Monday, April 7, 2014

Role of Tax Evasion and Its Prosecution in a Civilized Society (4/7/14)

Professor James Maule has a good editorial piece on this blog.  The entry is titled
How Shocking is Tax Evasion? (Mauledagain Blog 4/7/14), here.

The issue is whether tax evasion has lost its place as a seriously considered offense in the United States.  Professor Maule has a good succinct insight.  I recommend it to readers.

I am reminded of the famous Oliver Wendell Holmes quote in Compania de Tabacos v. Collector, 275 U.S. 87, 100 (1904) (dissenting), here: "Taxes are what we pay for civilized society."

10 comments:

  1. Thank you Jack. I have representation but I have been hoping to gather additional information on this for peace of mind. I believe I have no bad facts (except for around $5000 post-tax U.S. funds, source of all foreign account funds was through legitimate post-tax foreign earnings and before I stepped into U.S. several years back, total tax due less than 12K over 8 years), My main concern is that I have several modest accounts and therefore a per-year per-account FBAR penalty will be absurd and also very onerous for me. I plan to contact the TAS if that occurs. Based on JustMe's story, I believe my penalty, at least in theory and my analysis, should be less than his given the account balances.

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  2. I live in Switzerland and enjoy paying Swiss taxes. Since Switzerland is a civilized society, why do individuals living in America refuse to pay Swiss taxes? Is it not the duty of individuals living in America to pay Swiss taxes for this civilized society that I live in?

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  3. I am currently in OVDI. I have no quarrel with paying back taxes or even interest on the taxes or the 20% of taxes penalty. Nor have I heard much complaining about that. It's the 27.5% of foreign bank accounts, regardless of facts, under the fear of maybe being assessed 300% that I do not hink is fair.

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  4. There is a vicious cycle in that 1) there is little optout history so people are afraid to opt out and 2) because people are afraid to optout there is very little optout history.

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  5. In many cases multiple accounts are an indication of legitimate reasons for having foreign accounts. Just like I have multiple accounts in the US for multiple reasons and purposes, such may be the case with foreign accounts. Keep in mind that the more foreign accounts you have, the more chances of one account becoming known, so it seems that if secrecy is your goal you would want one account, not many.

    Also as far as the iRM it says that multiple penalties per yera (ie per-account) should be limited to egregious cases. In my view egregious conduct would be to establish various offshore companies and accounts so transfers are smaller and more likely to have a justifiable purpose, then churn the money through a daisy chain of accounts in different banks, countries and company names to obscure the trail; in other words a typical money laundering scheme. Merely having multiple accouts does not fit this description.

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  6. Your point is excellent. If the OVDP without opt out really is for the bad guys, then the IRS should publish some guidance on what can be expected on opt out so that the good guys can make a good decision.

    Jack Townsend

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  7. uscitizenshipnightmareApril 14, 2014 at 6:23 AM

    I know this is not a tax policy blog, but since this particular post is very much tax policy... Tax evasion is indeed a serious crime, one that warrants both civil and criminal sanctions, but you have to wonder whether it is serious enough to warrant either the current enforcement priority or the approach to enforcement (at least in the offshore space). For the offshore initiatives, neither Congress nor the IRS are really focussed on tax evasion, money laundering or any other underlying "mala in se." Rather, they are focussing on the "malum prohibitum" and a weak one at that - the mere failure to report. The draconian penalties that come with failure to file the FBAR (or one of the many other required forms such as 3520) are no longer being used as an additional stick to punish someone who has committed tax evasion but rather as a serious crime in and of itself, one that warrants a harsher (at least in civil practise) penalty than the underlying offense of tax evasion/fraud. One has to wonder where this type of enforcement practice fits in a "civilised society".

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  8. Deadlines is surely a headache. I can tell you I have used an online service to request for a tax extension. With just 3 minutes to do it online,it is easy as pie. My sister gave me this discount code for 20% off http://bit.ly/1jD1Lwr

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  9. update : United States, v. John C. Hom
    The case will be heard on April 18th. It will be interesting to see how the case turns out.

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  10. Thanks, I will look forward to learning from the court's action on the motion.


    Jack Townsend

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