerland's largest bank, agreed in 2009 to pay $780 million in fines, penalties, interest and restitution as part of a deferred prosecution agreement with the U.S. government. The IRS said people hiding assets offshore have received jail sentences running for months or years, and they have been ordered to pay hundreds of thousands and even millions of dollars.
Bloomberg News reported U.S. authorities are poised to take enforcement action against as many as 10 banks, which could yield tens of thousands of previously undisclosed accounts held by U.S. citizens.
Paddy, Paddy, Paddy....
Sigh.....I sadly see that you just re-posted the IRS press release without any questions of Commission Shulman assertions of success.
That is really disappointing to see. Here, let me help you.
Here are just a few questions, you might have asked before you just repeated the story the IRS handed you. There might have been another story here, if you had an inquiring mind.
Commission Shulman, $2.7 Billion sounds like a lot of money, but, as you know, it is a number in isolation. A sole number by itself is pretty meaningless in terms of providing perspective, so...
Before you started this program, did you do any cost versus benefit analysis,(like any business would do) so you would have come guidelines upon which you could judge your success?
Was it more or less than you expected?
What was the actual cost to produce this new revenue, both direct and indirect? Include the unintended consequence cost too, please.
We understand there has been a lot of personal pain and trauma in the immigrant and expat community which has resulted in increased expatriation request. Also some immigrants are leaving or considering leaving due to this heavy handed penalty application.
Did you factor those costs into your cost versus benefit analysis? What is the long term lost of revenue for this short term gain?
Of the $2.7 billion collected, how much was actual new taxes collect versus how much of it was the extreme penalties and interest you applied.
Of the new taxes collected, how much of that total was already taxed in the country the money was deposited?
What is the Minnow to Whale ratio from your recent Voluntary Disclosure efforts?
IE, Of those that have come forward, how many were the Active Evader UBS types (Whales) you were targeting, and how many were just average middle class ordinary Immigrants and Expats (Minnows) who were benignly unaware of failures to file Foreign Bank Accounts Reports (FBAR) or report income which was most likely taxed in the country in their home country or current residence country?
The Minnows were your by catch, so would like to know how many of the 30,000 you say have come forward are in the Minnow category?
I understand from other reporting that you had disclosures from 140 countries around the world. Was that a surprise for you? Were you expecting that? Why?
BTW, why don't Big Corporations have to pay taxes on the funds they have in foreign banks? Just curious.
Why is the FBAR penalty unique and so draconian and why is it so important that the FBAR be filed yearly?
Prior to 2009, how many law enforcement actions were undertaken in the Justice Department as a result of information gleaned from the FBAR reports.
It seems that the FBAR penalty structure is such a disproportionate and severe one as compared to other types of tax non compliance like Timothy Geinther's tax failures where he paid "no" penalties at all. Why is that?
The FBAR seems to be very important tool now in the IRS enforcement efforts, ever since it was delegated to the IRS from FINCEN.
Therefore...
Is it not true, that the FBAR was a pretty obscure form, and not well known about or even complied with in the Tax Practitioner community prior to your enforcement actions starting in 2009?
What actions did you take to warn "US Persons" who might be affected by your actions that this was coming? Any special alerts to immigrants? Any mass mailings? Any outreach to Expats? Any special messages on the front of a 1040? Any other special outreach that no one seems to have seen or recalled?
What were your goals when you started hammering people with penalty and imprisonment threats?
Was your desire solely to improve compliance, or was this just a revenue collection opportunity that you piggy backed on the UBS media attention created by the Justice Department court actions to pry loose 4500 secret accounts?
Do you know that you have allowed the press to continue to mis-characterize this as an enforcement action against the Rich hiding funds in secret Swiss Bank Accounts? Why haven't you corrected that?
Did you know, your program would adversely affect millions of unsuspecting middle class immigrants and Expat of dual citizens around the world before you launched it?
Are you aware of all the outrage in Canada about the IRS overreach in its attempt to extract FBAR penalties?
How many Total FBARs were filed prior to your actions in 2009?
