Land of the Fee-The cost of offshore tax compliance (to the IRS)

The Internal Revenue Service is pleased to announce that its highly successful campaign to bring non-resident United States persons into tax compliance has led to an unprecedented number of tax returns entering our processing center. However, due to recent budget cuts to our country’s tax collection service, and our inability to have predicted the current volume of returns, the IRS no longer has the available manpower needed to process US taxpayer’s returns in a timely fashion.

In our effort to maintain a consistent level of service for our customers, the IRS will now charge a processing fee to taxpayers whose tax returns originate in a foreign country. This fee will help defray the cost of the additional manpower needed in processing these returns.

Due to existing law, non-resident US tax persons currently yield little, if any, revenue for the US government. This fee shall remain in place until such time that Congress makes changes to our tax laws that currently allow non-residents to avoid paying into the US tax system.
– Tax Czar

Okay, not true, but doesn’t it seem like a natural progression in the current climate? It wouldn’t be much different from the US government’s decision to charge US citizens a $450 fee to cover the costs of their own renunciations. I am slowly starting to digest the reality of the situation: that if are not of benefit or value to the US, we are a liability by default.

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14 thoughts on “Land of the Fee-The cost of offshore tax compliance (to the IRS)

  1. @All

    Plaese STOP giving them more of these insane ideas!!!! 😡
    Otherwise they might just become true one day 😦
    Insane at least to those who are still sane 😉

  2. I’m sorry to go off topic, but I have been reading your site since January (when I first discovered FATCA) and I want to make my first post.

    First of all, thanks for this great collection of information. I’m extremely frustrated and angry about how US Congress is progressively criminalizing ex-pats. I’m still two years away from gaining a second citizenship, but I’m already thinking that renouncing US citizenship might be the only choice, if I wish to live abroad and feed my family. That is a sorry state of affairs, but it seems that the situation will only get worse.

    I just made a discovery that I want to share: It appears that it is now possible to file the FBAR electronically. Here’s a press release: http://www.fincen.gov/news_room/nr/html/20110717.html

    I find it very apt that it is the “Financial Crimes Enforcement Network (FinCEN)” administering this site. Clearly, ex-pat = criminal in the eyes of many US persons.

    I haven’t yet filed my FBAR for this year, but I plan to try to do so electronically. I want an electronic confirmation that this important paper was received.

    Another interesting point: I found that the FinCEN site doesn’t work properly in Firefox, so as a programmer I started looking at the HTML code to see if I could figure out the issue. In the comments in this code, there is the following line: “Copyright (C) 2001-2007 Northrop Grumman Corporation”

    So now US tax dollars funding the military complex are being redirected towards making it even more difficult to live as an American citizen outside of the US!

  3. I’m sorry @UncleTell, I didn’t mean to make you mad, but do they really require my help in making bad decisions? Besides that, be assured that I’m not great at making predictions, that’s why I stopped buying lottery tickets (and the fact that the tax man south of the border would go after 38% of my winnings-exempt in Canada, like the sale of your principal residence here) 😦

  4. @garbo999

    It is ok. You rather have you off subject than not posting at all, so thanks for joining in. Welcome aboard.

    Regarding the electronic FBAR. Yes, you can do it electronically, but only if you do are filing individually. If you file jointly, you either have to file the paper file, or do it twice, once for each partner of a joint account.

    I plan to still fill by paper, if for no other reason than I refuse to do their data input for them. I want them to have to waste the money and time to entry my data from the paper file I send them, so unless they make the electronic filing mandatory, I am going to mail it.

    Interesting find about Northrop Grumman Corporation. Yes, the military industrial complex is everywhere, and the CPA/Attorney/Accounting firm/FATCA industrial complex is currently under construction. I am sure Northrop Grumman will find a way to make money on this complex too. 🙂

  5. garbo999 – Beware electronic FBAR filing.

    Nobody else has pointed you to that earlier buried Brock nugget (retrieved through my own files) with a problematic link –

    http://www.taxalmanac.org/index.php/Discussion:FBAR_online_filing_-_warning!!!!!

    – connection to source may work only with cut-and-paste because there seems to be some techie glitch with those trailing exclamation marks [which I may have overcome with some html code, but who can tell until this comment sets in the unalterable – by me – concrete of “posted” status.]

    Following is direct quotation of the base comment for that thread (if Petros feels that this goes beyond fair dealing he can edit or whatever):

    Word from fellow preparer over here in the UK: He had a client who used the online FBAR programme to file overdue/late FBARs and that taxpayer is now dealing with lawyers to remove the penalties assessed.

    If you use the online FBAR programme to file a late FBAR, there is
    no way to include a Reasonable Cause letter with it and thus
    automatic $10,000 penalties are being automatically generated on
    overdue/late FBARs. File all your overdue FBARs by paper with the accompanying RC letter.

  6. OK, link works, but you need to go two screens further:

    (1) Click second link: “Search for FBAR …”

    (2) Click link beneath “Page title matches”

  7. OK, thanks for the link! In my case, I’ve been filing FBARs since 2002 so timely filing is not a problem. But maybe I will just stick with the paper form for now.

  8. I am sticking with paper just because it makes more work for them! I want to be sure there continues to be a cost of input into the system that is on their dime! I am not going to report on myself, and be the data input clerk too!

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