Why The IRS Is So Determined To Go After Dual Citizens

By: Pete
Date posted: 01.30.2012 (5:00 am) | Write a Comment  (0 Comments)

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Many US citizens that live and have lived abroad for decades are tempted to downplay IRS warnings despite those warnings being very clear and scary:

“Taxpayers who do not submit a voluntary disclosure run the risk of detection by the IRS and the imposition of substantial penalties, including the fraud penalty and foreign information return penalties, and an increased risk of criminal prosecution,” the IRS said.

“The IRS remains actively engaged in ferreting out the identities of those with undisclosed foreign accounts.”

Anyone convicted of criminal tax evasion could face a prison term of up to five years and a maximum fine of $250,000.

Why Is The IRS Suddenly So Active?

There are many reasons why the IRS is suddenly more vocal. Many seem to think that the IRS is all talk but I would caution anyone who thinks that. Why?

The IRS is going after revenues for the US government which in these days of massive deficits are critical to acquire.
The IRS is getting much more power to get information from foreign entities and governments. That has happened thanks to increased pressure by the US government and more bilateral agreements with governments such as the Canadian government.
Increased power to collect assets abroad thanks to new regulations thanks to among others the QI regime and the dual collection

For example, the new law that will require Canadian banks to share client information with the US government is one of many initiatives that will make it much easier for the IRS to find and go after those acting illegally. No bank, no matter where it is in the world can afford to go against the US treasury and US government so I think such information exchanges will only become more popular over time.

Honestly, Why Would You Resist

In almost all cases, US citizens living and paying taxes in Canada do not have anything to pay out, so why they would choose to act illegally and start battling it out with the IRS is beyond me. Can you imagine starting to get communications from the IRS with questions or requests? Wondering about your next trip to the US? It just doesn’t seem worth it.


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