According to reports from Senator Levin, only 345,000 FBARS were filed in 2008. Is that true?
How many do you think should have been filed?
What is the IRS estimate of the number of people around the world that should be filing FBARs?
How many FBARS were filed this year?
What was the compliance rate before you started, and what is it now?
What percentage rate improvement do you consider success? 1% 3% 10% 25%
Commissioner Shulman, you say that "Your goal all along was to get people back into the U.S. tax system,†Looking back at previous statements at the start of the 2009 program, where would I find an indication of that objective?
Do you think that threats of imprisonment and fear amongst middle class expats and immigrants is the best way to accomplish what you now say was your stated goal?
Is there anything else the IRS could have done to mitigate the stress this has created for millions of people around the world?
Well, Paddy, the questions really are endless, but I will stop now, as I think you get the point!
Unfortunately, you have bought the IRS narrative hook, line and sinker. Here is an analogy for you....
You are standing on the docks, waiting for IRS ship to unload the occasional Whale, while listening the Captain's descriptions on what a successful hunt it was, how many Whales are caught, and how much oil has been extracted.
You are about to leave and file your report for all fishermen to read on the internet.
As you leave, you notice that forklifts are unloading tote after tote of Minnows off the ship that are being shoveled onto a processing belt that runs into a fertilizer factory, and yet you ask not a question like, "Where did you catch these, and what are you doing with them? Were you intending to catch these when you went Whale hunting?"
Go back and ask the Captain, please!
Wow! Whoever you are, thanks for taking so much time to make such an expansive comment. A shame that you're too shy to put your name to it.
But you're right, it is just a number quoted by the IRS, and who knows how much the IRS spent getting this money (by the way, as I pointed out, but you seem to have missed, the funds do not include penalties). That said, I think, as you seem to have detected yourself, that this is less about retrieving lost tax income and more about preventing tax dodging in future.
Will that work? That's a good question, but neither I nor the Commish has a crystal ball. All I can tell you is, given the risks, I'll be declaring my own foreign accounts from now on. You?
Appreciate your interest in the subject. I posted a response, but it never showed up. Why is that? Disappointing, as I thought it was a reasonable response. There must have been a link or something that shot it to the Moderation team, and time moves on, and it was forgotten. Oh well, will let it go.
IRS Traps Innocent, Hard-Working Americans in Criminal Tax Probe.
Recent media reports touting the success of the IRS's Overseas Voluntary Disclosure (OVD) Programs in seizing $2.7 million in tax revenues fails to mention that of the 12,000 "tax cheats" captured, hundreds are innocent Americans living and working overseas.
ACA fully supports efforts to eliminate tax evasion, however, current IRS policies using tools intended to prosecute organized criminals, terrorists and drug dealers on ordinary Americans in a clear abuse of government power. ACA has received dozens of complaints from Americans who are bona-fide residents overseas citing prosecution for errors or omissions on the Foreign Bank Account Report (FBAR) form. These individuals face penalties that begin at $10,000 per occurrence or 20% of the value of their bank accounts, whichever is higher. Additionally, the burden of proof rests on the filer who is assumed guilty until proven innocent. The IRS is actively enforcing these penalties even on Americans who possess no criminal backgrounds and have not been engaged in suspicious behavior. (Should journalists wish to speak with any of these individuals, ACA can furnish interviews upon request. Contact information below).
The OVD programs do not distinguish between criminals and bona-fide overseas residents. That means Americans selling exports abroad who need ordinary financial accounts to function or stay-at-home moms who co-own accounts with their foreign born husbands are treated the same as terrorists and drug lords. In one case received by ACA, a businessman listed his income in the wrong column of his tax returned, refiled and actually received a tax credit....in addition to a filing penalty of $1 million for being unaware he was also required to file an FBAR.
These individuals are not criminal tax evaders but they are the "success" stories that IRS Commissioner Shulman is touting with the press in an attempt to raise tax revenue at any cost. More information on this can be found in ACA's latest report, "The FBAR Scam" at www.aca.ch/fbarscam.pdf.
