Scott Michel Quoted in Reuters, Taxpayers With Overseas Accounts Seethe at Penalties
The Internal Revenue Service's crackdown on overseas tax cheats is having an unintended consequence on American expats. It's prompting many of them to pay penalties for failure to file paperwork that may be drastically out of proportion to the actual amount of taxes owed.
The IRS had no comment for this story, but said in past statements that 30,000 people have come forward during the tax amnesties so far, and that it collected a total of $2.2 billion from those who participated in the 2009 program, and an additional $500 million as of September 15 (a number that does not include penalties).
But this may just be the tip of the iceberg. There are between five and six million Americans living abroad, and another 39 million immigrants in the U.S. (who face similar issues with overseas disclosure if they have accounts back home). Yet, in 2009, there were just 534,043 FBARs filed, according to a report by the Treasury Inspector General for Tax Administration.
In a recent article in Tax Notes, Scott Michel, president of Caplin & Drysdale in Washington, D.C., and Mark Matthews, a tax partner at Morgan Lewis & Bockius in Washington, D.C. wrote that they saw few of the stereotypical offshore tax cheats in their practices. Instead, many had inherited foreign assets from foreign-born parents and other relatives (during the first program) or they had lived abroad for years (in the second).
Click here to read the article on the IRS crackdown on U.S. taxpayers with undeclared offshore accounts.